Survey indicates surprising 401(k) trends

A recent survey of defined contribution plan participants conducted by MassMutual’s Retirement Services Division revealed unexpected findings about participant attitudes and approaches toward investing – and some striking differences based on gender.

Surprisingly, 75.8% of participants surveyed were optimistic about the stock market, believing that performance will improve in the next 12 months, compared with 7.6% who think it will decline. MassMutual conducted the online survey of more than 1,000 of its retirement plan participants between November 15, 2009 and January 15, 2010.
 
While women were just as optimistic as men relative to the market outlook, women were significantly less confident in making their own investment decisions (32.5%) compared with men (47.8%). Likewise, more men enjoy managing their investments (61.5%) than do women (48.1%). More women also prefer to spend as little time as possible on investment decisions (39.3%) compared with men (28%). While, overall, 70.9% of participants enjoy learning about investments compared with 8.2% who don’t, a higher percentage of men (75.4%) enjoy learning versus women (63.1%).
 
“Regardless of gender, being able to retire is the greatest concern among 401(k) participants (37.3%) – more than double the concern about healthcare costs (16.0%), job security (14.5%), and managing debt (12.2%),” said Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman and CEO of MassMutual International LLC.
 
“While almost nine times as many participants believe that they need to save more for retirement as don’t (72.9% vs. 8.2%), women are more concerned that they won’t have enough saved (70.3%) compared with men (63.2%),” Sarsynski said.
 
Another interesting finding from the study is the manner in which both male and female participants prefer to learn about retirement planning.
 
“By an overwhelming majority, participants prefer to receive their information from their retirement plan provider and financial advisor (67% combined) than other sources,” Sarsynski said. “It is incumbent upon providers and financial advisors in the retirement space to provide the information necessary to help both men and women make good decisions.”
 
In terms of approach to retirement planning in the current economy, overall, 40.3% reported becoming more conservative, 32.9% became more aggressive, and 26.8% have not changed their approach. Men who changed their approach were fairly evenly divided between those who became more conservative (39.0%) and those who became more aggressive (35.3%).
 
Women were far more likely to take a more conservative approach (42.5%) than to be more aggressive (27.7%), and a review of their account balances shows this to be true. Average account balances of female participants showed far less volatility than those of men, reflecting their more conservative investment selections and indicating their actual behavior lined up with their survey responses.
 
Only 10.2% of surveyed participants currently work with a personal financial advisor. However, the percentage (30.0%) of participants who are more likely to seek help from an advisor as a result of the recession is more than double the percentage who are less likely (12.7%), with the remainder no more or less likely to seek help than before. Significantly, women are almost 25% more likely to already work with an advisor than men (11.9% vs. 9.6%) and are almost 20% more likely than men to seek help as a result of the recent economy (34.1% vs. 28.8%).
 
MassMutual’s participant behavior data supports the findings of the survey. MassMutual’s average participant balance was up 29.1% in 2009 vs. 2008 and participants are displaying increasing confidence in equities. As of year-end 2009, participant assets in bonds and stable value funds declined slightly, while assets in equities and asset allocation investments as a percentage of total assets grew to 62.3%, a high for the year. Investments in MassMutual’s asset allocation options increased from 18.6% at year-end 2008 to 21.6% at year-end 2009, a 16% increase – and the highest level of assets in asset allocation funds as a percentage of total retirement assets at MassMutual to date.  
 
MassMutual’s Retirement Services Division serves approximately one million participants across more than 6,000 plans. For more information regarding MassMutual Retirement Services, please call your retirement plan advisor or contact MassMutual at (866) 444-2601.
 
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