Client Service August 10, 2016

Participants Reveal What Retirement Planning Help They Need

Fewer than half (44%) of participants surveyed by Charles Schwab are confident making 401(k) decisions on their own, but 74% said they would be confident making 401(k) decisions with the help of a financial professional.
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Saving enough for a comfortable retirement is by far the top source of financial stress for 401(k) participants, with 40% citing it as a significant financial stress, according to the Charles Schwab’s 2016 401(k) participant survey.

Paying off credit card debt was cited a significant source of financial stress by 21% of respondents, and paying off student loans was chosen by 13% of respondents overall and 24% of Millennials.

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Fewer than half (43%) of participants know how much they should save for a comfortable retirement. Two-thirds (67%) indicated they know what percentage of their salary they should save in their 401(k)s, yet 49% said it seems impossible to save enough money in their 401(k) to have a comfortable retirement. Fifty-nine percent said their 401(k) is their only or largest source of retirement savings.

Fewer than half (44%) are confident making 401(k) decisions on their own, but 74% said they would be confident making 401(k) decisions with the help of a financial professional. Seventy percent said they would like personalized investment advice for their 401(k), 58% wish there was an easier way to know how to choose investments, and 44% said they don’t feel they know what their best investment options are.

Twenty-nine percent of participants said they increased their 401(k) contributions in the past year because they received a promotion or salary increase and had more money available to save, and 28% did so because they are concerned about having enough money to retire and want to save more. However, 5% decreased their contributions because they needed money for day-to-day living expenses, and 16% said they made no change to their contribution amount because they think they are already saving enough.

NEXT: Obstacles to saving and help wanted

Obstacles to saving for retirement cited by respondents included:

  • Not willing to sacrifice things that add to my quality of life – 32%;
  • Paying for unexpected expense like home repairs – 30%;
  • Saving/paying for children’s education – 29%;
  • Needing enough money to pay basic monthly bills – 24%;
  • Paying off credit card debt – 23%;
  • Having medical bills to pay – 19%; and
  • Still paying off student loans – 17%.

Participants want help with retirement planning and finances. Twenty-six percent said they would like help managing their current expenses so they can save more money for retirement. Participants also want help with calculating how much money they need to save for retirement (46%); determining at what age they can afford to retire (43%); figuring out what their expenses will be in retirement (39%); understanding how to create a monthly paycheck to cover expenses in retirement (30%); and figuring out how to catch up on their retirement savings goals (23%), among other things.

Eighty-five percent said they would use a financial wellness program if it were offered by their employer.

The survey was conducted from June 2 through June 6 among 1,000 401(k) plan participants. Full survey results are available here.

Data & Research August 10, 2016

Retirement Concerns One Unifying Factor This Election Season

A timely survey from Personal Capital suggests people who are registered with the Republican party are a little more likely to maintain a retirement savings account than Democrats—but both sides of the aisle have serious shortfalls to address.
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Online financial advisory firm Personal Capital revealed findings from a new survey that breaks down U.S. workers’ savings behaviors according to their political affiliations.

The survey finds that, while Republicans are more likely to have a retirement account than Democrats, one in five Americans of working age has no retirement savings regardless of party affiliation, “showing Americans as a whole are not well-prepared for their financial future.”

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No big surprise, the polling shows Americans believe that the state of the economy and health care system are two of the most important problems facing the country—cited as a top national concern by 33% and 31% of respondents, respectively. These actually lag behind “the threat of terrorism,” however, cited by 48% of the population.  

“Additional issues concerning Americans are crime (24%), immigration (23%), unemployment (21%), education (20%), morality (15%), war (14%) and the environment (12%),” Personal Capital finds. “In spite of the economy being a major issue, personal finances are not, as few people, a mere 8%, list retirement security as a top concern going into this year’s election.”

“Regardless of who wins the presidency, there are 10,000 people who retire each day in this country, and that number is expected to remain the same until the last Baby Boomer turns 65 in 2030,” warns Bill Harris, CEO of Personal Capital. “If this survey shows us anything, it’s that we all need to see retirement savings as a priority, because we will all be impacted by it in the future.”

Highlighting their embrace of the defined contribution (DC) retirement planning system, the survey found that Millennials feel more secure about their retirement prospects versus the older generations still in the work force. Still, younger people also rank retirement savings behind such issues as terrorism and the cost of education.

While there are many signs of division in the data regarding the two main parties and their presidential candidates, some interesting points of consensus emerged. For example, only 19% of Hillary Clinton supporters and 18% of Donald Trump supporters report feeling “confident with regard to their retirement savings.”

“Both parties have devoted sections of their official 2016 platforms to Social Security and how they will address retirement security if they are in the White House,” Harris concludes. “We know that with the growing cost of healthcare, education and the shifting economy, Americans will only be able to retire comfortably by planning and saving for the future – no matter who wins the election.”

To learn more about Personal Capital and its services and research, visit www.personalcapital.com.

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