“We are encouraged that employees who participate in DC plans know what is important, but they simply don’t know what to do,” says Kristi Mitchem, senior managing director and head of global defined contribution for SSgA. “Employers want their employees to be financially successful, not necessarily financial experts. We need to turn confusing tasks into clear steps, not with investment lingo, but with simple, clear descriptions and explanations. We also need to take advantage of tools that simplify, like automatic savings and professionally managed target-date funds.”Other survey findings include:
- About 40% of respondents expressed uncertainty about the risk and return characteristics of common investments in 401(k) plans, including international equity funds, stock index funds, and stable value funds.
- About 67% know adjusting their investments over time is important, but only 30% say they know how to do this.
- About 82% think it’s important to know how to make retirement savings last a lifetime, but just 28% say they know how to achieve this.
- More than half of survey respondents admitted they don’t know what target-date funds are, or are not familiar with how they work.
Employees do not need to know everything about investing for retirement, they just need to know the right things.
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