While a new T. Rowe Price 2022 Year-End report shows 401(k) plan participants have largely stayed the course and not significantly changed their loan, distribution, or withdrawal behavior despite the recent turbulent market environment, that doesn’t mean there aren’t some interesting findings about participant behavior in the research released today. Here are five examples:
Participants consumed nearly three times more digital retirement educational content in 2022 than in 2021
• Participants consumed nearly three times more digital retirement educational content in 2022 than in 2021. The most significant increase was with participants over 50 years old consuming content focused on retirement savings.
• Participants have taken slightly more hardship withdrawals (4% more in 2022 vs. the 10-year average) but the amount of those withdrawals has decreased by over 20% compared to 2021.
• Participants with 100% invested in a target date product were 15 times less likely to exchange than those with 0% invested in a target date product during Q4 2022.
• Participants who take multiple loans per year have a deferral rate that is lower by an average of 2.3 percentage points than those who do not take multiple loans.
• Participants who are near retirement and have not taken a hardship withdrawal have an average of three times more in savings than their counterparts who have taken a hardship withdrawal.
Baltimore-based T. Rowe Price published the report detailing plan sponsors’ and participants’ reactions to increased inflation and market volatility in 2022. Similar to the 2022 mid-year edition of the report, participants have not significantly changed their loan, distribution, or withdrawal behavior.
“It’s encouraging to see that participants are largely staying the course amid inflation and market volatility,” said Rachel Weker, senior retirement strategist for Retirement Plan Services at T. Rowe Price. “Plan sponsors can support participants by offering financial wellness programs that include savings content and tools, and by implementing strategic plan design solutions to continue to encourage these positive behaviors.”
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