"Some'' or "very few'' employees will be actually financially prepared for retirement, according to a survey of executives who oversee 401(k) retirement plans.
As a result, retirement plan sponsors see improving employees' financial planning for retirement as their top priority this year, according to the 11th Annual 401(k) Benchmarking Survey released Monday.
The survey was conducted by Deloitte, the International Foundation of Employee Benefit Plans (IFEBP) and the International Society of Certified Employee Benefit Specialists (ISCEBS). About 430 respondents were queried electronically. Respondents were evenly distributed by geography, size and ownership status (i.e., publicly or privately held.)
Stacy Sandler, principal, Deloitte Consulting LLP., said this year's survey indicates that Americans have not been saving and investing enough for their retirement.
"Rising healthcare costs and dropping 401(k) balances have taken their toll on employees,'' she said. "Those factors, combined with record levels of personal debt, high unemployment and low levels of personal savings continue to paint a highly concerning picture of retirement readiness."
Retirement plan sponsors say they'll remain steadfast in helping employees prepare for retirement. According to the survey, an estimated 64 percent believe their responsibilities include taking an interest in whether employees are tracking towards a comfortable retirement.
To encourage retirement plan participants to make better use of their 401(k), an estimated 49 percent of 401(k) sponsors are offering features that automatically increase participants' contribution levels. However, 64 percent of retirement plan sponsors queried reported that fewer than 10 percent of participants take advantage of this opportunity.
To motivate plan participants to save more, the Department of Labor (DOL) issued regulations in 2010 that required 401(k) retirement plan sponsors to provide regular plan disclosures to every 401(k) plan participant. Plan providers and plan sponsors must deliver the first round of those disclosures this year.
However, only 39 percent of those retirement plan sponsors surveyed said they are "very informed" and are included in the design process when it comes to their ability to deliver retirement plan information disclosures that began on Jan. 1. An estimated 56 percent of those retirement plan sponsors surveyed said they are "somewhat informed."
"We're hopeful that most companies have fully incorporated required disclosure delivery into the design of their 401(k) plans," Sandler said. "Some 401(k) participants already have their first round of communications in-hand and everyone else should have their plan communications in early May."