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401(k) enrollment should be about opting out, not opting in

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  • J.K.Logic
    2016-06-28 04:33:18 PM
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    Aside from Social Security, which may or may not be insolvent in the coming decades (I digress).. 401(k)s are a solid way for a vast majority of us to save for retirement. That is, if your employer offers it.

    And then there's another issue, auto enrollment. Even though a recent retirement study shows that some 71% of employees are in favor of having auto enrollment into their company's 401K program, only 21% of companies that offer 401ks at all have the auto enrollment feature.

    Makes it more daunting to have to go through the 401k process by your own initiative, without auto enrollment. Workers many times don't even bother because it's too confusing or taxing, even though they are fully aware it's good for him. Or maybe they aren't fully aware, and employers purposely fail to mention the benefit at all; that happens too.

    Either way, seems if the retirement benefit were really to be maximized in favor of the worker, all employers should not only offer a 401k program if they can, but they should all do auto enrollment, with an option to opt out, instead of opt in. That small change would work wonders on enrollment %s.

    I highly recommend checking out The Current State of 401(k)s: Closing the Gap Betwen Employer's Offerings and Workers' Needs. Study is by Transamerica Center for Retirement Studies.

    Would you rather opt in or opt out of a 401(k) offering? I think it's clear, but I would 100% rather opt out.

  • JFoster
    2016-07-08 04:01:48 PM
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    Agreed. I would rather opt out. It would also give me the feeling that I was stuck with one employer for the rest of my life. My wife was just recently "auto-enrolled" and she had to jump through hoops, to opt out, which wasn't successful. She's in it for the foreseeable future as a result.
  • rpc
    2016-09-01 11:19:28 AM
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    I personally don't like opt put programs, as one should not be required to pay in to something, without understanding of what or where it is they're sending their money to. It may well be to their benefit, but freedom of choice is more important. Someone else should not be making financial decisions for another person without their consent. 401Ks are fine, but companies need to do a better job, even one-on-ones, to better help each employee what it is. And, too often 401k options are limited to whats cheapest for the company, not what is least cost for employees... i.e, fees.
  • ZachZ
    2017-01-10 02:17:23 PM
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    J.K.Logic Wrote: Would you rather opt in or opt out of a 401(k) offering? I think it's clear, but I would 100% rather opt out.
    I'm fine with this option so long as the business doesn't force their employees to contribute by garnishing their paycheck. If the company is willing to give, lets say a blanket 3% regardless if the employee is contributing or not and then match up to 6%, then I see no problem with it. My only issue would be if the employer forces their employees to contribute.
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