Maybe it’s the knowledge that they have some retirement savings tucked away, but 401(k) plan participants are slightly more optimistic about the economy and their financial situation than those who do not have a similar savings plan. Now, that’s not to say that anyone is optimistic about the economy, but when investors were asked to answer whether “I am better off financially now than I was one year ago”, 36 percent of individuals who participate in a 401(k) or other defined contribution plan agreed or strongly agreed with the statement. This compares to only 20 percent of the individuals who do not participate in a defined contribution or 401(k) who felt better off.
Unfortunately, a slightly larger percentage of 401(k) plan or defined contribution plan participants, 38 percent, disagreed or strongly disagreed with the statement above and indicated that they are not better off financially than a year ago. In contrast, however, 46 percent of individuals that do not participate in a plan do not feel they are better off than a year ago.
As far as the future is concerned, the results aren’t much better. Thirty nine percent of plan participants agree or strongly agree that they will be better off financially a year from now but 23 percent of plan participants do not feel they will be in a better financial position than today.
And how do they feel about the drivers of this economic dissatisfaction? Do they believe the government is working to fix the economic challenges?
Only 20 percent of plan participants believe the job plan President Obama has outlined will produce the desired results while 55 percent fell otherwise. Despite how they feel about the jobs plan, only 9 percent believe that Congress and the White House can work together to create a workable jobs plan. Seventy one percent feel they cannot work together. This is important for 401(k) and other defined contribution plan participants because 58 percent know someone who has been unable to find a job.
Like the rest of American investors, 401(k) plan participants are dismal about the future and don’t foresee a quick economic turnaround. For some, however, they will not let the economy ruin the upcoming holiday season. About 15% plan on spending a little more this year on their holiday shopping. Let’s hope their shopping increases the “ho,ho, ho” factor for all of us.