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Americans - Brave or Foolish? Controlling Investments in Retirement Accounts

Pensions are dinosaurs, growing extinct by the day. Like 401(k)s, defined contribution accounts are the primary retirement savings vehicle made available to working Americans. In an unprecedented time in the market, with the "dip" in the market experience in Q1 2020 and the slower to recover market downturn from late 2007 through early 2009, Americans still want to control their own destiny when it comes to retirement plan investments. 

A recent survey conducted by the Investment Company Institute (click here to view) reveals that Americans across various household income bands generally want to make their own investment decisions. While it is clear that government control of American's retirement savings "is not a popular remedy," but what about more employer control? Is using default investment options (like target-date retirement funds) the best approach to get Americans set up for retirement? 

Employers generally shy away from directing investments - or even engaging a manager to provide employees investment advice - for fear of the fiduciary responsibility for "wrong" choices. 

Clearly, the majority of Americans (like yours truly) are not investment professionals. Are we brave or foolish?

An ICI survey reveals that 96% of those surveyed believe it is important to have choice in, and control of, the investments in their retirement plan account.

Tags

erisa, retirement plans, 401k, l&e