Summary
Many workers eligible to participate in a 401(k) plan, or other type of defined contribution (DC) plan, make decisions that are unlikely to produce an adequate retirement income. This phenomenon can be addressed through the design of DC plans, including the strategic use of plan defaults, as well as education and advice. However, no single strategy has proven to be a complete answer. The TIAA-CREF Institute surveyed experts in behavioral economics, actuarial science, decision-making, and financial education and advice to examine uses and combinations of plan features, product designs and participant services to address the retirement income needs of a heterogeneous workforce. There seems to be a certain degree of consensus regarding various design elements for a primary DC plan.
