What’s your guess? Did the percent of employees contributing to IRAs in 2010 rise or fall vs. 2009? If you said ‘increase,’ you’re right. According to a study conducted by the Principal Financial Group in October,* 85% of survey respondents contributed to 401(k) plans in 2010 vs. 81% in 2009. And, the contribution amount is increasing by a larger share as well.
- 18% of respondents increased the contribution amount in 2010, compared to 13% in 2009. Factors driving the increase are a growing uncertainty about Social Security, combined with an optimistic view of the future.
- 45% of the survey’s workers and 43% of retirees indicate that they are very or extremely concerned about the future of Social Security. Saving more in a retirement account means that they will be less likely to rely on Social Security as the primary source of income.
- The survey also showed a growth in positive outlook for the economy and personal finances from the third quarter to the fourth quarter 2010. 40% of workers and 39% of retirees believe that the economy will improve in 2011.
For plan sponsors, your 401(k) is an important benefit for employees. Making sure that your investment choices are well-researched and managed can go a long way toward increasing employee satisfaction and confidence.
Happy New Year!
*Source: The Principal Financial Group Well-Being Index (SM) – Summary 4th Quarter 2010