A recent survey conducted by Schwab finds that 401k savings goals and stress levels are on the rise. Participants in the survey now believe they need to save $1.9 million to be prepared for retirement.
The survey of 401k plan participants finds that saving enough for a comfortable retirement continues to be their leading source of significant financial stress. On average, these 401k participants believe they need to save $1.9 million for retirement, an increase of 12% from the $1.7 million reported in last year’s survey. Two in five participants, or 41%, also say they made a change to their 401k account due to COVID-19, citing rebalancing and increasing contribution rates as the most common changes. The top action steps taken by these individuals were a combination of defensive and potentially opportunistic moves. Of the 41% who acted, 14% rebalanced their portfolio and 12% increased their contribution rate. These individuals also indicated that they either increased (8%) or decreased (7%) their exposure to stock funds/equity.
Notably, there was a higher rate of action among the one in four (25%) of survey respondents who consulted a financial professional. Of those who sought guidance, 67% made changes in their 401k. The top three actions steps were the same as the broader group but at a higher rate: rebalancing (26%), increasing the contribution rate (22%) and increasing exposure to stock funds/equity (17%).
Survey respondents anticipate COVID-19 will have an impact on their retirement savings. Thirty-seven percent feel they are ‘very likely’ to achieve their retirement savings goals, nearly half (49%) report they are ‘somewhat likely’ to achieve their retirement savings goals and 14% say it is ‘not likely’ that they will achieve their goals. One in five (21%) expect to retire later than originally planned because of the current situation.
If you have questions regarding your 401k contributions, rebalancing or your exposure to stock funds/equity, please reach out to our team by calling 678-905-4450 or scheduling an appointment online at wiserinvestor.com.