Americans are underutilizing their 401(k) plans, according to a survey of 1,000 participants by the ING Retirement Research Institute.

Eighty-seven percent admit they could save an additional 1% of their annual salary, 59% said they could increase it by 3%, and 53% could bump it up by 5%. And for 64%, their 401(k) or other employer-sponsored retirement plan accounts for all, if not the majority, of their retirement savings.

Investors are also unsure of how much they should save, with 65% determining their contribution rate themselves. "The issue for many workers, made even more urgent in shaky economic times and an era of volatile equity markets, is scrubbing household budgets and, when possible, finding more dollars to save for retirement," says ING Insurance U.S. CEO Rob Leary.

"Being cost-conscious is certainly important and prudent, but at the same time, people must also find ways to contribute more into their retirement accounts. Even though few Americans are getting raises, they should give themselves a “retirement raise," he adds.

Catherine Smith, CEO of ING U.S.’s retirement services says that "after choosing to participate in the plan, the most important decision workers make is setting their contribution rate each year." 

She believes that "for too many, participation and contribution rate elections are just another box to check." Americans need "to be more deliberate and take the time to consider things like tax impact, compounding and the effects of employer matches in making these elections," Smith adds.

The ING Web site now includes a "Give Yourself a Retirement Raise" calculator that shows the impact of contribution rate changes.

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