Even before the coronavirus crisis Americans had many sources of financial stress. For example, debt reduction, monthly expenses, job security, and medical bills were among the most commonly cited money-related stressors in the latest 401(k) participant poll conducted by Charles Schwab. However, the top source of financial stress reported by surveyed workers was saving enough for a comfortable retirement. That is not too surprising since many respondents previously admitted that they wish they had spent less on dining out, expensive clothes, vacations, and other luxuries and instead put that money to work in their 401(k) plan.
Those foregone contributions definitely represent a missed opportunity considering that 58 percent of respondents said this tax-advantaged savings vehicle will likely be their largest source of retirement income, including 18 percent who said their 401(k) represents their only old-age savings at the moment. Moreover, when asked about the obstacles that prevent participants from contributing as much as they would like to their 401(k), 29 percent cited an unwillingness to sacrifice their current standard of living (discretionary spending that enhances their quality of life). On the bright side, this is a decline from previous surveys and suggests that more surveyed workers now recognize their past financial mistakes. In fact, many appear to already be taking the right steps to improve their readiness for retirement. Forty-seven percent of respondents, for instance, said that they have increased the size of their regular 401(k) contributions within the past two years.
More than half of surveyed participants also acknowledged that their retirement investments would likely perform better if they received guidance from a financial professional, and 95 percent even said that they would feel “somewhat or very confident” in their ability to make the right 401(k) investment decisions if they were consulting with in an advisor. Further, surveyed workers expressed a desire to have additional assistance with investing and general retirement planning available through the workplace, and the latest poll suggests many employees might even prefer this in the form of a digital tool such as an online retirement calculator. Providing these extra services could be a great way for employers to standout when competing for talent since 87 percent of surveyed workers already consider a 401(k) plan a “must-have” benefit, and 90 percent in earlier polls even said they would “think twice before accepting a job that didn't offer one.”
Sources: Charles Schwab