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Non-401(k)-Savers Timid About Asking for Financial Help

Whether saving in a 401(k) or not, the majority of survey respondents say their investment confidence would grow dramatically with the help of a financial professional.

By Rebecca Moore editors@strategic-i.com | August 15, 2017
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Everyday money matters are dramatically impacting the lives and retirement saving efforts of Americans, according to a survey from Schwab Retirement Plan Services.

The nationwide survey of 1,000 workers with access to a 401(k) plan—half of whom are actively contributing to it (“savers”) and half of whom are not (“non-savers”)—reveals that 60% of savers and 53% of non-savers who have at one time contributed to a 401(k) say their 401(k) is their largest or only source of retirement savings.

Workers in the survey identified a number of sources of financial stress, with non-savers naming present-day challenges in far greater numbers than their saving peers. More than twice as many non-savers as savers say keeping up with monthly expenses is a significant source of stress (42% compared to 20%). Forty-five percent of non-savers say they either have no money left over or are actually behind on bills at the end of each month, compared to 23% of 401(k)-savers who say the same.

When asked about their primary obstacles to saving for retirement, non-savers focused on immediate concerns including: needing to pay basic monthly bills (46%), paying off credit card debt (42%), covering unexpected expenses like home repairs (34%), and paying medical bills (33%). Savers have similar concerns, but generally in smaller numbers: unexpected expenses (36%), monthly bills (31%), being unwilling to sacrifice things that add to their quality of life (29%), and credit card debt (29%) top their list.

In hindsight, non-savers recognize the impact that debt is having on their ability to save. When asked to select the one thing they would change about the way they managed their finances in the past, 26% of non-savers say they would have accumulated less debt, compared to just 13% of savers.

The survey reveals a substantial gap in the way 401(k)-savers and non-savers perceive their overall financial health. Eighty-five percent of savers say they are in pretty good shape or very good shape financially, compared to 64% of non-savers.

Two-thirds (66%) of savers say they have increased their 401(k) contribution percentage in the past two years, and 62% say they believe they are saving enough to retire when they want to.

Outside of 401(k) plans, savings accounts and IRAs are the most common methods of saving for retirement. Fifty-six percent of savers have a savings account, and 47% have an individual retirement account (IRA). Forty-four percent of non-savers have a savings account, and 23% have an IRA. However, more than one-quarter of non-savers (26%) are not currently saving or investing for retirement at all.

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