Workers still believe they need $1.9 million
for retirement
Workers’ confidence about achieving retirement goals has risen
sharply since last year according to a new survey from Schwab
Retirement Plan Services, and so has their appetite for financial
advice. The annual nationwide survey of 401(k) plan participants
finds that more than half (53%) say they are very likely to achieve
their retirement goals, compared to 37% in 2020. On average, plan
participants in 2021 believe they need to save $1.9 million for
retirement, the same amount as in 2020. Ninety-one percent say
their financial health is very good or pretty good.
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Catherine Golladay, Executive Vice
President, Workplace Financial Services at Schwab (Photo: Business
Wire)
“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,” said Catherine Golladay,
head of Schwab Workplace Financial Services. “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.”
In COVID’s Wake, Workers Plan to Save More and Want More
Help
Many participants report the pandemic has changed the way they
approach saving and spending, with 48% planning to save more in
general, 36% planning to increase their 401(k) contribution rate,
35% planning to invest more outside of their 401(k) plan, and 34%
planning to pay off debt.
Despite their optimism, many participants also face obstacles to
saving for retirement, including market volatility (32%),
unexpected expenses (29%), keeping up with monthly expenses (27%),
education expenses (21%), and credit card debt (20%). After more
than a year of the pandemic, 23% feel they will have to delay
retirement due to COVID. Six in ten (61%) think their financial
situation warrants professional advice to address these kinds of
challenges, compared with half (50%) in 2020.
The top four retirement planning areas where participants want
help are calculating a retirement savings goal (44%), receiving
advice on how to invest a 401(k) (39%), figuring out how to create
income in retirement (35%), and anticipating taxes in retirement
(35%). The percentage of survey respondents who are very confident
making their own 401(k) investment decisions has increased from 25%
in 2019 to 40% in 2021 but still lags those who are very confident
in making investment decisions with the help of a financial
professional: 44% in 2019 and 56% in 2021.
“Optimism is fueling a recalibration of expectations,” said
Golladay. “Workers went back to basics for a year and re-discovered
the importance of work-life balance. Do-it-yourself retirement
planning was really tested because workers were pressed in other
areas. Many have decided that more help is the answer, and they are
also looking beyond retirement to other workplace benefits that
support financial security.”
Must-Have Benefits
401(k) plans and health insurance again top the list of desired
workplace benefits with more than 80% of participants saying these
are “must-haves.” Other top-five must-have benefits according to
survey respondents are life insurance (50%), disability insurance
(43%), and health savings accounts (38%).
Among these other benefits, health savings accounts (HSAs) had
the largest increase in respondents who consider them must-haves
compared with 2020, growing from 32% to 38%. Eight out of ten
survey respondents (79%) have access to an HSA at work, and half
(49%) use it. HSAs have been a popular way to pay insurance
deductibles and other immediate healthcare expenses, but more
participants are also using HSAs to save for healthcare expenses in
retirement; 54% 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,”
said Golladay. “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.”
About the survey
This online survey of U.S. 401(k) participants was conducted by
Logica Research for Schwab Retirement Plan Services, Inc. Logica
Research is neither affiliated with, nor employed by, Schwab
Retirement Plan Services, Inc. The survey is based on 1,000
interviews. Survey respondents were actively employed by companies
with at least 25 employees, were 401(k) plan participants and were
21-70 years old. For past surveys, respondents were 25 to 70 years
old, so for comparing 2021 results to previous waves, the data was
rebased on those aged 25 to 70. Survey respondents were not asked
to indicate whether they had 401(k) accounts with Schwab Retirement
Plan Services, Inc. All data is self-reported by study participants
and is not verified or validated. Respondents participated in the
study between April 1 and April 15, 2021. Detailed results can be
found here.
About Charles Schwab
At Charles Schwab, we believe in the power of investing to help
individuals create a better tomorrow. We have a history of
challenging the status quo in our industry, innovating in ways that
benefit investors and the advisors and employers who serve them,
and championing our clients’ goals with passion and integrity.
More information is available at aboutschwab.com. Follow us on
Twitter, Facebook, YouTube, and LinkedIn.
Disclosures
Schwab Retirement Plan Services, Inc. and Charles Schwab &
Co., Inc. are separate but affiliated companies and subsidiaries of
The Charles Schwab Corporation. Schwab Retirement Plan Services,
Inc. provides recordkeeping and related services with respect to
retirement plans. Brokerage products and services are offered by
Charles Schwab & Co., Inc.
Workplace Financial Services is a business enterprise which
offers products and services through Schwab Retirement Plan
Services, Inc.; Schwab Stock Plan Services; and Compliance
Solutions. Schwab Retirement Plan Services, Inc., provides
recordkeeping and related services with respect to retirement
plans. Schwab Stock Plan Services is a division of Charles Schwab
& Co., Inc. providing equity compensation plan services and
brokerage solutions for corporate clients. Compliance Solutions is
comprised of Schwab Designated Brokerage Services (DBS), a division
of Charles Schwab & Co., Inc., and Schwab Compliance
Technologies, Inc. (SchwabCT). DBS provides brokerage solutions for
corporate clients who monitor their employees' securities activity.
SchwabCT provides technology solutions for corporate clients to
help facilitate their compliance technology program implementation.
Schwab Retirement Plan Services, Inc., Schwab Compliance
Technologies, Inc., and Charles Schwab & Co., Inc. (Member
SIPC) are separate but affiliated entities, and each is a
subsidiary of The Charles Schwab Corporation.
Through its operating subsidiaries, The Charles Schwab
Corporation (NYSE: SCHW) provides a full range of securities
brokerage, banking, money management and financial advisory
services to individual investors and independent investment
advisors. Its broker-dealer subsidiary, Charles Schwab & Co.,
Inc. (member SIPC, www.sipc.org), and affiliates offer a complete
range of investment services and products including an extensive
selection of mutual funds; financial planning and investment
advice; retirement plan and equity compensation plan services;
compliance and trade monitoring solutions; referrals to independent
fee-based investment advisors; and custodial, operational and
trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles
Schwab Bank, SSB (member FDIC and an Equal Housing Lender),
provides banking and lending services and products. More
information is available at www.schwab.com and
www.aboutschwab.com.
(0621-1R10)
©2021 Schwab Retirement Plan Services, Inc.
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Mike Peterson Charles Schwab 330-908-4334
mike.peterson@schwab.com
Travis Fishstein The Neibart Group 718-801-8205
SchwabRPS@neibartgroup.com
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