The average 401(k) account balance is $91,100, but you can probably do better, right?
That's the idea behind peer comparison tools that let retirement savers compare themselves against their co-workers, people of similar income or their neighbors. It's an effort to nudge retirement savings levels higher by employing the social comparison theory, which proposes that we judge our self-worth in part by how we measure up to others.
Such tools can produce meaningful results. For example, Empower Retirement, which administers $440 billion in assets for more than 7.5 million retirement plan participants, found that participants who used its peer comparison tool raised their average deferral rate from 7 percent to 9 percent on average. Empower's tool allows savers to make savings comparisons based on age, gender and income.
Voya Financial recently rolled out its latest peer comparison tool. Voya, formerly ING U.S., which pioneered the use of peer comparison tools for retirement plans in 2009, claims that plan participants who have used the new tool are now contributing 7.3 percent on average compared to the 5 percent average for participants in small and mid-size retirement plans.