J.P. Morgan Asset Management has officially published the results from its 2024 Defined Contribution (DC) Plan Participant Survey, which focused on assessing the dynamic changes in retirement savings and the evolving expectations of plan participants. According to certain reports, more and more participants are now seeking robust retirement income support and enhanced resources for financial wellness and education. Furthermore, the report in question would reveal distinct preferences and behaviors across Baby Boomers, Generation X, Millennials, and Generation Z, while simultaneously highlighting the synergies between participant responses and sponsor views. Talk about the whole development on a slightly deeper level, after surveying 1,503 participants to gauge their perspective on four main areas: general savings and employer-sponsored benefits, advice, plan design and retirement income, the survey discovered that nine in every ten participants found financial wellness programs to be valuable. Next up, the survey discovered that majority of participants found key SECURE 2.0 provisions, such as employer-sponsored emergency savings and student loan matching to be appealing (69% and 66%, respectively). A more concerning detail, however, would come to the fore once we touched upon that more than 39% respondents were found to lack basic emergency savings, marking a major uptick from the 27% reported in 2021. Hence, the plan sponsor implications proposed by JP Morgan’s survey here include the consideration to offer employees financial wellness support, like emergency savings, student loan debt matching, and financial education.
Furthermore, the survey would reveal that, even though three out of four participants express a desire for professional advice on investment decisions, only half are currently receiving it. This was joined by the fact that six out of every ten participants were found to wish for an easy button where they can completely hand over retirement planning and investing to a professional. Keeping all this in mind, the study’s plan sponsor implications would include educating participants about the value of professional guidance and offering it to plan participants.
“While it’s no surprise that participants seek retirement income support, it’s particularly noteworthy that guaranteed income options are highly attractive and can even motivate increased savings,” said Alexandra Nobile, Retirement Strategist at J.P. Morgan Asset Management. “Retirement plans continue to be a top priority for employees when evaluating employer benefits. It’s encouraging to see that SECURE 2.0 provisions, including emergency savings and student loan matching, are resonating strongly with plan participants.”
Moving on, the development also told us how 63% of participants openly acknowledge that they are not saving enough for a financially secure retirement. Alongside the stated gap, though, we would get to spot high favorability towards automatic enrollment and contribution escalation, with nearly nine out of 10 participants supporting these features. Not just that, literally 89% participants claimed to have a strong interest in target date funds. These findings, on their part, would call for plan sponsor implications like using automatic features to increase participation and contribution rates and given the strong interest, consider defaulting into target date funds. Hold on, there is more, considering we still haven’t acknowledged that, despite expected retirement age being around 65, the data available at our disposal shows how many may retire earlier due to unforeseen circumstances. This could possibly be a big reason why nearly 77% individuals reported a willingness to create one steady retirement income stream. However, across the group in question, less than half have, thus far, even calculated their savings needs.
Apart from them, nine out of ten respondents expressed interest for in-plan solutions that provide guaranteed income in retirement. More on the point of guaranteed income would reveal how it was also a top motivator for participants to contribute more to their retirement plans. To complement such a picture, the study would propose plan sponsor implications in the form of exploring retirement income offerings.
