When it comes to retirement saving plans, Americans can have a variety of options. For millions, employer-sponsored plans are a primary savings vehicle – especially 401(k) plans. It’s no surprise as to why. A 401(k) plan offers a number of benefits, including tax-deferred accumulation, a high contribution limit for pre-tax savings, and in many cases an employer match.
As retirement nears for many Americans, it brings up an important question: How will their 401(k) plan prepare them to enjoy a comfortable, meaningful post-work lifestyle? Even with these benefits, many Americans are dissatisfied with their 401(k) because they perceive shortfalls in other areas. Limited investment options, low access to personal financial advice, and lack of money control are just a few investor frustrations.
There’s also the issue of subpar financial knowledge. Surveys indicate many people don’t understand 401(k)s, even though these plans dominate the workplace savings landscape. According to the Investment Company Institute, as of December 31, 2016 Americans held $7 trillion in all employer-based defined-contribution plans. Of this, $4 trillion was in 401(k) plans – or 57.1% of total defined-contribution plan assets.
