Employees See 401(k) As Main Retirement Vehicle
With fewer and fewer participants looking toward Social Security to carry them through retirement, investments in 401(k)s become more crucial than ever for participants. In fact, in addition to contributions levels increasing – and remaining the same for 54% – the majority also considers themselves either conservative (47%) or moderate (39%) in their investment style in an effort to preserve their wealth accumulations, according to the AMVESCAP research.
“The results of the survey indicate that participants value employer-provided 401(k) plans and 87% of the respondents said they intend to increase or maintain their contributions in 2003,” said Hubert Harris, chairman and chief executive officer of AMVESCAP Retirement, Inc., in a statement. “Defined contribution plans continue to play a critical part of the savings equation for retirement in the United States.”
The increase in defined contribution plans is also a direct result of the erosion of faith in the Social Security system. Only 27% of the group aged 60 and older see Social Security being a source of retirement income, with that number plummeting to 12% for the 20 to 29 age bracket.
Many participants are also buoyed by the apparent turnaround of the market looming on the horizon. Overall, three quarters of respondents think the economy will be no worse than last year, and 77% predicted the economy and stock market will be better than or the same as 2002.
“Participants have weathered the ‘perfect storm’ over the past two years and today most are going through an entirely new experience surrounding their retirement plans. This new participant experience means that people are focusing on getting back to the basics.” Bob Benish, director of participant services said, in a statement, “Participants are resilient and are learning that education is more important than ever in helping them achieve retirement security.”
AMVESCAP Retirement surveyed 615 plan participants on a number of issues to gauge their investing sentiment, investment strategy for their 401(k) account, and views on how much they plan to rely on Social Security income in their retirement.Survey results are viewable at: http://www.amvescapretirement.com/sponsors/news/pressreleases/survey.html .