Schwab 401(k) Survey Shows Sharp Increase in Confidence and Demand for Financial Advice

Workers’ confidence about achieving retirement goals has risen sharply since last year according to a new survey from Schwab Retirement Plan Services, and so has their appetite for financial advice. The annual nationwide survey of 401(k) plan participants finds that more than half (53%) say they are very likely to achieve their retirement goals, compared to 37% in 2020. On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020. Ninety-one percent say their financial health is very good or pretty good.

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Catherine Golladay, Executive Vice President, Workplace Financial Services at Schwab (Photo: Business Wire)

“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,” said 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.”

In COVID’s Wake, Workers Plan to Save More and Want More Help

Many participants report the pandemic has changed the way they approach saving and spending, with 48% planning to save more in general, 36% planning to increase their 401(k) contribution rate, 35% planning to invest more outside of their 401(k) plan, and 34% planning to pay off debt.

Despite their optimism, many participants also face obstacles to saving for retirement, including market volatility (32%), unexpected expenses (29%), keeping up with monthly expenses (27%), education expenses (21%), and credit card debt (20%). After more than a year of the pandemic, 23% feel they will have to delay retirement due to COVID. Six in ten (61%) think their financial situation warrants professional advice to address these kinds of challenges, compared with half (50%) 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 but 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.