Schwab Survey Finds Saving Enough for Retirement is Top Source of Financial Stress, Even for Millennials

SAN FRANCISCO--(BUSINESS WIRE)-- A new survey from Schwab Retirement Plan Services, Inc. finds that saving enough money for a comfortable retirement is the most common financial stress inducer for people of all ages. The survey also reveals that most people view the 401(k) as a “must-have” workplace benefit and believe they would benefit from professional saving, investment and financial guidance.

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Steve Anderson, President of Schwab Retirement Plan Services, Inc. (Photo: Business Wire)

The nationwide survey of 1,000 401(k) plan participants finds that building adequate retirement savings was cited most often (40%) as a significant source of financial stress in respondents’ lives – even more than job security (24%), paying off credit card debt (21%) or keeping up with monthly expenses (20%).

Despite having more time to accumulate retirement savings, Millennials still named saving for retirement (38%) a significant source of financial stress – above all others. This included monthly expenses (29%), credit card debt (26%) and even student loans (24%).

About half (49%) of survey respondents feel it is impossible to save enough in their 401(k) for a comfortable retirement. Only 43 percent know how much money they may need for a comfortable retirement, which is significantly lower than awareness of other important targets in their lives, including ideal credit score (91%), weight (90%) or blood pressure (77%).

“With so many competing obligations and priorities, it’s natural for people to worry about whether they’re saving enough for retirement,” said Steve Anderson, president, Schwab Retirement Plan Services, Inc. “Roughly nine out of ten respondents told us they are relying mostly on themselves to finance retirement. It’s encouraging to see people of all ages taking responsibility for their own future and making this a top priority.”

The 401(k) Factor

According to the survey, the 401(k) is either the largest or only source of retirement savings for most respondents. Ninety percent call the 401(k) a “must-have” benefit and would think twice before accepting a job that didn’t offer one.

However, merely participating in a 401(k) plan is not enough. Only half (51%) of respondents feel totally on top of their 401(k) and more than one-third (35%) are stressed about choosing the right 401(k) investments.

Many participants can do more to maximize the benefits of a 401(k), but face obstacles. For example:

• Despite experts’ advice that participants should periodically increase their 401(k) contributions, one-third (34%) have not done so or have actually decreased their contributions in the past two years.
• 32 percent say the number one barrier to saving more is an unwillingness to sacrifice things that add to their quality of life, like dining out or vacations.
• Only 10 percent of participants are currently using professional 401(k) investment advice.

According to the survey, 401(k) participants feel that having professional assistance may help improve their financial situations, with the majority of participants (70%) saying they’d like personalized investment advice for their 401(k) plans.

“In our experience, people who use 401(k) investment advice tend to save more, are better diversified and stay the course during market uncertainty,” noted Catherine Golladay, senior vice president of participant services and administration at Schwab Retirement Plan Services, Inc. “Advice helps build confidence, too. Roughly three-quarters (74%) of the people we surveyed say they’d feel very or extremely confident making 401(k) decisions with the help of a financial professional. Only 44 percent would feel that same level of confidence on their own.”

The survey shows that participants also want help setting specific benchmarks for their retirement, including:

• 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%)
• Anticipating tax expenses in retirement (38%)

Financial Wellness Welcomed in the Workplace

The desire for help and guidance extends beyond 401(k) investing and retirement planning. The vast majority (85%) of respondents say they would be interested in using a financial wellness program if it were offered by their employer.

In fact, the survey found that people are already managing basic financial tasks at work, including paying bills (67%), taking care of personal financial issues (62%), managing their 401(k) (56%) and checking up on non-retirement investment accounts (41%).

“People look at retirement savings as part of their overall financial picture,” added Anderson. “Employers are in a unique position to address the needs of their employees more holistically. An increasing number of employers now recognize that a workplace financial wellness program can not only help alleviate the financial stress employees feel, but it can also increase retention, loyalty and engagement.”

Pocketbooks & Politics

Issues around personal finance could help drive the upcoming presidential election, according to the survey. An overwhelming majority (77%) of respondents consider the ability to save enough for retirement a major public policy issue.

Participants are split, though, on which presidential candidate will be better for their own economic security. Fifty-two percent say Democrat Hillary Clinton has the edge on pocketbook issues compared to Republican Donald Trump (48%).

In the survey, Clinton fared better with Millennials (60%) and women (61%) while Trump’s support came from Baby Boomers (55%) and men (55%).

About the Survey

This online survey of U.S. 401(k) participants was conducted by Koski Research for Schwab Retirement Plan Services, Inc. Koski Research is neither affiliated with, nor employed by, Schwab Retirement Plan Services, Inc. The survey is based on 1,000 interviews and has a 3 percent margin of error at the 95 percent confidence level. Survey respondents worked for companies with at least 25 employees, were current contributors to their 401(k) plans and were 25-70 years old. Survey respondents were not asked to indicate whether they had 401(k) accounts with Schwab Retirement Plan Services, Inc. All data is self-reported by study participants and is not verified or validated. Respondents participated in the study between June 2 and June 8, 2016. Detailed results can be found here.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube and LinkedIn.

Financial tools and resources are available at www.schwabmoneywise.com.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:SCHW) provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

The Charles Schwab Corporation provides services to retirement and other benefit plans and participants through its separate but affiliated companies and subsidiaries: Charles Schwab Bank; Charles Schwab & Co., Inc.; and Schwab Retirement Plan Services, Inc. Trust, custody, and deposit products and services are available through Charles Schwab Bank. Schwab Retirement Plan Services, Inc. is not a fiduciary to retirement plans or participants and only provides recordkeeping and related services. 0816-2842

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©2016 Schwab Retirement Plan Services, Inc. All rights reserved.

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