October 9, 2012
401(k) Education Missing A Target
Dennis Ackley says he doesn’t get a lot of holiday cards from the mutual fund industry.
The Kansas City, Missouri, consultant has become a well-known critic of the 401(k) materials that funds provide to employers, which usually leave the complex job of retirement planning to the workers to figure out. When speaking to a room full of 401(k) plan sponsors, he has a unique way of getting his point across. Ackley hands out sheets of paper similar to what’s shown here and asks them to wad them up and throw them at the target.
The problem – for the plan sponsors in the audience – is that Ackley doesn’t give them a target.
“Most of them are just kind of befuddled by the whole thing.” Befuddlement, he tells is audience, “is what young employees experience sitting in a 401(k) meeting.”
Ackley believes 401(k) education usually lacks one basic piece of information required for employees to get on the right track for retirement. The first step, he said, “is get a target.”
To establish personal targets for each employee, Ackley said plan sponsors might help them set goals for the total assets they wish to save by the time they retire or for how much income they can expect their 401(k) retirement savings to generate.
In a recent employer survey by the benefits consulting firm Callan Associates, 42 percent said that they gave employees retirement-income projections. And that figure sounds high, perhaps because Callan surveys primarily large companies.