Dear Retirement Savers: Feel No Shame When Asking for Help
Asking for directions can be a humbling experience. Relying on others to help us reach a destination can force us to see things in a new perspective. We may realize that our current path is wrong or that others truly know more than we do. The longer we wait to admit we need help, the more we veer off course, especially when traveling toward retirement.
The reluctance to ask for help is not restricted to the road. Despite most participants saying that 401(k) plans are a “must-have” benefit from their employers, only 24 percent say they are likely to have someone help them manage their investments, according to a new survey from Charles Schwab. In comparison, 87 percent are likely to have someone change the oil in their cars.
Retirement savers need to realign their financial priorities. The average participant in the survey spent roughly the same amount of time researching and choosing investments for their 401(k) plans as they do investigating cell phones, even though retirement can last for 30 years or longer and cell phones are often traded in every year or two. Furthermore, people spend more than twice as much time researching their car purchases than they do evaluating their 401(k) investment options.
“Today, responsibility for managing their own retirement investments rests squarely on workers’ shoulders,” said Steve Anderson, head of Schwab Retirement Plan Services, in a press release. “In fact, the survey finds that nine in ten participants are relying on themselves for the money needed to live in retirement and a majority are using their 401(k) as their primary or sole source of retirement savings.”
How many retirement savers are lost? Charles Schwab found that 50 percent of participants believe their 401(k) plans are more confusing than their health care benefits, while one in three admit they feel a lot of stress when it comes to allocating their retirement dollars. Almost six in 10 wish it was easier to choose the right 401(k) investments. Yet less than one quarter of participants with access to professional advice say they use it. Among those not using advice, roughly half believe they would achieve better investment results if they did so.
“Most people see a doctor when they’re sick or a mechanic when their car isn’t running, so why not seek professional help to manage something as important as their 401(k)?” says Anderson. “In many cases, there is a significant difference between how much people need for a comfortable retirement and what they are actually saving. With all of the information providers have about 401(k) participants — age, salary, account balance, savings rate, and more – why leave them on their own, or lump them into target date funds based only on their age when so much more can be done to personalize their savings plans? We know that professional advice can play an important role in helping people save more to bridge the retirement gap.”
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