American workers are generally optimistic about retirement, but given another chance many would make different spending decisions on short-term pleasures, according to a survey released Monday by Schwab Retirement Plan Services.
Survey respondents understood their 401(k)’s value and the importance of saving for retirement, but their responses suggested a need for advice on meeting their financial obligations and making the most of their assets.
Logica Research conducted an online survey in May of 1,000 U.S. 401(k) participants, who worked for companies with at least 25 employees, currently contributed to their 401(k) plan and were between 25 and 70 years old.
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The research found that 70% of workers believed their quality of life in retirement would be better than that of both their parents and their own children, yet 40% said saving for retirement was their chief source of financial stress.
At present, three main obstacles hindered participants in their effort to save for retirement, according to the survey: paying for unexpected expenses, unwillingness to sacrifice things that improve their quality of life and paying down credit card debt.
Two-thirds of participants said they regretted past spending that could have gone toward retirement savings, particularly on meals out, expensive clothing, new cars and vacations.
At the same time, they said they were comfortable with what they had spent on significant items such as housing, weddings, student loans and their children’s tuition.
Survey responses showed that workers were relying heavily on their workplace retirement plans to help them meet their long-term goals, with 62% expecting their 401(k) to be their largest source of retirement income.
However, the survey found that participants may be missing out on opportunities to grow their nest eggs. Beyond their 401(k), participants were likelier to use a savings account to prepare for retirement than an IRA or other investment vehicle.
The Value of Advice
Survey respondents recognized the role of a retirement plan in helping them achieve a comfortable retirement. Eighty-eight percent considered a 401(k) a “must-have” benefit, and 90% said they would think twice before accepting a job that did not offer one.
Many participants reported taking proactive steps to try to meet their retirement goals, with 65% having increased their 401(k) contribution level in the past two years, and 80% deeming their 401(k) in better shape today than ever before.
Although a majority of survey participants said they felt on top of their 401(k) investments, many still thought they would benefit from professional help. Half were extremely or very confident in their ability to make the right 401(k) investment decisions on their own.