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)


What do you think?

View comments

Recommended for you

Featured video


The bizarro world of DOL and SEC rule supporters

Managing editor Christina Nelson talks with senior reporter Mark Schoeff Jr. about why groups that supported the Labor Department's fiduciary rule oppose much of the SEC advice package, and vice versa.

Latest news & opinion

10 most affordable U.S. cities for renters

Here are the U.S. cities that are most affordable for renters, according to Business, which compared the cost of rent to average salaries.

9 best - new - financial adviser jokes

Scroll through for nine new financial adviser laughs.

Fidelity CEO says zero-fee funds aimed at expanding its universe

Johnson says way to prosper in financial services is 'by building relationships.'

SEC advice rule contains a huge hole

Jay Clayton aims to clear up investor confusion by drawing a distinction between brokers and advisers in the agency's proposed package of revised standards. But where do dual registrants fit?

9 signs it's time to fire your client

Here are signals that a client should be asked to leave, according to experienced financial advisers.


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 It'll help us continue to serve you.

Yes, show me how to whitelist

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


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print