Which 401(k) Plan Features Boost Retirement Readiness?

401k, auto-escalation, auto-enrollment, 401k advisor

Plan design has a lot to do with it.

New research suggests 401(k) plan sponsors may play an even bigger role in American workers’ retirement outcomes than they realize.

According to a study by Empower Retirement, the features included in plan designs heavily impact participants’ chances of securing a successful retirement. More specifically, “an employee match that’s understood by workers, the availability of professional advice, auto features and plan access are all shown to be crucial elements to increasing retirement preparedness,” the company explained in a statement.

Its newest white paper, Scoring the Progress of Retirement Savers, analyzed data from a survey of 4,000 working adults under age 64 who are participating in a retirement plan. Empower calculated results according to its Retirement Progress Score (RPS), “which is a numeric estimation of the percentage of working income that American households are on track to replace in retirement.”

Results indicate the following plan features have resulted in improved retirement confidence and preparedness:

Collaboration between employers and employees is an essential ingredient necessary to achieving better retirement preparedness,” Edmund F. Murphy III, president of Empower Retirement, said in a statement. “After making the crucial decision to offer a retirement plan, employers should consider plan design features that have proven to be effective.”

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