Workers who participate in their employer’s 401(k) retirement plan are increasingly anxious about long-term retirement savings, according to a survey released this week by Schwab Retirement Plan Services.
On average, these 401(k) participants say they need to save $1.9 million for a comfortable retirement, an increase of 12% from $1.7 million in last year’s survey.
“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,” according to Catherine Golladay, head of workplace financial services at Charles Schwab.
“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,” Golladay explained.
The survey also finds that participant engagement is increasing. Forty-one percent of respondents have made changes to their 401(k) as a direct result of the coronavirus and its economic impact.
Fourteen percent of these proactive participants have rebalanced their portfolio, and 12% have increased their contribution rate. In addition, 8% have increased their stock funds/equity exposure, while 7% have decreased it.
Role of Advice
Financial advice appears to be playing a big role in prompting participants’ actions.
Among the 25% of survey respondents who consulted a financial professional, two-thirds have made changes in their 401(k) accounts — 26% by rebalancing them, 22% by increasing their contribution rate and 17% by increasing exposure to stock funds/equities.