J.P. Morgan Defined Contribution Survey Reveals Plan Participants Stayed the Course During COVID-19, But Still Want More Help to Plan for Retirement

PR Newswire

NEW YORK, July 15, 2021 /PRNewswire/ -- J.P. Morgan Asset Management today released findings from its sixth research study of plan participants, revealing that while nearly four in five respondents did not change their contributions or investments during COVID-19, more than half feel like they're overloaded with information and don't know where to start planning for retirement.

The 2021 Defined Contribution Plan Participant Survey of 1,281 DC plan participants shows that an increasing number of participants wish they could push a button and completely hand over retirement planning, with this number rising from 55 percent in 2016 to 62 percent in 2021. These findings suggest that plan sponsors and their advisors should feel confident in incorporating proactive investment features to help increase the odds that participants will be able to meet their retirement funding goals.

"It was pleasing to see that while the COVID-19 pandemic disrupted financial markets, workplace trends and spending patterns, participants remained broadly resilient in sticking to their savings plan," said Meghan Jacobson, Head of U.S. Insights at J.P. Morgan Asset Management. "At the same time however, the overarching theme of this year's research is that participants want more help with investments, contributions, and post-retirement income, so employers and advisors should feel empowered to offer features such auto enrollment and reenrollment in target date funds to place participants on a more secure retirement savings path."

"Since 2007, our plan participant surveys have tracked the knowledge, behavior and attitudes of 401(k) participants, with this year's survey standing out as particularly striking given 2020 was characterized by the impacts of the COVID-19 pandemic," said Alexandra Nobile, Retirement Insights, J.P. Morgan Asset Management. "The pandemic highlighted the need to be prepared for the unexpected, with emergency savings accounts prioritized by participants, particularly among younger individuals. Plan sponsors can play a key role in helping participants balance their emergency savings needs with support to help them across the retirement finish line."

Several other key trends emerged in the 2021 Defined Contribution Plan Participant Survey:

Participants think they should be saving more than they are

Participants know that they should be saving more for retirement—they just are not doing it. While three in four survey respondents believe they should be contributing at least 10% of their salary in order to be financially secure in retirement, 65% say they have not contributed the amount they believe they should in the past year.

Emergency savings are top of mind, but saving for retirement remains top priority

When asked to allocate $500 into different savings vehicles, participants allocated to:

Their retirement savings account ($197.80),
An emergency savings account ($134.10),
A program to help pay down debt ($72.90),
An HSA ($60.80),
A transportation savings account ($34.40).

More are being auto-enrolled and auto-escalated—and are ok with it

Participants' favorable/neutral views of auto-enrollment and automatic escalation continues to rise, climbing to 87% this year. Four in 10 survey respondents were automatically enrolled into their current plan, up more than 50% from 2016.

Participants want—and largely expect—their employers to help them save for retirement

Nearly nine out of 10 survey respondents identify retirement benefits as an important factor when deciding to stay with their current employers or consider a new employment opportunity. Similarly, 92% ranked their retirement plan benefits as 'extremely' or 'very' important for improving their financial wellness, followed by health insurance and PTO/vacation/sick leave at 90% and 89%, respectively.

Most participants also want help with overall financial wellness

Nearly seven out of 10 participants believe that their employer has a responsibility to help employees with their financial wellness—this is an even stronger belief for participants under age 30 (80%).

There is notable variability in when and how participants expect to retire

On average, surveyed participants expect to retire at 65. Digging beneath that average, however, shows how highly personal the retirement journey can be for each individual, with 24% expecting to retire at age 64 or younger, 34% at age 66 or older and 19% not sure.

Most are concerned about outliving their assets and unsure about how much they need to accumulate

Nearly seven out of 10 respondents (69%) are concerned about outliving their money in retirement. Less than half (47%) have calculated how much money they need to accumulate to last throughout retirement, and one-third (33%) are not confident about how to estimate how much they will have in their plan when they retire if they continue saving at the same level.

Many would welcome a post-retirement income option in their plan

A large majority of respondents (85%) say that they would likely leave their balances in their plans post-retirement if there was an option to help generate monthly retirement income. This figure grows even higher for younger participants (91% for ages 30-49, 86% for under age 30).

J.P. Morgan Asset Management has undertaken more than two decades of plan participant research and partners with organizations like the Employee Benefit Research Institute to better understand how U.S. households spend and save. The firm's retirement income portfolios leverage J.P. Morgan Asset Management's industry leading insights including the Long-Term Capital Market Assumptions.

Methodology

In January 2021, J.P. Morgan Asset Management partnered with Greenwald Research, a market research firm based in Washington, D.C., to conduct an online survey of 1,281 defined contribution plan participants. To qualify for the study, each respondent had to be employed full-time at a for-profit organization with at least 50 employees, be at least 18 years old and have contributed to a 401(k) plan in the past 12 months.

Survey results have been weighted by age, gender and household income to reflect the overall makeup of the general population of 401(k) plan participants. In a similarly sized, random sample survey of general population respondents, the margin of error (at the 95% confidence level) for the total population in this study would be plus or minus approximately 2.8 percentage points.

About J.P. Morgan Asset Management

J.P. Morgan Asset Management, with assets under management of USD 2.6 trillion (as of 30 June 2021), is a global leader in investment management. J.P. Morgan Asset Management's clients include institutions, retail investors and high net worth individuals in every major market throughout the world. J.P. Morgan Asset Management offers global investment management in equities, fixed income, real estate, hedge funds, private equity and liquidity.

JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services firm with assets of $3.7 trillion and operations worldwide. The Firm is a leader in investment banking, financial services for consumers and small businesses, commercial banking, financial transaction processing, and asset management. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of customers in the United States and many of the world's most prominent corporate, institutional and government clients under its J.P. Morgan and Chase brands. Information about JPMorgan Chase & Co. is available at www.jpmorganchase.com.

J.P. Morgan Asset Management is the marketing name for the asset management businesses of JPMorgan Chase & Co., and its affiliates worldwide.

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