Nearly Half Expect To Have Less Than
$500,000
- ‘Fear allocation’ keeping investors from participating in
equity market gains and much needed growth
- 88% are worried about the impact of presidential election on
their retirement savings
According to the Schroders 2024 U.S. Retirement Survey,
Americans who currently participate in a workplace retirement plan
(e.g. 401k, 403b, or 457 plan), believe they will need $1,200,000
saved to retire comfortably, yet 46% expect to have less than
$500,000 in savings at retirement – including 23% who say
they will have less than $250,000. Just 29% believe they will reach
the $1-million mark before retiring. The average age at which plan
participants expect to retire is 63.
“The difference between how much money plan participants say
they need to live comfortably and how much they expect to have
saved is miles apart for most retirement savers,” said Deb Boyden,
Head of US Defined Contribution, Schroders. “While the magic
retirement savings number is over $1 million for many plan
participants, they are not saving or investing correctly to reach
this goal. Without better planning and a roadmap to close the
savings gap, a comfortable retirement will be out of reach.”
The Fear Allocation: Plan Participants Want (and Need) More
Guidance
More than one-quarter of plan participants (28%) say they have
no idea how their retirement assets are allocated. Among those that
do, allocations across all retirement investments (including
workplace plans, IRAs, or other retirement accounts) suggest they
are investing emotionally.
Allocation of retirement investments by Americans who currently
participate in a workplace retirement plan:
Equities
29%
Cash
28%
Fixed income
19%
Target date funds
16%
Other
8%
The most commonly cited reason for holding cash in their
retirement accounts was fear – 66% of plan participants say their
cash allocation stems from a fear of losing too much money if the
stock market goes down, and 24% report they are not sure how to
invest their cash holdings.
“Fear can hold us back in many different aspects of life –
including retirement planning,” said Boyden. “For savers with
long-term horizons, large cash allocations create an opportunity
cost that prevents you from taking advantage of the powerful
benefits of compound growth.”
More than two-in-three (70%) say their workplace plan is their
single most important retirement asset, 59% wish they received more
guidance from their employer on how to invest plan assets, and less
than half (42%) are working with a financial advisor.
Over One-Third of Plan Participants Have Lost Sleep Worrying
About Finances
While nearly half (49%) of plan participants say the value of
their investment portfolio increased significantly in 2023, 40%
admit they don’t know how to protect these gains. Further, most
plan participants (60%) believe they worry too much about money,
and 39% have lost sleep worrying about their financial
situation.
Additionally, 88% are concerned with how the 2024 US
presidential election will impact their retirement savings.
However, 32% say they will not make any changes to their retirement
investments leading up to the election, 32% are unsure if they will
make changes, and 28% plan to make their portfolio more
conservative. Just 9% of plan participants expect to get more
aggressive with their retirement investments leading up to
November.
About the Survey
The Schroders 2024 US Retirement Survey was conducted by 8 Acre
Perspective among 2,000 US investors nationwide ages 28-79,
including 780 Americans who currently participate in a workplace
retirement plan (e.g. 401k, 403b, or 457 plan). The survey was
conducted from March 15 to April 5 in 2024.
For more information on the Schroders 2024 U.S. Retirement
Survey, visit here.
Note to Editors
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version on businesswire.com: https://www.businesswire.com/news/home/20240625317381/en/
Jennifer Manser Head of Corporate Communications, North America
212.632.2947 jennifer.manser@schroders.com