Keeping Participants on Track for a Healthy Retirement
Inertia and time limitations hinder some participants from actively choosing the investments in their retirement account, but other participants reveal a different hurdle: their confidence declines as they face the complexities of investment decisions. This lack of confidence isn't a surprise, given that survey results show workers often fall short in their knowledge of investment basics.
Only about half of participants were interested in selecting their own mix of individual funds or were comfortable deciding how much to invest in each fund. Even fewer said they had the time to keep an eye on those investments and make changes as their retirement approaches.
It's no wonder a significant percentage of participants don't properly allocate their assets. This is especially true for employees who've been at a company for several years. These veterans may think their plans are in good shape because of the investment choices they made when they were first hired, but there's a good chance that their allocations are outdated and need to be realigned.
Getting More Mileage out of Inertia
A small percentage of participants decide to change their plan mix at reenrollment, but most employees defaulted into a QDIA stay put—inertia actually works to plan sponsors' advantage in this case. It’s a win-win situation for participants and sponsors.
Reenrollment shouldn’t be the final step when participants lack time or investment knowledge—or even when they don't. It's crucial to keep employees engaged before, during and after reenrollment—even if they don't need to take action. Employees who get regular, effective communication respond more positively to change. Communication best practices include positive, straightforward language, more visuals and a simple call to action.