Retirement Optimism Jumps, Along with Demand for Advice – National Association of Plan Advisors

Market%20performancePlan participants’ confidence about achieving their retirement goals has risen sharply since the start of the pandemic, along with their interest in financial advice, new survey results show. 

According to Schwab’s annual nationwide survey of 401(k) plan participants, more than half (53%) say they are “very likely” to achieve their retirement goals, compared with only 37% who said the same in 2020. On average, plan participants in 2021 believe they need to save $1.9 million for retirement, which is the same amount as in 2020. Nearly all (91%) say their financial health is either very good or pretty good. 

Many participants report that the pandemic changed the way they approach saving and spending. Schwab found that:

  • 48% plan to save more in general;
  • 36% plan to increase their 401(k) contribution rate;
  • 35% plan to invest more outside of their 401(k) plan; and 
  • 34% plan to pay off debt. 

Advice Warranted

Despite the optimism, workers still face savings obstacles, with 23% thinking they will retire later than planned, despite doing well financially. The top concerns that might get in the way of saving for retirement include market volatility (32%), unexpected expenses (29%) and monthly expenses (27%). Consequently, 6 in 10 (61%) think their financial situation warrants professional advice to address these kinds of challenges, compared with half (50%) who said so in 2020. 

The top four retirement planning areas where participants want help are:

  • calculating a retirement savings goal (44%);
  • receiving advice on how to invest a 401(k) (39%);
  • figuring out how to create income in retirement (35%); and 
  • anticipating taxes in retirement (35%). 

The percentage of survey respondents who are very confident making their own 401(k) investment decisions has increased from 25% in 2019 to 40% in 2021. However, that still lags those who are very confident in making investment decisions with the help of a financial professional: 44% in 2019 and 56% in 2021.   

‘Must-Have’ Benefits

Not surprisingly, 401(k) plans (86%) and health insurance (84%) again top the list of desired workplace benefits, with more than 8 in 10 participants saying these are “must-haves.” Other top-five must-have benefits, according to survey respondents, are life insurance (50%), disability insurance (43%), and health savings accounts (38%).

Schwab found that among these other benefits, HSAs had the largest increase in respondents who consider them must-haves compared with 2020, growing from 32% to 38%. More participants also say they are using HSAs to save for health care expenses in retirement—registering at 54% in 2021, compared with 41% in 2020.

“We experienced tremendous stress in our work and home lives this past year that highlighted the importance of financial wellness and the value of trusted advice,” notes Catherine Golladay, head of Schwab Workplace Financial Services. “Now, as we emerge from the pandemic, employers have an opportunity to engage employees with education, advice and a range of other workplace benefits to help them build financial security and increase satisfaction at work.”

The online survey of 1,000 U.S. 401(k) participants was conducted by Logica Research for Schwab Retirement Plan Services between April 1–15, 2021. Survey respondents were actively employed by companies with at least 25 employees, were 401(k) plan participants and were 21-70 years old.