Nearly all American workers rely on their DC plans for retirement, but many lack the confidence to efficiently manage the savings for their golden years, a new report reveals.
According to a survey commissioned by Schwab Retirement Plan Services, as many as 89% of employees in the United States say they count on themselves for retirement income, and just 5% expect to rely mostly on the government.
That’s because 61% of survey respondents say their DC plans are either their only source of retirement savings or the largest one. Fifty-five percent of employees have increased their savings rate in the last two years, and 70% report that their DC plan is in better shape now than ever before.
Despite this self-reliance, many respondents lack confidence about their plans. Fifty-two percent find explanations of their DC investments more confusing than explanations of their healthcare benefits (48%). Fifty-seven percent wish there was an easier way to figure out how to choose the right DC investments. Forty-six percent don’t feel they know what their best investment options are, and 34% feel a lot of stress over correctly allocating their DC dollars.
As a result of this confusion, 61% of employees want personalized investment advice for their DC plans on everything from asset allocation to risk tolerance and retirement income planning, according to the survey.
The study shows that investment confidence almost doubles when employees receive help from a financial professional. Approximately one-third of participants say they’re confident about making the right investment choices based solely on their own ability—compared with 61% if they also had professional help.
The nationwide survey polled more than 1,000 DC plan participants.
Related articles: