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Retirement Planning > Saving for Retirement > 401(k) Plans

401(k) Investors' Appetite for Financial Advice Grows

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What You Need to Know

  • Fifty-three percent of 401(k) plan participants expect to achieve their retirement goals, Schwab's annual survey found.
  • The stress created by the pandemic highlighted the importance of financial wellness and trusted advice.
  • Many workers want more guidance on retirement planning and savings, and many are looking to other workplace benefits that support financial security.

Employees’ confidence about achieving their retirement goals has risen sharply since last year, and so has their appetite for financial advice, Schwab Retirement Plan Services reported this week.

Schwab’s annual nationwide survey of 401(k) plan participants found that 53% expect to achieve their retirement goals, compared with 37% in 2020. On average, plan participants believe they will need to save $1.9 million for retirement, the same amount as in 2020. 

Ninety-one percent said their financial health is pretty good.

“We experienced tremendous stress in our work and home lives this past year that highlighted the importance of financial wellness and the value of trusted advice,” Catherine Golladay, head of Schwab Workplace Financial Services, said in a statement. 

“Now, as we emerge from the pandemic, employers have an opportunity to engage employees with education, advice and a range of other workplace benefits to help them build financial security and increase satisfaction at work.”

Logica Research conducted the survey in the first half of April among 1,000 401(k) plan participants ages 25 to 70 who work for companies with 25 or more employees that have 401(k) plans and currently contribute to them. An additional 100 Generation Z plan participants also completed the survey.

Workers Want More Help

Many participants in the survey reported that the pandemic had changed the way they approach saving and spending. Here are the main things they plan to do:

  • Save more in general: 48%.
  • Increase their 401(k) contribution rate: 36%.
  • Invest more outside their 401(k) plan: 35%. 
  • Pay off debt: 34%.

Despite their optimism, many participants also face obstacles to saving for retirement: stock market volatility, unexpected expenses, keeping up with monthly expenses, education expenses and credit card debt. 

After more than a year of the pandemic, 23% said they would have to delay retirement. Six in 10 think their financial situation warrants professional advice to address these kinds of challenges, compared with half in the 2020 survey.

Forty-four percent of respondents said they want help calculating a retirement savings goal, 39% want advice on how to invest a 401(k) and 35% each need help figuring out how to create income in retirement and anticipating taxes in retirement. 

The percentage of survey respondents who said they are very confident making their own 401(k) investment decisions increased from 25% in 2019 to 40% in 2021. But they still lag the 44% in 2019 and 56% in 2021 who said they are very confident in making investment decisions with the help of a financial professional. 

“Optimism is fueling a recalibration of expectations,” Golladay said. “Workers went back to basics for a year and rediscovered the importance of work-life balance. Do-it-yourself retirement planning was really tested because workers were pressed in other areas.” 

She said many have decided that more help is the answer. In addition, they are looking beyond retirement to other workplace benefits that support financial security.

Must-Have Benefits

For survey respondents who said they were looking for a new job, 86% said a 401(k) plan and 84% said health insurance are benefits they must have. Fifty percent cited life insurance as a must-have benefit, 43% disability insurance and 38% health savings accounts.

Among these other benefits, HSAs had the largest increase in respondents who consider them must-haves compared with 2020, rising from 32% to 38%. Seventy-nine percent of respondents said they have access to an HSA at work, and 49% said they use it. 

Although HSAs have been a popular way to pay insurance deductibles and other immediate health care expenses, according to Schwab, more participants are also using HSAs to save for health care expenses in retirement — 54% of survey respondents in 2021, compared with 41% in 2020.

“It’s good news that plan participants have kept one eye on their future retirement even as they face a challenging present,” Golladay said. “Successful employers will capitalize on this and provide benefits and resources that can help turn today’s optimism and engagement into tomorrow’s financial security.”


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