What if people in your age and income brackets put an average of 8 percent of their salaries into their 401(k) plans, and the top 10 percent squirreled away 15 percent?and you could see it all on your plan’s website?
And what if you put only 6 percent of your salary away?and, with a click or two, you could boost your contribution?
? ? ? ?A. ?Wonder how much those 15 percenters are making?
? ? ? ?B. ?Work on your pitch for a raise?
? ? ? ?C. ?Say “Hurray for them” and keep saving 6 percent?
? ? ? ?D. ?Bump up your savings rate??
Many employees choose D, as peer comparisons push undersavers to pick up the pace, some large 401(k) plan administrators say.?
One big proponent of the approach is Empower Retirement, which administers plans covering 7.5 million employees. (Empower combined the 401(k) businesses of Putnam Investments, Great-West Financial, and J.P. Morgan Retirement Plan Services and administers Bloomberg LP’s own plan.) The tool it uses, How Do I Compare?, launched last year at Putnam?about 350,000 people have access to it today?and Empower is rolling out an enhanced version for all its participants.?
With Empower’s tool, retirement savers can compare their contribution rate and balance with the average for people of their gender and their age and income ranges. They can also see how they stack up against the top 10 percent of their peers, which Empower says is the real point of the exercise.?
In a sample of 30,000 savers Empower tracked, 5,000 changed their savings rate while using the tool, bumping up their contribution, on average, from a starting point of 7.3 percent of salary to match the top savers’ average rate of 9.1 percent, for a 25 percent increase.
Read more at?BLOOMBERG