Demand for advice rises as 401(k) investors
grow more bullish on professional help
Workers are feeling more confident about their ability to reach
their financial goals for retirement as anxiety around inflation
and market volatility has come down since last year, according to a
new survey from Charles Schwab. The annual nationwide survey of
401(k) plan participants finds that 43% of workers think they are
very likely to achieve their retirement savings goals compared to
37% in 2023.
Inflation and stock market volatility continue to be the biggest
obstacles to saving for a comfortable retirement, though workers
are slightly less concerned about both factors in 2024.
Top obstacles to saving for a
comfortable retirement
2023
2024
Inflation
62%
58%
Market volatility
42%
36%
Workers still think they need to save $1.8 million for
retirement, the same as last year, and on average, they expect
their nest egg to last 23 years after retiring at age 65.
“Workers are feeling more optimistic about their retirement
prospects and an improving economic climate tends to boost
financial confidence, but it’s not the only factor,” said Lee
McAdoo, Managing Director of Schwab Retirement Plan Services.
“We’re seeing heightened awareness around 401(k) investments and
performance – a promising sign that workers are actively engaging
with their accounts and cultivating knowledge to help them reach
their goals.”
Only 8% of survey respondents say they don’t know what
investments are in their 401(k) account, an improvement from 12% in
2023. In addition, more workers say they know what investments to
choose for their 401(k) (69% up from 65% in 2023) and 92% know how
their 401(k) is performing.
Workers: I get by with a little help from my friends
As confidence and 401(k) knowledge have improved, workers’
appetite for financial advice has increased as well.
Sixty-one percent feel their financial situation warrants advice
from a professional, higher than last year (55%). Plus, more
workers would be very confident in making the right 401(k)
investment decisions with the help of a financial professional
(55%, up from 49%), than they would making those decisions on their
own (29%, up from 27%).
Workers are most likely to say they seek advice directly through
their 401(k) plan (39%), followed closely by their financial
advisor (35%), family and friends (27%), and their employer (25%).
Sixty-one percent are comfortable asking artificial intelligence
tools like ChatGPT for help with financial planning, up from 49% in
2023. Still, more say they are very likely to follow human
professional advice recommendations (60%) rather than
computer-generated recommendations (19%).
“Improved 401(k) confidence is not necessarily an indicator that
workers are comfortable going it alone,” said Marci Stewart,
Director of Client Experience at Schwab Workplace Financial
Services. “In fact, they are realizing that professional help has
the potential to further accelerate their progress. Self-guided
education and computer-generated advice can provide solid financial
wellness support, and a human professional can validate your plan
and make more tailored recommendations, which can be invaluable for
feeling more confident and financially secure in the long
term.”
The emerging retirement challenge: solving the income
puzzle
The survey finds that more workers would like help with creating
an income stream in retirement — a possible symptom of waning
confidence in Social Security.
Overall, respondents expect 43% of their retirement income to
come from a 401(k), up from 40% last year. They expect Social
Security to make up 16% of their retirement income on average, down
from 20% last year. Workers who are within 10 years of retirement
expect to rely much more on Social Security than those further from
retirement. Those who will still be working for at least 11 more
years expect to rely more on their 401(k) than those closer to
retirement.
Expected percentage of retirement
income by source
Within 10 years of retirement
11 or more years from
retirement
401(k) (participant’s and spouse/partner’s
401(k))
37%
45%
Social Security
22%
13%
Additional sources (e.g., investments,
defined benefit plans, company stock plans, part-time work)
41%
42%
Workers who are closer to retirement also have focused on
investing outside their 401(k) through individual retirement
accounts and brokerage accounts significantly more than those who
are further from retirement. Savings accounts are popular among all
workers, and a significant share of workers are using health
savings accounts and company stock plans to save for retirement,
too.
“Uncertainty about the future of Social Security means employers
will play an increasingly important role in helping workers develop
a retirement income stream not only through their 401(k), but also
through other workplace financial benefits that can include health
savings accounts, company stock plans and traditional pension
plans,” said Stewart.
About the survey
This online survey of 1,000 U.S. 401(k) plan participants was
conducted by Logica Research between April 17 and May 3, 2024.
Survey respondents were actively employed by companies with at
least 25 employees, were 401(k) plan participants and were 21-70
years old. Survey respondents include participants served by
approximately 15 different retirement plan providers. All data is
self-reported by study participants and is not verified or
validated. 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 X, Facebook, YouTube and LinkedIn.
Disclosures
Workplace Financial Services is a business enterprise which
offers products and services through Schwab Retirement Plan
Services, Inc.; Schwab Stock Plan Services; and Designated
Brokerage Services. Schwab Retirement Plan Services, Inc., provides
recordkeeping and related services with respect to retirement
plans. Schwab Stock Plan Services is a division of Charles Schwab
& Co., Inc. providing equity compensation plan services and
brokerage solutions for corporate clients. Schwab Designated
Brokerage Services (DBS), a division of Charles Schwab & Co.,
Inc., provides technology solutions for corporate clients with
regulatory requirements to monitor employee security transactions.
Schwab Retirement Plan Services, Inc., and Charles Schwab &
Co., Inc. (“Schwab”) (Member SIPC) are separate but affiliated
entities, and each is a subsidiary of The Charles Schwab
Corporation.
0724-C23D
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version on businesswire.com: https://www.businesswire.com/news/home/20240724006959/en/
Mike Peterson Charles Schwab 330-908-4334
mike.peterson@schwab.com
Carly Taylor The Neibart Group 973-618-6993
SchwabRPS@neibartgroup.com
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