Seventy-seven percent of Americans are confident that their 401(k) and other defined contribution (DC) plans will help them meet their retirement goals, the Investment Company Institute (ICI) found in a survey.
This rose to 84% among households that actually own a DC account or individual retirement account (IRA); 63% of households that did not own such an account said they were confident that these accounts could help them meet their goals.
ICI also found that people like DC plans for their tax advantages, investment opportunities and investor control.
“The key features of 401(k)s, 403(b)s and other DC plans really drive their popularity among Americans,” says Sara Holden, senior director of retirement and investor research at ICI. “DC plan participants appreciate the convenience of payroll deduction and the incentive of the tax treatment of these plans to encourage savings. Further, most DC-account-owning households said that their employer-sponsored retirement accounts help them think about the long term, not just their current needs.”
The survey found that 91% of plan participants say the accounts help them think about their long-term needs. Ninety-two percent said the payroll deduction makes it easier to save, and 82% said the tax treatment of their retirement plan gives them a big incentive to save. Nearly half of the people surveyed said that if it were not for their workplace retirement plan, they probably would not be saving for retirement.
Ninety-four percent said they think it is important to have control of their investments. Eighty-three percent said their plan offers them a good lineup of investment options, and 83% said knowing they are saving from every paycheck makes them less worried about the short-term performance of their investments.
The survey also found widespread support for maintaining the current contribution limits and preserving the tax treatment of DC plans. Ninety-one percent disagreed that the government should take away the tax advantages of DC accounts, and 91% said they did not want the government to reduce the amount that people can contribute to a DC plan. Even among households that do not own a DC account, 85% said they did not want the tax advantages to be removed.
More than nine out of 10 households agreed that retirees should be able to make their own investment decisions, and more than eight out of 10 disagreed that retirees should be required to trade a portion of their retirement accounts for a fair contract promising them income for life.GfK Group conducted the online survey for ICI last December among more than 2,000 U.S. adults. The full findings of the survey can be viewed in ICI’s report, American Views on Defined Contribution Plan Saving.