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You Can “Win” the 401kRace Even if it is Your First Marathon

By Jack Towarnicky

Even though the 401kRace is a Marathon, you don’t need to be financially fit before you start! 

Ever hear of an American distance runner named Galen Rupp?  You should have.  He has won many races at 5,000 and 10,000 meters.  Recently, he won the bronze medal in the 2016 Olympic Marathon in Rio de Janeiro with a time of 2:10:05 – that’s less than 5 minutes a mile! What makes that truly amazing is that it was only the second marathon that he had ever run.  The first?  Five months earlier, on February 13, 2016, Galen ran his first-ever marathon race, finishing first at the U.S. Olympic trials at 2:11:12!2

Importantly, there IS a science to winning the 401kRace for those who have no prior experience, education or training when it comes to retirement savings.  It is called Behavioral Economics.  Economics is sometimes called the dismal science.  Behavioral Economics, on the other hand, will brighten your path to financial fitness.  

Increasingly, more and more plan sponsors, service providers, and plan advisers deploy Behavioral Economics concepts in their retirement savings plan designs, including but not limited to incorporating various “default” or automatic provisions that apply unless you elect otherwise:

  • Enrollment – You start running, you start contributing,   
  • Escalation – Most start slow, perhaps contributing 3% or 6% of pay, then the contribution pace picks up,  
  • Investment – Most plans use an age-appropriate investment (target date funds, target maturity models where asset allocations change as you approach the “finish line”, and  
  • Payouts – Unless your account balance is less than $5,000, most plans commence payout based on life expectancy no later than April 1st of the calendar year after the calendar year you reach age 70 ½.  

This is the new trend.  Based on the results of PSCA’s 60th annual survey, and other 401(k) surveys, the percentage of firms incorporating automatic features has more than doubled over the past ten years.3  While these features are increasingly applied without any affirmative election on your part, you remain firmly in control of your contribution rate and your investments.  Most plans also allow participants to fully control payouts after separation or reaching age 59 ½.  

Simply, automatic features help ensure more and more workers are on the “road to financial fitness”.  
PSCA is a sponsor of the 401(k) Race for Financial Fitness. Plan sponsors and 401(k) professionals interested in running should consider participating.  Click here for more information.

1. Dennis Young, Eliud Kipchoge Wins Olympic Marathon, Galen Rupp Takes Bronze, 8/21/16, Accessed 3/30/18 at:   

2. Sara Germano, Galen Rupp Wins U.S. Olympic Marathon Trials in His First Race at the Distance, Wall Street Journal, 2/13/16, Accessed 3/30/18 at:  

3. PSCA, 60th Annual Survey, 2018, See: 

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