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Employee options for investing in savings and thrift defined contribution retirement plans, such as 401(k)'s, include a wide range of available investments and risks. Diversified investments was the most popular investment choice in 2009, with an 81 percent participation rate for employee contributions, followed by common stock funds at 63 percent.
Typical investment options in recent years are company stock, common stock funds, diversified investment funds, and life-cycle funds. (Life-cycle funds automatically adjust from higher risk to lower risk as the employee nears retirement.)
Company stock investments typically have the highest risk, along with the highest potential returns. Common stock funds, diversified investment funds, and life-cycle funds have varying amounts of risk to meet the large range of employer of employee investment profiles. Available investment options for workers' own contributions or employers' matching funds are fairly similar, but there is some variation.
Workers were more likely to have investment choices for their own contributions than for employer matching funds, but most workers participating in savings and thrift plans could choose among investment options for either type of contribution. Some workers also had multiple savings and thrift investment options available to them.
These data are produced by the Employee Benefits Survey program, a subset of the National Compensation Survey program. To learn more, see "Employees given range of investment options in 401(k) plans" in Program Perspectives, June 2011.
Bureau of Labor Statistics, U.S. Department of Labor, The Economics Daily, Employee participation in defined contribution savings and thrift plans at https://www.bls.gov/opub/ted/2011/ted_20110708.htm (visited March 31, 2023).