Anxiety about long-term retirement savings is up according to a new survey from Schwab Retirement Plan Services, and so is participant engagement. The nationwide survey of 1,000 currently employed 401(k) plan participants finds that saving enough for a comfortable retirement continues to be their leading source of significant financial stress. On average, these 401(k) participants believe they need to save $1.9 million for retirement, an increase of 12% from the $1.7 million reported in last year’s survey. Two in five participants also say they made a change to their 401(k) account due to COVID-19, citing rebalancing and increasing contribution rates as the most common changes.
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“As the country works to emerge from the COVID-19 crisis, we can expect that the mindset and confidence levels of 401(k) savers will fluctuate. Professional financial guidance will continue to play an important role in helping steady their course ahead.”
“Saving for retirement has been a top financial stressor for people even when the markets were setting records and we were living through the longest bull market in history,” said Catherine Golladay, executive vice president and head of Workplace Financial Services at Charles Schwab & Co., Inc. “Now we are in a new reality where people are trying to navigate the health and financial challenges right in front of them, while also worrying about their long-term goals. It is a lot, and we know workers can benefit if they talk to a financial professional to help them work out the right steps for their situation.”
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Professional financial help: Catalyst for increased participant action
Forty-one percent of those responding to the survey have made changes to their 401(k) as a direct result of COVID-19 and its economic impact. The top action steps taken by these individuals were a combination of defensive and potentially opportunistic moves. Of the 41% who acted, 14% rebalanced their portfolio and 12% increased their contribution rate. These individuals also indicated that they either increased (8%) or decreased (7%) their exposure to stock funds/equity.
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