If at First You Don’t Succeed—The Case for 401(k) Re-enrollment

You can lead a horse to water, but you can’t make it drink. But when it comes to retirement savings, there is a way—automatic enrollment. And a new plan design is growing in popularity with plan sponsors and advisors—re-enrollment.  

Automatic enrollment has long been shown to transform the negative influence of inertia of participant behaviors into a positive force for retirement plan participation and, in the process, helping to make dramatic improvements in retirement security. Implementing re-enrollment typically boosts 401(k) plan participation rates from two-thirds or three-quarters of eligible workers to levels generally over 90%. The remaining one in ten (and frequently fewer) take the time and effort to “opt-out” of participation for various reasons—perhaps they can’t afford to just then, or maybe they have another family member who is shouldering that responsibility.