Most Participants Would not be Saving if not for 401(k)

July 14, 2011 ( - Survey results from Fidelity Investments reveal more than half (55%) of current workplace savings plan participants say they would not be saving for retirement if not for their 401(k) plan.

The research, which highlights the savings behaviors of current and former 401(k) participants in a challenging economy, also found nearly one in five respondents (19%) currently enrolled in workplace plans report they have no retirement savings at all outside this key retirement benefit.  

Of those who do have savings outside of their 401(k), 37% of working respondents are building retirement savings in an IRA. In addition, 33% are in an employer-sponsored pension plan, 28% have savings in bank accounts, and 28% have investments in stocks or bonds. Pre-retirees 55 and older are the most active users of IRAs, with 44% saying they utilize these retirement savings investments.   

Fidelity’s survey found that nearly one quarter (23%) of working respondents have taken a loan from their retirement plan, with many saying they needed to do so for an unforeseen emergency. But when asked about the decision, 29% of these respondents indicated they would not do so again.

Match a Powerful Incentive  

Fidelity surveyed 1,000 current and retired workplace plan participants on their attitudes and behaviors toward retirement savings and found 92% of current workplace participants indicated they chose to participate in their 401(k) because it is important or very important not to lose out on company match dollars, and 90% said the plans are a good tax-deferred way to save.   

The survey found more than half (53%) of working respondents increased their contribution rate in the last five years, despite historic market volatility and economic uncertainty. However, economic conditions still present a challenge for many, with more than half (54%) of working respondents reporting they would contribute more to their 401(k)s if they could.  

When asked why they increased their contributions, 23% of working respondents said they wanted to take full advantage of employer matching dollars, and 38% said they had received a raise or had extra money available.   

Only 23% of working respondents reported ever decreasing their workplace plan contribution percentage. For those who decreased contributions, 46% reported needing extra money, and 9% said it was due to the elimination of a company match. Forty percent of these respondents said they already do – or possibly will – regret the decision to decrease their retirement savings contribution.