RIP rollovers?
A recent survey from T. Rowe Price found that the overwhelming majority of 401k participants expressed interest in keeping their savings in their employer plan upon retirement.
Of the 83% who said yes to staying in the plan, 30% said they currently have plans to keep their savings with their employer, and 53% said they would consider keeping their saving in their employer plan if it offered solutions to help generate income.
The survey, which focused on financial attitudes and behaviors, found that the preference to keep assets in plan is true across all generations, the strongest with millennials at 88%, followed by Generation X (83%), and baby boomers (77%).
Meanwhile, 61% of participants say their employers have not communicated the advantages of leaving the money in the plan and many are confused or unaware of their options:
- Eight in 10 participants have a goal to manage a plan that converts their assets into an income stream in retirement, but when asked what type of retirement income products they would use to do so, they are unsure.
- One in four participants were not sure if they should invest in a managed payout, an immediate annuity, deferred annuity, or if they should manage their money on their own.
Pandemic’s influence
“Creating more awareness around retirement income products and strategies has become increasingly critical as more and more defined contribution savers approach retirement, and especially in recent months, while many individuals faced financial hardships caused by the global pandemic, ” Kevin Collins, head of retirement plan services at T. Rowe Price, said in a statement. “When it comes to retirement income, there is no simple, one-size-fits-all solution—and determining the appropriate strategy can be a complicated task for many individuals, educating participants on the types of products that are available as well as providing them with tools and support can help them make informed choices that best fit their specific needs and preferences.”
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.