People understand the importance of saving for retirement, but their behavior often does not match their intentions.
Some 35 percent said they were not increasing their saving because they did not want it to affect their current quality of life, according to a new survey on retirement readiness commissioned by Schwab Retirement Plan Services. And 29 percent have either decreased or made no change in their 401(k) contribution levels in the past two years.
Perhaps that's because the informational materials they receive on their 401(k) plans are often opaque. Nearly half of people surveyed (47 percent) said the information they receive on the menu of 401(k) investment options is more confusing than the materials that explain their health benefits.
Professional guidance might help. In fact, 67 percent of those surveyed said they would like advice on choosing 401(k) investments, and 49 percent believe they would see improved investment performance with professional help.
But employers have only recently started automatically providing personalized investment advice unless employees opt out, said Catherine Golladay, vice president of participant services and administration at Schwab. Among Schwab's clients, 40 to 50 percent offer automatic enrollment and about 25 percent automatically increase contribution levels (with some employers doing both), but only about 10 percent provide the automatic investment advice.
Among people surveyed, only 12 percent are receiving professional investment advice—a figure in line with what Golladay observed. The survey, by Koski Research, was based on 1,000 interviews in May and June with employees currently contributing to their 401(k) plans and working for organizations with at least 25 employees.