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.
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.