Around 42% of plan nonparticipants said they didnt contribute because they couldnt afford to, 12% said they had more pressing savings priorities and 22% said they simply hadnt got around to signing up.
Perhaps the biggest potential target for financial advisors: the approximately 6% of nonparticipating workers who said they didnt join their employers 401(k) because they didnt completely understand it.
Other findings also suggest more workers would sign up if they had more help: A third of noncontributors said they wanted a full explanation of 401(k) plans. Another 29% said they wanted face-to-face meetings with someone to explain the plan rather than just be handed written materials. And 27% said they would like follow up and reminders from their employer about the 401(k).
The findings also suggest noncontributors generally are ill-prepared to handle the financial demands of retirement: 17% said they dont plan to retire, 30% are counting on Social Security to provide most of their retirement funds and 20% said will use other personal savings.
Among nonparticipants, just 48% own their own home, compared to 67% of participants.
To some extent, fear of the stock market may prevent workers from investing for retirement, Nationwide found. Only 32% of nonparticipants in their companies plans said they are inclined to invest in the market, compared to 57% of participants.
"This survey illustrates the critical condition of many Americans retirement plans–the major risk of missed opportunity and the need for better financial education," says Michael Butler, senior vice president of NFS Distributors Inc., a division of Nationwide Financial.
Apprehension about the economy may also hinder workers from learning more about their 401(k) plans. Only 32% of nonparticipating workers thought the economy would rebound in 6 months or less, compared to 49% of participants.
Other reasons preventing them from learning more about 401(k)s include: "I dont need one," "I dont know who to ask," "Im too busy" and "Im reluctant to ask."
The survey polled around 2,600 workers in October and was conducted by BIGresearch, Columbus, Ohio.
Reproduced from National Underwriter Life & Health/Financial Services Edition, February 20, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
