Important information about the popularity and confidence Americans have in their 401k and related decided-contribution (DC) plans was released by the Investment Company Institute (ICI) on Tuesday.
“Americans were confident in the ability of DC plans to help individuals meet their retirement goals.”
Seventy-five percent of Americans had favorable impressions of 401k and similar retirement plan accounts in fall 2021, in line with 76% in fall 2020 and fall 2019, ICI found in its 14th survey of American Views on Defined Contribution Plan Saving.
Among individuals expressing an opinion, 89% had favorable impressions of 401k plans, with 43% agreeing that they had a “very favorable” impression, the report added.
“Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts,” the authors wrote.
Views on features of defined contribution plan saving
According to ICI, Survey responses in fall 2021 indicated that individuals whose households own DC accounts “appreciate key features of DC plans,” similar to previous survey results.
- Nine out of 10 DC-owning individuals agreed that these plans helped them think about the long term and made it easier to save. Nearly five out of 10 (45%) DC-owning individuals indicated that they probably would not be saving for retirement if not for their DC plans.
- Nearly nine out of 10 DC-owning individuals agreed that the tax treatment of their retirement plans was a big incentive to contribute.
- Nearly all DC-owning individuals agreed that it was important to have choice in, and control of, the investments in their DC plans. Nearly nine out of 10 indicated that their DC plan offered a good lineup of investment options.
Confidence in defined contribution plan accounts
Americans—whether or not their households had retirement accounts—were confident in the ability of DC plans to help individuals meet their retirement goals.
- Among individuals whose households owned DC accounts or IRAs, more than eight out of 10 (84 percent) indicated that they were confident that DC plan accounts could help people meet their retirement goals.
- Among individuals whose households did not own DC accounts or IRAs, more than six out of 10 expressed confidence that DC plan accounts can help people meet their retirement goals.
Views on proposed changes to defined contribution plan accounts
In addition, Americans’ views on policy changes revealed a strong preference for preserving retirement account features and flexibility.
- A strong majority of Americans disagreed with proposals to remove or reduce tax incentives for retirement savings.
- In fall 2021, nearly nine out of 10 disagreed that the government should take away the tax advantages of DC accounts, and about nine out of 10 disagreed with reducing the amount that individuals can contribute to DC accounts.