August 07, 2012
the majority of defined contribution (DC) plan participants say a DC plan is
their primary retirement savings account, they are not
putting enough in. ---
A survey by Diversified found nearly seven in 10 (69%)
respondents admitted that their DC plan at work was their only or primary
retirement account. And despite the fact that the majority surveyed were at
least middle-age (68% said they were 46 years old or older) with a reasonable
income (64% made at least $75,000 annually), more than half (54%) said they had
less than $100,000 saved for retirement. Thirty-seven percent had less than
$50,000 saved. Only 3% said they had $1 million or more saved.
Sixty-one percent of DC plan participants surveyed said they
were saving 10% or less of their annual salary—with 25% saying they were saving
5% or less. Only 19% said they were contributing significant funds into
their retirement account—saving more than 15% annually.
The survey also found more than one-third (34%) either
“guessed” or “made up” estimates for the income they will need in retirement;
and only 30% said they consulted with a professional for help setting their
goals. Two-thirds admit that they could use more guidance on how much money
they will need in retirement.
“There’s no reason to guess,” said Patricia Advaney, senior
vice president, participant solutions for Diversified. “With the abundance of
help available—from online tools to guidance to advice—it’s much easier today
for plan participants to calculate a retirement income goal, then take
appropriate actions to get there.”
The good news is that 38% of participants reported that they
had increased the amount of money they are saving for retirement this year over
last year. Eleven percent took a loan against their DC plan over the past
12 months, and 3% said they took a hardship withdrawal.
The survey was conducted via e-mail by Diversified in the
first quarter of 2012 among 3,370 DC plan participants in plans administered by
a wide variety of organizations.