NEW YORK, May 27 /PRNewswire/ -- Participants in employer-sponsored 401(k)
retirement savings plans have a fair knowledge of investing fundamentals, but
they aren't taking actions that will enable them to reach their goals,
according to an exclusive nationwide poll of 401(k) investors for Money
magazine and Lincoln Financial Group.
    "Eight out of 10 401(k) investors say they understand all or most of their
investment options, but many are still making critical mistakes," said Money
Education Services associate editor Lesley Alderman.  "For example, many
respondents expressed a desire to retire early, but they are not saving enough
to achieve that goal."
    Conducted March 20-29 by ICR of Media, Penn., the national telephone poll
of 371 401(k) plan participants (error margin: plus or minus 5 percentage
points), revealed key contradictions between what 401(k) savers have learned
about investing and the actions they are taking to reach their goals.
    Among the highlights:

   --  Many seek early retirement, but they aren't investing enough to get
        there comfortably.  Some 60% of 401(k) investors plan to retire
        before age 65, yet 54% of this group (and 58% overall) invest less
        than $5,000 a year in their 401(k)s.  And 41% of early-retirement
        planners invest mostly in low-risk, low-return choices such as bond
        and "stable value" funds.  Yet in general, Alderman said, "people who
        plan to retire early should invest more money and seek higher returns
        than those who don't."

   --  Women, less affluent and young workers are particularly vulnerable.
        Some 35% of women (vs. 30% overall) call themselves conservative
        investors, as do 37% of 401(k) savers with annual household income
        below $50,000.  But "such conservatism tends to backfire because of
        equities' superior long-term performance," said Mary Rudie Barneby,
        president of Delaware Investment & Retirement Services of
        Philadelphia, which is part of Lincoln Financial Group.  The survey
        also found that savers 33 and younger are investing more cautiously
        than those 34 and older, although younger investors, with longer time
        horizons, can afford to take more risk, Barneby noted.

   --  They think they know their stuff, but many use the wrong criteria to
        choose investments.  Some 82% of 401(k) investors say they understand
        most or all of their investment options, but 70% (and 72% of the
        self-described knowledgeable group) tend to pick funds based on past
        performance -- an unreliable gauge of future returns -- rather than
        on an understanding of how the portfolios work.

   --  They want more information and more choices.  One out of five 401(k)
        participants at small firms say they understand none of their
        investment options (as do 13% at large firms).  And overall, 87% of
        401(k) savers want more data from the firm that manages their plan's
        investments.  In addition, most (56%) said more investment options
        would be valuable.

   --  They're too willing to touch their retirement savings.  Some 27% (and
        35% of respondents ages 18 to 33) say they plan to use their 401(k)
        accounts for purposes in addition to retirement.  And 15% (20% at
        large firms) have borrowed from their 401(k)s, largely to make a down
        payment on a house, pay off debts or pay college tuition.  "Dipping
        into a 401(k) can be dangerous in the long run," said Alderman.
        "Unfortunately, many employees, especially young ones, see their
        accounts as tax-favored investments for a variety of uses, rather
        than as their best -- and maybe their only -- chance to fund a
        comfortable retirement."

    Money is the nation's largest financial publication, with a circulation
rate base of 1.9 million and total readership of 8.5 million, according to the
latest MRI audience survey.
    Lincoln Financial Group is one of the nation's leading financial services
firms, offering investment management, financial planning and individual
annuities.  It is also one of the world's largest life-health reinsurers.

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