Whom to believe? Despite recent headlines to the contrary, the majority of non-retired investors who have a 401(k)—91 percent—say they are satisfied with it as a retirement tool.
According to a joint Wells Fargo/Gallup survey, this includes 44 percent very satisfied and 47 percent somewhat satisfied. Only 9 percent are dissatisfied. When asked what words come to mind when people think about their 401(k), the top three responses are “satisfied,” “good,” and “happy.”
Additionally, among all investors, 59 percent think all businesses, regardless of size, should be required to offer their employees a 401(k) plan.
Also, 40 percent think all workers should be required to deposit at least 3 percent of their income into a 401(k)-type retirement plan; 59 percent oppose this. A majority — 82 percent — oppose increasing fees and penalties for early withdrawals whereas 17 percent favor such penalties.
Further, 401(k) participants are eager to get the most out of their plans. Ninety-three percent of 401(k) participants say it is important that companies provide access to investment advice as part of their 401(k) offerings to employees. Two thirds say this is very important, and another 27 percent consider it somewhat important.
Most 401(k) participants also express interest in a variety of investing advice services that could be offered to their 401(k) plan for a fee. This includes a service that creates a guaranteed income stream in retirement (73 percent); a service that determines how much they can afford to withdraw each month in retirement (70 percent); ongoing advice for allocating their investments (67 percent); and help determining the best age for them to start collecting Social Security (64 percent).
Another evolving change in 401(k) investor sentiment is what participants plan to do with their 401(k) account balance when they retire. When asked which of four actions they are most likely to take upon retirement, 31 percent say they will leave their money in the 401(k) plan while slightly more — 36 percent — say they would roll the money into an IRA. Nearly one in seven (15 percent) say they would withdraw the money, while 6 percent would purchase an annuity.
“These findings represent a vote of confidence in the 401(k) system,” Joe Ready, director of Wells Fargo Institutional Retirement and Trust, said in a statement. “Investors really value their workplace 401(k) and believe others should have access to a 401(k). In addition, they are starting to view it as a good place to invest during their retirement years.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.