Financial experts say that people should try to replace 70%-80% of their current income in retirement, but current statistics suggest that employees need to make the right arrangements to do so.

And while employer-sponsored 401(k) plans can provide the necessary leverage to get workers into a safer position in retirement, many employees are still saving too little – or starting too late – to get to where they need to be in their post-work years.

The Guardian Retirement Solutions’ Small Plan 401(k) RetireWell Study 2.0 surveyed 2,000 active 401(k) participants at the end of 2014 to assess their opinions about their workplace retirement plans.

It found that 401(k)s are working for plan participants and have become the most important source of retirement income for the majority of them but that employee confidence about retirement may be misplaced. It encourages plan sponsors to step up their educational offerings when it comes to their workplace 401(k) plans to help drive up contribution rates.

Also see: Plan sponsors’ action critical in 401(k) success

It also found that small plan participants are missing out and that seasoned financial professionals can help.

Seventy-seven percent of participants in defined contribution plans of all sizes believe that the money they have saved up in their employer-sponsored plan is very important to their household in retirement. Sixty-two percent believe Social Security is also very important.

Those interviewed for this study believe that, on average, 34% of their household income in retirement will come from their workplace DC plan. They believe that Social Security will make up about 24% of their earnings in retirement. IRAs, earnings from employment, including self-employment and other sources, like defined benefit plans or an inheritance, would make up an additional 42%, Guardian found.

A whopping 92% of respondents said they are very or somewhat satisfied with their 401(k) plan and 90% said they are very or somewhat satisfied with the investments available to them in their plan, according to Guardian. Eighty-seven percent said they were happy with the information they get about their plan and 89% were satisfied with the other features of their DC plans, the study found.

Guardian says that the employees it surveyed for this study may be expecting too much from their retirement accounts, with 55% of respondents expecting to replace more than 70% of their income in retirement. Twenty-seven percent of those believe they will replace 100% of their income in retirement and another 15% believe they will replace more than 100%.

“This is quite an ambitious goal and exceeds the 70-80% replacement ratio most industry experts recommend,” the report said.

And while the majority of respondents set a high income replacement goal, 50% said they are only somewhat confident they will hit that target. Twenty-one percent said they were very confident; 22% were not very confident and 6% were not confident at all.

Also see: 401(k) redesign requires clarity, focus on financial literacy

Guardian said that “participants are confused. In spite of the ambitious aspirations—95% income replacement—there’s an obvious disconnect here between the income replacement ratio participants are targeting and the reality of some of their expectations in retirement.”

Out of those surveyed, 49% said they expect to work in retirement, while 62% said they don’t expect to have enough money to pay for health care in retirement, Guardian found.

The survey also determined that most participants know basic 401(k) terminology but are unclear about many of the new features, like target-date funds, dollar cost averaging or target risk funds, which is “an unsettling notion given these participants are targeting high rates of return,” the report said.

If people don’t understand, they might not engage with their plan, the report said. This is more pronounced in the small plan market. It found that one-third of all 401(k) participants didn’t do anything with their workplace retirement plans in the past year.

If plan participants knew that their current plan contribution rate would only replace 50% of their income in retirement, 41% of respondents said they would increase their contribution rate, while 55% said they would leave it alone.

Participants said that if they had a better sense of how much retirement income their contributions are creating they might contribute more. Seventy-five percent said that they would increase contributions if they had a better understanding of the investments available through their 401(k) plan. Seventy-three percent said advice from a financial professional about how to invest would make them more likely to increase contributions. Better educational materials and learning that others were saving more than you were would also be motivating factors, Guardian found.

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