Employers and their employees hold different perspectives on how to best achieve retirement preparedness through 401(k) plans, according to the results of two newly released studies from Schwab Retirement Plan Services. Taken together, the studies indicate that, despite efforts by employers to educate workers on the 401(k) offering, most workers are unengaged and financially unprepared for retirement. CFO Research Services, on behalf of Schwab, surveyed more than 200 senior finance and human resources executives from large and midsized U.S. companies about their perceptions of 401(k) plans in the workplace. Key findings include:

* More than half (54%) of employers report that employees participating in plans are not taking full advantage of the investment options, features and services offered in connection with their 401(k) plan.

* In order to better engage employees, the majority of employers plan to make as much or more extensive use of traditional outreach methods, including interactive planning tools (93%), printed educational materials (93%) and in-person workshops (81%).

* Only 16% of employers plan to adopt or promote personalized savings and investment management through a third-party adviser, despite evidence outside this survey of its positive impact on employee savings and investing behavior.

* A growing number of employers are using or considering the use of automatic solutions. In total, 45% are currently auto-enrolling employees, and another 25% are very or somewhat likely to do so.

A separate survey of 401(k) participants finds that relatively few have the desire to manage their own workplace savings plan. Koski Research, on behalf of Schwab, surveyed more than 1,000 workers enrolled in 401(k) plans across the country and reveals that:

* More than half (52%) say they don't have the time, interest or knowledge to properly manage their 401(k) portfolio.

* Nearly three-quarters (73%) spend less than eight hours per year managing their 401(k) plan account.

* Many (56%) do not review plan-related education materials they receive.

* Nearly one-third don't know they pay any fees for their 401(k) plan. Of the 70% that understand they pay some sort of fees, 95% don't know about investment fund operating expenses, and 67% don't know about plan administration fees.

* A significant majority (83%) say they are interested in receiving professional investment management from their employer. However, this interest does not translate into action, based on Schwab data that shows just one in 10 participants actually takes advantage of 401(k) investment management advice when it is offered.

"This data suggests that employers and their employees, while sharing a common goal of retirement preparedness, have different points of view on which engagement strategies are most effective in helping employees achieve that goal," says Dave Gray, vice president of 401(k) client experience at Charles Schwab.

 

Can Twitter help?

To help bridge the gap, one financial planner says Twitter can make a big difference. Change the retirement world, 140 characters at a time? Yes, says Jeff Rose, financial planner from Carbondale, Ill., who runs a blog called Good Financial Cents.

Rose has launched a Twitter-based movement to educate workers - particularly Gen Y - about Roth IRAs. The movement's hashtag, #rothiramovement is trending in the financial world, and will soon be mainstream, Rose hopes.

"I asked a big group of bloggers if they'd be willing to blog about the benefits of the Roth IRA all on the same day to help me start a Roth IRA movement," he told Reuters.

Most of Rose's clients are baby boomers - and many say they lament not saving earlier in life. That sparked Rose's passion for increasing financial literacy and retirement readiness among younger workers.

"I talk all the time with adults twice my age who regret the fact that they didn't start saving or investing earlier," he told Reuters. "The most common excuse I hear is that they just didn't know better."

According to T. Rowe Price, investors of all ages could stand to learn more about Roths. A T. Rowe study shows that many investors lack basic understanding about the differences between Roths and traditional IRAs.

For example, about one-fifth of investors age 21 to 50 mistakenly thought that traditional IRAs let investors withdraw contributions and earnings tax free, which is actually a key feature of the Roth, not the traditional IRA.

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