The Principal Finds Text Messages Inspire Retirement Savings

One year after launching a text messaging service for retirement plan participants, The Principal has released data indicating it has improved savings rates and asset allocation.

A recent analysis comparing the group of participants who receive text alerts from The Principal to a random sample of participants not receiving text alerts found 17% of the text messaging group increased salary deferrals, compared to 4% of the sample group. In addition, those who increased their salary deferrals in the text messaging group, on average, increased their allocations to higher risk/return investment options in the range of 4%-5%, while decreasing their allocations in lower risk/return investments in the range of 5%-6%, The Principal said.  

The average account balance increase since last summer has been 56% for the text messaging group, compared to 35% for the sample group.   

Last August, The Principal announced that participants in retirement accounts it administers can choose to receive certain account information via text messages and their personal iGoogle home pages (see The Principal Offers New Media Features for Participants). Since then, more than 20,000 participants have signed up to receive account balance alerts from The Principal through text messaging.