Help Is on the Way for 401 k Investors
Below is a MRR and PLR article in category Finance -> subcategory Investing.
Help Is on the Way for 401(k) Investors
Overview
As more employers strive to educate their workforce about 401(k) plans?"emphasizing the perks of tax-deferred growth and the necessity of consistent saving?"many employees remain uninformed about how to invest these assets effectively.
The Current Scenario
A recent Hewitt Associates study reveals that in 2004, the majority of employees did not actively manage their 401(k) portfolios. In fact, only one in six participants made any changes within their accounts during that year.
The research, which analyzed over 2.5 million employees eligible for 401(k) plans, uncovered that many were risking too much by concentrating their savings in a single stock. Company stock emerged as the most substantial holding, comprising around 27% of participants' total 401(k) balances. Alarmingly, over 25% of employees had half or more of their savings tied up in their employer's stock.
On the flip side, some employees were not taking enough risks. Workers in their 20s were found to invest less in equities compared to those in their 30s.
A Solution on the Horizon
For investors lacking the time or expertise to manage their 401(k) investments, help is available. Major defined contribution plan providers like AIG VALIC, Fidelity Investments, Great-West Retirement Services, Merrill Lynch, the Principal Financial Group, and TIAA-CREF have joined forces with Chicago-based Ibbotson Associates to manage participants' accounts.
Eligible participants who choose this service will benefit from a customized portfolio, regularly rebalanced and adjusted to align with their evolving life circumstances.
"401(k)s are becoming the primary savings vehicle for retirement in this country," notes Roger Ibbotson, chairman and founder of Ibbotson Associates and finance professor at the Yale School of Management. "With so much riding on your 401(k) account, it's crucial to obtain professional, unbiased advice."
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