Study: Too many 401(k) options confuse employees

We've been saying this for a long time: Cookie-cutter savings plans like your employer's 401(k) program won't help you get the retirement income you need. Your company knows that, but instead of coming up with alternatives or more viable solutions, they just throw more 401(k) plans at their employees. 

Like tech stocks? They've got a plan for that. Like retail? They've got a plan for that, too. Before you know it, you're looking through a guide that lists dozens of 401(k) options and you have no idea what you should be looking for. Think it's just you with this problem? Think again. According to a new study from brokerage firm TIAA-CREF, one third of Americans who participate in their employer's retirement plan say that they don't understand their investment options. 

The study also found that women are less familiar with the plans then men, and members of Generation Y admit to being the least informed of all age groups. 

One-third of the survey's respondents said that they had too many investment choices. Of them, 65 percent said that they were concerned that they weren't saving enough for retirement. That really should come as no surprise when you think about it. When you've got a countless number of plans thrown at you, how can you really take the time to do the proper research? At a certain point, you're just picking something that sounds good, and everyone knows that's no way to go about planning for your financial future. 

In an interview with Pensions and Investments, David Ray, a vice president and national sales manager at TIAA-CREF, said that he expected some employees not to understand their options, but found the final result to be somewhat "alarming in and of itself." 

He added that it's difficult for many employers to get their employees engaged in the process of picking out retirement plans for the entire organization. It's seems to be more convenient for companies to throw everything but the kitchen sink at workers instead working with a group of experts to develop a successful program. 

One interesting finding from this study involves where workers put their trust. Despite being bothered with too many 401(k) options, 81 percent of the workers surveyed said that they trusted their employer's advice about financial products over information offered by traditional institutions like banks. 

There really is no reason to be tied down to a retirement plan that isn't working for you. By exploring your options, you can develop an early retirement strategy and protect your wealth.