Despite volatile market conditions, more than 95% of 401(k) participants did not made any investment exchanges in the first half of the year, and fewer than 1% of workers fully invested in a target-date fund made changes to their investments, according to a research paper by T. Rowe Price.
"I think this is good news," said Sudipto Banerjee, co-author of the paper and vice president of retirement thought leadership. "This is what we would like to see in the data that participants are not having knee-jerk reactions to daily market changes."
The paper noted a slight downward trend in contributions to plans, theorizing that inflation may be limiting some workers' ability to increase contributions. However, Mr. Banerjee said that the figure is not a primary concern, but still a statistic that his firm is keeping an eye on.
"We continue to suggest that workers save at least 15%, including any employer contribution, of their annual salary for retirement," Judith Ward, thought leadership director and co-author of the paper, said in a news release. "In practice, the suggested savings rate will vary from person to person, usually increasing for people with higher incomes."
Mr. Banerjee said that even if returns come in lower than expected in the short term, the guidance does not change. In an interview, he echoed Ms. Ward's recommendations for older workers to lay off retirement for a time.
"For the vast majority of participants, we don't really see that they need to make any big changes," he said.
The research also lays out specific guidance for employers in helping their workers navigate volatility as well.
Mr. Banerjee and Ms. Ward suggest that employers provide more exposure to target-date funds, as they are rarely touched and are inherently meant to withstand market fluctuations.