A new survey on retirement savings illustrates a jarring example of just how confused many workers are about how to go about it:
- Come again? The takeaway stat is that 59% of people who are not participating in a 401k actually think they are participating in a 401k.
The survey of 1,100 workers of various ages and incomes was conducted by
Principal Financial Group, which sought to find out why people were not enrolling in the savings plans offered by their employers. All of the 1,100 fell into this camp. But they started getting baffling responses from respondents telling them, incorrectly, that they were enrolled. Upon zeroing in on this group, the survey discovered:
- 49% thought they were automatically enrolled, when they had to opt in.
- 41% thought they had opted in, when they hadn't.
- 70% were under the impression that money was being deducted from their paychecks and funneled into the 401k plans.
- Most of these workers had participated in a previous employer's 401k plan, which may have contributed to their confusion over the paperwork.
"We have a very complex system," Chris Littlefield, president of retirement and income solutions at Principal Financial, tells USA Today. "People change jobs, and every plan at every employer is different." The confusion makes clear that employers should do a better job communicating with their employees about all of the above, he says. (More retirement savings stories.)
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