State of the participant 2020

Our annual look at participant behavior and retirement readiness across the defined contribution plans on our open-architecture platform¹ can help you make sense of what’s happening with your own participants—and suggest actions you can take to help them.

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Plan participants under age 40 are on track for a secure retirement (retirement ready)

60.4%

of participants under age 30 are retirement ready.

65.9%

of participants age 30 to 39 are on track—the highest of all age groups.

 

53.3%

of those between age 40 and 49 have also hit the mark. 

 

Auto features continue to drive retirement readiness

47.9%

Average retirement readiness for plans without auto features.

60.2%

Average retirement readiness for plans with automatic enrollment + a default contribution of 6%.

63.0%

Average retirement readiness for plans with automatic enrollment + a default contribution of 6% + auto-contribution increases of 1% yearly.

 

Too little risk² could be the bigger danger for self-directed investors³

Read "Helping participants become better at 401(k) investing"

Under age 30:

72% are invested too conservatively.

Age 40—49:

53% are invested too conservatively. 

Age 60 and older:

45% are invested too conservatively. 

Stable value funds have a place in many saving strategies

18%

of participants age 40 to 49 hold stable value funds.

23%

of those age 50 and older are invested in stable value.

Opt-out rates for auto-enroll plans seem to greenlight higher default contributions

At a 3% default contribution rate:

 

12.0% of eligible employees opt out of enrollment

At a 6% default contribution rate:

 

10.4% opt out

 

At an 8% default contribution rate:

 

7.9% opt out

 

 

Effective plans are built from the insight out.

John Hancock’s consultative, data-driven approach has been refined during our 50 years of experience working with plans of all sizes and complexities. Our goal is to make sure all the pieces work together—and offer all the support necessary to make retirement plans work for plan participants, sponsors, and financial representatives.

1 Data is from our open-architecture platform, which included 1.2 million participants, 1,123 plans, and $77.48 billion in assets under management as of September 30, 2019. 2 John Hancock’s assumed age-appropriate target equity ranges are as follows: under age 30: 80%—100%, age 40—49: 65%—85%, and age 60 and older: 40%—50%. 3 Self-directed investors exclude those holding one or two target-date funds in a managed or brokerage account or invested in a custom model portfolio.

The content of this document is for general information only and is believed to be accurate and reliable as of the posting date, but may be subject to change. John Hancock does not provide investment, tax, or legal advice (unless otherwise indicated). Please consult your own independent advisor as to any investment, tax, or legal statements made herein.

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