Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 28th, 2018
Benefits & Administration
401(k) Participants With Loans Save Less Than Those Without
Twenty-five percent of 401(k) participants have an outstanding loan against their account, according to Alight Solutions. Three-quarters of employers are worried about the level of participant loans in their 401(k) plan. Alight Solutions found a nearly $100,000 difference in 401(k) savings between participants who had loans outstanding and those who did not.Read more >
Unpredictable Retirement Age Calls for New Planning
Researchers are increasingly finding that people underestimate the age they will—or will need to—retire. Delaying retirement can have a significantly positive effect on the probability of an investor achieving retirement success; however, Morningstar found the uncertainty around retiring earlier than expected results in much lower probabilities of success for people planning to retire after age 61. Morningstar suggests individuals and their advisers must incorporate retirement age uncertainty in their retirement planning by focusing on saving.Read more >
ICI Finds Patterns in Retirement Plan Participant Loan Activity
Following the recession of 2008/2009 defined contribution (DC) plan participant loan activity went from a low of 15.3% of participants with an outstanding loan in 2008, when the Investment Company Institute (ICI) first started its survey of DC plan recordkeepers, to a high of 18.5% of participants with an outstanding loan in 2011. Since then, loan activity has edged down, reaching 16.4% of DC plan participants with an outstanding loan in the first quarter of 2018. ICI finds that two factors appear to influence DC plan participants’ loan activity: reaction to financial stresses and a seasonal pattern.Read more >
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