Investors don't have a clue about using 401(k) savings, Cerulli says

Advisers and plan sponsors should implement campaigns to educate participants nearing retirement about their options

Jun 29, 2018 @ 12:14 pm

By InvestmentNews

A new study from research firm Cerulli Associates finds that most investors who have accumulated a retirement nest egg in a 401(k) plan are "clueless" about how to use the money.

When asked what they will do with their accumulated savings, one quarter of respondents explicitly answered, "I don't know," Cerulli said.

Another quarter said they "will ask my existing financial adviser for advice." Cerulli said the latter answer is probably a marginally more prepared version of "I don't know."

"In sum, this suggests that half of 401(k) plan participants have no idea what to do with the savings they have diligently set aside for retirement," Cerulli said.

The survey found that 8.5% of respondents would hire a financial adviser to help them.

For advisers specializing in the plan business, Cerulli suggests working closely with plan sponsors to identify the sponsor's preferences when it comes to retaining the assets of retired participants in the plan and ensure these preferences are reflected in the plan's available distribution options.

Advisers and sponsors also should implement targeted campaigns to plan participants approaching retirement to explain their options upon reaching retirement, Cerulli said.

Advisers generally can find many opportunities in helping clients support a thoughtful and sustainable drawdown strategy, Cerulli said.

In its study, Cerulli found that the average retirement age for men and women among 401(k) plan participants was 64.6 and 64.2, respectively.

"This is somewhat troubling given that women, on average, are expected to live almost three years longer than their male counterparts," Cerulli said, noting that given the average retirement age and average life expectancies, "Americans will need enough retirement savings to fund their living expenses for almost two decades — a daunting prospect."

(More: Guaranteed income tops boomers' retirement wish list)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Retirement: it's no longer about feeding pigeons from a park bench.

Today's retiree's expect so much from retirement than previous generations and advisers are in prime position to help their clients what's important and what's not.

Latest news & opinion

Genstar Capital buys majority stake in Cetera Financial Group

The private-equity firm has previously invested in such companies as Mercer Advisors and AssetMark.

Cetera Financial Group close to announcing its acquisition by private equity

Details of sale to one or more P-E firms could be announced as early as today.

10 best states for retirement

When it comes to places to retire, here are the 10 best states for enjoying your golden years.

Focus Financial raises goal for IPO to $600 million

Company's revised goal from $100 million could be a sign RIA valuations are rising.

CFA Institute adding crypto, blockchain to curriculum

Subjects will be added to its Level I and II coursework for the first time next year.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print