According to the results of the JPMorgan Retirement Plan Services 401(k) Quiz, only 4% of respondents could correctly place investments in order from most conservative to most aggressive (the answer: stable value fund, bond fund, growth fund, company stock). Only 16% were able to pinpoint stable value fund as the most conservative.
Respondents didn’t fair much better with other questions, either. Only 28% indicated correctly that investing too conservatively was the most common investment mistake and only 38% were correct when asked what penalty was not a consequence of early withdrawals (answer: 1 16% service charge to the employer).
The study also found that only 47% of respondents knew that they should reallocate their assets when their investment goals or time horizon changes and to keep overall asset allocation balanced appropriately.
The JP Morgan survey also found that only 52% respondents correctly answered how much money was needed for a comfortable retirement. The correct answer? Seventy percent of annual income.
The study, done by Cambridge Brand Analytics for JPMorgan Retirement Plan Services, was conducted in August, 2004, with 300 respondents.
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