How Much?

Major reasons 401(k) participants cite for not saving more money now for retirement are having to pay off debt (49%); not earning enough (36%); and having other spending priorities (26%), according to a survey by J.P. Morgan.

Many participants know they should save more—68% said their 2015 contributions were below what they should have been. In addition, 81% said they are interested in doing financial planning for retirement, but nearly half (45%) do not have a plan.

However, 48% of participants admit they simply spend too little time thinking about and planning for retirement. The survey also found many participants may not be fully engaged in managing their 401(k) accounts—28% have never rebalanced their account, 31% have never made a change to their initial choice of investment options, and 18% have never increased their contribution amount.

Individuals vary in what motivates them to save, but 67% agree that helping them to “understand their numbers”—how much more they should be putting in the plan or should have there today to ensure a financially secure retirement—is an effective way for employers to encourage them to save. At least half (52%) look to their employer for an idea of how much to contribute to their plan, while 41% think they should be notified if their saving is falling short.

Only 38% are very or extremely confident they know how much to put into their 401(k) each year to reach their retirement goals. Thirty-four percent  are very or extremely confident that they know how to estimate the total they will have in their 401(k) at retirement, based on their current saving rate, and only 30% said they know how much monthly income their savings will provide.

According to J.P. Morgan, participants appear receptive to trading some degree of autonomy for plan features and strategies designed to offer a disciplined approach to saving, simplified investment choices and improved asset allocation.

Roughly three-quarters of participants are in favor of, or at least neutral toward, automatic enrollment (75%) and automatic contribution escalation (74%). Roughly two-thirds (67%) are in favor of, or at least neutral toward, a combination of these two features. A large majority (90%) find target-date funds (TDFs) appealing. And most (82%) are in favor of re-enrollment.