In Practice December 5, 2006

Workers Give Minimal Attention to Retirement Accounts

The majority of workers polled by AllianceBernstein admitted they are unprepared or reluctant to monitor and manage their retirement plan investments.
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According to a press release on the survey, 61% of respondents said they are what AllianceBernstein calls “Accidental” investors, meaning they lack confidence in their ability to manage their investments, do not enjoy the process, and give minimum attention to their retirement plan accounts. Nearly half of all “Accidental” investors said they review their investments no more than once a year – or not at all (32%).

 Most of the workers surveyed who do monitor their investments said the retirement plan statement is the primary source of information for them, the release said. Half of all “Accidental” investors also said they primarily rely on their retirement plan statement for monitoring their accounts.

 Most of the workers surveyed who do monitor their investments said the retirement plan statement is the primary source of information for them, the release said. Half of all “Accidental” investors also said they primarily rely on their retirement plan statement for monitoring their accounts.

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 Among all 401(k) eligible investors, the Internet is the second most important resource for monitoring retirement plan savings (33%).Mutual fund NAV’s in newspapers ranked last (3%) in helping participants determine the value of their retirement investments.

  

Dick Davies, Senior Managing Director, head of Institutional Defined Contribution Services at AllianceBernstein pointed out that the release provisions of the Pension Protection Act of 2006 that govern automatic enrollment, default investments, automatic contribution rate escalation, and the frequency and content of participant statements show that, “[r]ather than fight employee inertia, the lesson learned over the past 25 years of the 401(k) experience is to harness it.”

 

Workers surveyed were age 18 or older and employed full time by companies offering a 401(k) plan.

Data & Research December 5, 2006

Principal Survey Finds Concern about the Future

Almost three-quarters of employees (71%) and half of retirees (50%) said they were very concerned about their long-term financial future, according to the latest Principal Financial Well-Being Index.
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A news release from the Principal Financial Group about its quarterly survey said it also found that 90% of employees and 87% of retirees believe there should not be a mandatory retirement age.

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“When it comes to the ideal retirement age, workers and retirees are in agreement on one thing: it’s a personal decision and not something that government should mandate,” said Dan Houston, executive vice president, Retirement and Investor Services, The Principal, in the news release. “For many, it’s an economic decision to keep working, in order to pay mounting health care bills, keep up with inflation or just to cover the basic necessities. For others, it is simply a desire to stay active, engaged and make a contribution.”

Not all retirees are taking advantage of their extra leisure time, the poll found. A quarter of retirees (26%) indicated they were almost always, often or sometimes bored in retirement. “It is no wonder that many work well beyond their 50s and 60s to pay for their basic necessities and maintain their current financial well being, or just to stay engaged,” Houston asserted.

Meanwhile, focusing on current workplace issues, when asked what employers could do to help them get more out of work, workers still value a pay increase over anything else. Nearly three-quarters of workers (73%) indicated that their employers could provide better pay for performance and almost half (47%) indicated employers could provide better workplace benefits.

Other results included:


  • About three in five (61%) workers indicated they were either satisfied or very satisfied with their employers, while 20% indicated they were dissatisfied or very dissatisfied.

  • When workers were asked how the length of their work week compares with a year ago, nearly three out of ten employees (29%) admitted to working more this year.

  • When asked why they work, respondents said to pay bills (89%), followed by needing benefits (such as health insurance and retirement) (64%) and to saving for the future (51%).

The survey was conducted online within the United States between October 23 to November 1, 2006 among 1,197 employees (ages 18+) and 630 retirees of small- and mid-sized US businesses (10 – 1,000 employees).

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