Study: Retirement savers make costly 401(k) mistakes

Despite extensive efforts to educate workers about saving for retirement, many employees are not doing a good job of managing their company-sponsored 401(k) accounts, a new study indicates.

The analysis of nearly 1 million retirement portfolios found that 69 percent have inappropriate risk or diversification of holdings and 36 percent have worrisome concentrations of company stock. In addition, one-third of savers aren't putting enough aside to qualify for the full company matching contribution.

The problems are especially pronounced among young and low-paid workers, according to the study by Financial Engines, a Palo Alto, Calif.-based firm that provides investment advice and managed accounts for defined contribution plans like 401(k)s.

"Unfortunately, our study found that those who need their 401(k) the most look to be benefiting the least," Jeff Maggioncalda, Financial Engines' president and chief executive, said in an interview.

Maggioncalda said that some of the performance problems will dissipate as companies adopt automatic enrollment programs for workers, as authorized by the Pension Protection Act two years ago.

Still, he said, the data should help plan sponsors and other industry professionals "figure out who needs help and how to get it to them."