T. Rowe Price: 401(k) Plan Participants Report More Retirement Confidence

About this update from T. Rowe Price Group, Inc.

[{"type":"text","content":"BALTIMORE, Jan. 23, 2020 /PRNewswire/ --\nNEWS\nIndividuals who participate in 401(k) plans are more confident about their retirement than those who do not participate, according to a recent study focused on financial attitudes and behaviors conducted by T. Rowe Price. The 5th annual study, \"Retirement Savings and Spending,\" found that regardless of income and assets, preretirees aged 50 and older who participate in a 401(k) plan are 16% more likely to be confident about their retirement than those who do not participate. \n\"Our findings support that a 401(k) plan is a game-changer in terms of shaping healthy financial behaviors as well as ultimately resulting in more financially confident individuals,\" said Sudipto Banerjee, vice president of retirement thought leadership at T. Rowe Price. \"These plans provide a structure that encourages saving by allowing people to pay themselves first. We believe that 401(k)s are an important, foundational first step toward a successful retirement.\"\nKEY FINDINGS\nRegardless of household income, individuals with access to 401(k) plans save significantly more. Among low income households making $25,000 or less, 401(k) participants saved 10 times more on average than their peers without access to a plan and 20 times more than those who have access but choose not to participate. Eligible nonparticipants are worse off than people without access to a 401(k) plan. Plan participants have a median household asset balance of $172,000 compared to the median of $7,000 for workers without plan access. Eligible nonparticipants have a median asset balance of $2,000. 401(k) plan participants report higher progress toward major financial objectives. Plan participants are more likely than eligible participants to report higher progress toward a variety of financial objectives such as reducing student loans (72% and 38%, respectively) and saving for emergencies (73% and 41%, respectively). Additionally, plan participants are twice as likely to save for retirement via traditional IRAs or other accounts.\"We believe that employer savings plans like 401(k)s can help provide a foundation for long-term savings for people who wouldn't normally do so on their own. Those who don't have access bear more responsibility to seek other ways to save for retirement. We were pleased to see policymakers pass the SECURE A...

More updates from T. Rowe Price Group, Inc.