Any congressional assault on 401(k)s in the name of deficit reduction seems particularly shortsighted as 72 million baby boomers rush toward retirement without much savings.
Talk about the potential for economic meltdown.
Fidelity Investments, which manages 401(k)s for 11 million workers, recently surveyed them about their retirement planning and discovered that 55 percent wouldn't be saving for retirement at all if it weren't for their workplace 401(k)s.
- Nearly 20 percent currently enrolled in workplace plans report they have no retirement savings at all outside this key retirement benefit.
- When asked about top reasons for participating in the plans, 92 percent of current workplace participants indicated it was important or very important not to lose out on company match dollars, and 90 percent felt the plans were a good tax-deferred way to save.
- More than 54 percent of working respondents report they would contribute more to their 401(k)s if they could.
- About 23 percent of working respondents have taken a loan from their retirement plan, with many saying they needed to do so for an unforeseen emergency. But when asked about the decision, 29 percent of these respondents indicated they wouldn't do it again.
Meanwhile, Vanguard, which competes against Fidelity in the 401(k) management business, analyzed who saves what among its customers and discovered that employees of small utility firms -- those with fewer than 1,000 workers -- had a 92 percent participation rate in their 401(k)s. Large mining companies -- those with more than 1,000 employees -- came in second with an 88 percent participation rate).
Overall, among the companies for which Vanguard manages plans, 74 percent of workers participate. I wonder what keeps the other 26 percent from saving. If there's an employee match, failure to save at least enough to get the match is leaving money on the table. Something I'm too cheap to do.