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August 10, 2016 at 09:06 AM
Building an adequate nest egg for a comfortable retirement is a big cause of financial stress for workers of all ages, including millennials with more years to accumulate savings, Schwab Retirement Plan Services reported Wednesday.
A vast majority of respondents in a new Schwab survey said the 401(k) was a “must-have” workplace benefit, and that they would hesitate to take a job that did not offer one.
Koski Research conducted the online poll of 1,000 U.S. 401(k) participants in early June. Respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25 to 70 years old. They were not asked whether they had 401(k) accounts with Schwab.
Forty percent of those surveyed said accumulating sufficient savings for retirement was a major source of financial stress in their lives, while 24% worried more about job security, 21% about paying off credit card debt and 20% keeping up with monthly expenses.
Nearly as many millennials named saving for retirement a significant source of financial stress. Twenty-nine percent said they were stressed by monthly expenses, 26% by credit card debt and 24% by student loan debt.
Half of survey respondents despaired of saving enough in their 401(k) for a comfortable retirement, and only 43% knew how much money they might need for their post-work years.
In contrast, their awareness of other important targets in their lives, like their ideal credit score (91%), weight (90%) and blood pressure (77%), was much higher.
“With so many competing obligations and priorities, it’s natural for people to worry about whether they’re saving enough for retirement,” Schwab Retirement Plan Services president Steve Anderson said in a statement.
“Roughly 9 out of 10 respondents told us they are relying mostly on themselves to finance retirement. It’s encouraging to see people of all ages taking responsibility for their own future and making this a top priority.”
The 401(k) and Financial Wellness
The survey found that the 401(k) was most respondents’ biggest or only source of retirement savings.
However, merely participating in a 401(k) plan is not enough for respondents. Only 51% said they were totally on top of their 401(k), and 35% said they felt stressed about picking the right investments for their plan.
Schwab noted that many participants could do more to maximize the benefits of a 401(k), but obstacles stood in the way. For example, rather than periodically increase their contributions per experts’ advice, 34% had not done so or had decreased contributions in the past two years.
For 32% of respondents, the chief barrier to saving more was unwillingness to sacrifice things that add to their quality of life, such as dining out or vacations.
