For April Fool’s Day, Lincoln Financial Group is urging plan sponsors to make sure participants aren’t fooled by retirement plan and savings misconceptions—including some misunderstandings which plan sponsors might not have thought about addressing in their education efforts.
Lincoln’s survey of people saving for retirement found many are confused about several key areas, including how much to save, rolling over money from retirement accounts and how to prioritize paying off debt versus savings.
For example, 18% of survey respondents said the statement “As a general rule, if you save enough in your workplace retirement plan to meet the employer match, you are probably saving enough to be on track for a comfortable retirement,” is true. Twenty-two percent indicated they don’t know if this is true or false. These percentages rise to 31% and 32%, respectively, for respondents younger than 24.
Nearly one-quarter (23%) indicated they believe that they can only change the amount they contribute to their retirement plan during benefits open enrollment, and 20% said they don’t know. This was another misconception more widely held by participants younger than 24. But it was also a prevalent belief among participants ages 35 to 44 and 65 or older.
More than one-third (37%) of employed U.S. adults agreed with the statement, “I don’t know what I should be looking for when I get the quarterly statement from my workplace retirement savings plan or log in to view my balance online.” This jumps to 43% among female respondents.
Nearly half (48%) of respondents agreed with the statement, “I’ve thought about moving money from an old employer’s 401(k) into my current employer’s 401(k), but it seems like it would be too much of a hassle.” Likewise, nearly half (47%) agreed with the statement, “Paying down my student loan debt as quickly as possible is more important than saving for my retirement.” Lincoln notes that this could be true or false, depending on a person’s situation.
“Our research shows that while participants understand the importance of saving for retirement and see it is a top financial priority, there is still a need for ongoing education to help them achieve their financial goals,” says Aaron Moore, senior vice president, retirement plan client engagement, Lincoln Financial Group.
In addition to adding more education, Lincoln recommends plan sponsors offer personalized advice, financial wellness tools and digital tools such as calculators.
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