9 August 2022

401(k) Participants Most Worried About Inflation

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Participants in 401(k) plans rank inflation as the biggest obstacle to saving for a comfortable retirement, according to a Charles Schwab survey released Tuesday.  

Almost half of the 1,000 401(k) plan participants surveyed (45%) said inflation was an obstacle, exceeding worries over keeping up with monthly expenses (35%), stock market volatility (33%), unexpected expenses (33%) and even paying off credit card debt (24%).

"Workers have been through a lot over the past two years, and it's only natural that recent economic and geopolitical turbulence has continued to fuel financial concerns," said Catherine Golladay, head of workplace financial services, in a news release.

In response to worries over inflation, most plan participants (79%) reported changing their spending, saving and investing habits, with 34% saying they were reducing the number of purchases they made. Despite the belt-tightening, participants nevertheless reported saving less in general (33%) and contributing less to their 401(k) accounts (15%).

The tough economic environment led participants to downgrade their ability to achieve their retirement savings goals, according to the survey findings. Less than half (47%) said they were very likely to meet their goals, down from 53% in 2021. More than 1 in 10 (13%) said they were not likely to meet their goals at all, up from 8% the year before.

Employers apparently were not oblivious to their workers' financial woes. A solid 3 in 5 participants (60%) said their employers were helping employees manage financial stress by, for example, increasing pay (32%), increasing the 401(k) match (23%), providing additional bonuses (20%) and decreasing hours to allow for better work-life balance (11%).

The survey was conducted between April 4 and April 19. The 1,000 survey respondents were actively employed by companies with at least 25 employees, were 401(k) plan participants and were 21 to 70 years old.

Click here for the original article.  

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