Schwab 401(k) Study: Confidence Among Workers Improves as Inflation and Market Volatility Concerns Soften
Demand for advice rises as 401(k) investors grow more bullish on professional help
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
“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
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
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
Overall, respondents expect 43% of their retirement income to come from a 401(k), up from 40% last year. They expect
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% |
|
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
About the survey
This online survey of 1,
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Disclosures
0724-C23D
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