T. Rowe Price has published a report detailing the reactions of plan sponsors and participants to increased inflation and market volatility in the year’s first two quarters. The report examines retirement behavioral trends and correlations between the challenging economy and job tenure and rates of savings for retirement.
The report found hiring and termination rates reached five-year highs in the first half of the year. It also found that longer-tenured employees had an average deferral rate 48% higher than the average for new hires.
Despite increased inflation and market volatility in the first half of 2022, participants have not changed their loan, distribution or withdrawal behavior significantly, the study says. More than 99% of participants who invested fully in a target-date product did not make an exchange. Participants who invested fully in target-date products continued to exchange investment choices at lower rates than plan participants at large.
The research also found that while distribution rates have normalized since the height of the pandemic, financial hardship withdrawals increased slightly in the first half of 2022 compared to the previous two years. This is largely due to the fact that special COVID-related distributions are no longer available.
The report found that participants consumed a greater amount of digital retirement planning and savings content during the second quarter, specifically around financial wellness. Participants accessed three times more retirement planning and savings content than in the same period last year. These programs focused on budgeting, retirement readiness and maximizing 401(k) plans.