Workers Have Second Thoughts About Managing 401(k) Plans

But even the Generation Y men who participated were more likely to favor an auto-pilot approach than a do-it-yourself approach, the Prudential researchers report.

In the 1970s and 1980s, when inflation started eroding the purchasing power of defined benefit pension plan benefits, many employees complained about lack of control over their retirement income.

Employers responded by setting up 401(k) plans that let employees set their own savings rates and allocate their own assets.

But now, only 31% of the baby boomer and Silent Generation retirement plan participants surveyed say they will have enough savings to quit work at the age hoped, and only 14% of the older non-plan participants surveyed expect to have enough savings to quit work on schedule, the researchers report.

When the survey team told survey participants about a package of several different automatic plan features–automatic enrollment, a minimum initial contribution rate, an automatic contribution escalation program, automatic asset allocation, and automatic annuitization once plan members begin collecting retirement benefits–about 76% of the older participants said they would recommend that auto-pilot package to younger workers.

When the survey team described the auto-pilot package to the Generation Y participants, 48% of the young men said they preferred the auto-pilot package, and 39% said they preferred a do-it-yourself approach.

About 59% of the Generation Y women said they preferred the auto-pilot package, and 23% said they preferred a do-it-yourself approach.