According to a Charles Schwab survey, workers in the United States anticipate they would need to save roughly $1.8 million for retirement, as inflation fuels concerns about finances.
This estimate is higher than last year’s $1.7 million, with 37 percent of respondents saying they are very likely to accomplish it, a 10 percentage point decrease from last year, according to the survey.
According to the study of 401(k) members, 62 percent of workers see inflation as a hurdle to saving for a “comfortable retirement,” up from 45 percent last year, and 42 percent see stock market volatility as an impediment, up from 33 percent last year. Around 78 percent indicated inflation and stock market volatility influence their spending and saving habits, and 36 percent stated they expect to postpone retirement due to these conditions.
A 401(k) plan is becoming a prerequisite for potential employees; 88 percent said it is a “must-have benefit,” and three out of four respondents said they would turn down a new job if it did not provide a 401(k).
“While many employees are attempting to cut back on spending, some costs are unavoidable, and certain areas of their finances have suffered,” said Brian Bender, president of Schwab Workplace Financial Services. “Despite these challenges, retirement saving continues to be a priority for workers, who have maintained their 401(k) savings rates and largely stayed on top of their 401(k) investments over the past year.”
More employees are saving for retirement: 68 percent reported putting money into a savings account, up from 61 percent last year; 47 percent reported IRA investments, up from 33 percent last year; and 38 percent reported investing through a brokerage account, up from 29 percent.
The survey also discussed the role of artificial intelligence (AI) in financial planning, with 95 percent of workers still preferring human counsel over computer-generated advice. Workers’ trust in financial decisions increases from 27% to 49% when they receive professional counsel.
The majority of workers, 73 percent, indicated they would like individualized guidance on their 401(k), while 39 percent said they get such advice through work programs.
The study comes at a time when inflation is high across the country.
Last week, Federal Reserve Chair Jerome Powell stated that there is still “a long way to go” before inflation returns to its target of 2 percent. In an effort to combat inflation, the Fed hiked its benchmark interest rate to its highest level in 22 years in July.
From April 19 to May 2, Logica Research conducted online research on 1,000 401(k) members in the United States. In addition to being 401(k) respondents, those polled worked for organizations with at least 25 workers and ranged in age from 21 to 70. The study revealed that participants self-reported the data without any checks or validations.
