Investors feel confident they’re getting the most out of their 401(k)s but acknowledge not knowing much about them, says Scarborough Capital Management’s 401(k) Pulse Survey.
Of the 1,000 investors with 401(k)s surveyed, 68.7 percent responded they are confident or somewhat confident in investment decisions made for their 401(k), while only 22.7 percent of respondents believe they know how their 401(k) is actually invested. About a quarter of those surveyed said they feel totally uneducated on the subject.
The survey also indicated that, in certain situations, investor behavior is difficult to predict. About an even split of respondents with multiple 401(k)s opted to keep them separate as compared to those who rolled the accounts over. Likewise, about half of all investors decide to work with a financial advisor—regardless of their income level.
The survey also found a higher number of young people dipping into their retirement savings in order to purchase a home. While, generally, few Americans actually dip into their 401(k)s to purchase real estate purchases, a majority of those who did say they would do it again.
Many factors could be contributing to this phenomenon, including the housing market and the state of the economy. But at the same time, young people seem to think their 401(k) will go a lot further than those approaching retirement. Among 18 to 34-year-olds, 46.9 percent think their 401(k) will fund more than a third of their retirement, but only 29 percent of those 55 and older believe the same thing. The general population's thoughts on this are even more scattered, as evidenced below.
According to the survey, men are more likely to put more of their earnings into a 401(k) than women.
Jay Sprinkel, a financial planner with Scarborough Capital Management, said the survey results show investment strategies for clients should differ from household to household. “What these results do point to, however,” he said, “is that understanding your own finances is a lifelong process, and the sooner you start, the better.”