Americans are generally feeling good about their finances and outlook for retirement — at least, those with 401(k) accounts are.
The latest Schwab Retirement Plan Services annual survey of 401(k) plan participants found that fully 91% believe their financial health is "pretty good or very good."
Further, 53% of survey respondents say they are "very likely" to achieve their retirement goal, up from 37% last year. The average goal respondents had in mind was $1.9 million, the same amount as last year.
Aspiring retirees cope with COVID-related challenges
For millions of Americans, the COVID-19 pandemic represented a turning point in the way they spend and save money.
On the one hand, many respondents to the Schwab survey have one or more plans to improve their retirement outlook, such as saving more in general (48%), increasing their 401(k) contributions (36%), investing more outside of their 401(k) plan (35%) and paying off debt (34%).
However, many of them also cite a variety of challenges standing in the way, including:
- Market volatility (32%)
- Unexpected expenses (29%)
- Keeping up with monthly expenses (27%)
- Education expenses (21%)
- Credit card debt (20%)
Amid these difficulties, 23% of the 401(k) plan participants surveyed feel that the COVID-19 outbreak has forced them to delay their retirement.
In fact, more than 6 in 10 respondents (61%) believe their situation could benefit from the advice of a financial professional — an 11 percentage point increase from 2020. Specifically, 401(k) plan holders most want help with:
- 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%)
- Anticipating taxes in retirement (35%)
Health savings accounts gain popularity as a workplace benefit
Survey respondents ranked 401(k) plans as the most desired workplace perk today, with 86% tagging it as a "must have" benefit. This was followed closely by health insurance (84%), as well as:
- Life insurance (50%)
- Disability insurance (43%)
- Health savings accounts (38%)
Interest in health savings accounts (HSAs) saw an increase among respondents this year (38%), compared with in 2020 (32%). But although 79% of those questioned say their employer provides them with an HSA, only 49% take advantage of it.
A survey from Lively conducted at roughly the same time indicated that, with many Americans (around 7 in 8) agreeing that health care costs are increasing, 61% worry about covering health expenses in retirement.
This may be why Schwab found that more respondents are using HSAs to save for health care in retirement — with 54% doing so in 2021, versus 41% in 2020.
Methodology: Logica Research conducted an online survey of 1,000 U.S. 401(k) participants on behalf of Schwab Retirement Plan Services, Inc. between April 1 and April 15, 2021. Survey participants met the following criteria:
In addition, another 100 members of Generation Z with 401(k) plans also participated. Data in the 2021 survey was also rebased on participants from ages 25 to 70, to make adequate comparisons to previous editions.