If defined contribution plan participants must improve their retirement savings, sponsors must improve their education and communication efforts.
According to Empower Institute, 68% of participants who were surveyed didn't understand the term "rebalancing investments"; 69% were uncertain about "asset allocation"; and 77% weren't sure about "Social Security optimization."
The unsettling results are contained in a recent report combining three surveys conducted over 12 months by the research unit of Empower Retirement.
"Words have the potential to inform, encourage and empower," the report said. "But the wrong words can be powerful in negative ways, leaving people uncomfortable, overwhelmed or confused."
The report also found that participants' most preferred method of receiving plan communications was personal email (26%), followed by website visits (16%). Other prominent responses were: notices mailed with account statements (13%), notices mailed separately from account statements (13%), in-person meetings (11%) and work email (10%).
The high response for personal email might reflect the personal in-box being home to other financial communications, thus allowing participants to think about retirement and personal finances "in a holistic manner," the report said.