2010 National 401(k) Evaluation
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Welcome to the 2010 edition of The Financial Engines National 401(k) Evaluation.
When we first evaluated the savings and investments of nearly one million 401(k) participants in the initial National 401(k) Evaluation in 2008, no one could have imagined what the next two years held in store. The U.S. economy weathered a serious financial crisis, with the stock market and participant 401(k) accounts taking significant hits. On a brighter note, many employers embraced the automatic 401(k) and Qualified Default Investment Alternatives (QDIAs) finalized by the U.S. Department of Labor in late 2007.
This report illustrates the impact of those very different events and highlights both the vulnerability and great potential of the 401(k), the cornerstone of the American retirement system. It demonstrates what is working with the 401(k) and what needs more work, which participants are taking advantage of their 401(k) plans, and which participants are making costly mistakes.
New Retirement Income Section and Plan Design Analysis
Understanding what participants are doing now with their 401(k)s is useful, but it's time to also start looking at what matters: how are people going to live in retirement? This year, in addition to assessing more than 2.8 million participant portfolios, the 2010 edition of the National 401(k) Evaluation includes a new Retirement Income section that attempts to determine how close (or how far) participants are to achieving their retirement income goals and an analysis of the impact of automatic 401(k) plan design on participant portfolios.
Due to the decline in defined benefit pension plans, it now takes a series of good decisions throughout a participant's career to achieve a successful retirement. Without help and without a plan, chances are good that many participants will not have enough assets to comfortably retire at age 65. Plan sponsors can play a very influential role through plan design to help participants succeed.
The 2010 National 401(k) Evaluation is the largest and only data set of its kind to combine participant saving and investing decisions with plan design, salary data, and retirement income forecasts across multiple 401(k) providers. We hope that you find this analysis informative and useful as we all work together to get 401(k) participants on the right track.
Jeff N. Maggioncalda
President and CEO