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401(k) Plans in Living Color

A recent study entitled 401(k) Plans in Living Color: A Study of 401(k) Savings Disparities Across Racial and Ethnic Groups, presents the results of a survey conducted by the Ariel Education Initiative, Aon Hewitt with the Joint Center for Political and Economic Studies and the Raben Group.  The survey used data as of the end of 2010 on 2.4 million employees from 60 of the largest US organizations across a variety of industries and sectors.  In addition, the survey includes more detailed information from 19,000 employees from three large organizations.

The study confirms the results of an earlier survey that found significant racial and ethnic gaps in retirement savings.  Additionally, the data showed a significant decline in retirement contribution rates across all employees between 2007 and 2010, with 80% of all groups citing day-to-day expenses as the reason they were not saving adequately for retirement.  In addition, the survey also looked at three ways contributors use their retirement savings prior to retirement: hardship withdrawals, loans, and cashing out accounts when leaving a job.  The results indicate the African-Americans and Hispanics have disproportionately reduced their retirement account balances through each of these ways.

The good news from the survey is that automatically enrolling employees in defined contribution plans has resulted in higher participation rates across all groups.  However, the survey suggests that the rates for auto-enrollment are too low resulting in lower contributions among employees who planned to participate in the plans, and recommends both increasing initial rate as well as incremental increases over time.

The results of the survey are available at:




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