With inflation slowly easing, workers are more confident in their ability to reach financial goals in retirement than they were a year ago, according to the results of a survey recently released by Charles Schwab.
The online poll of 1,000 401(k) plan participants in the United States was conducted by Logica Research between April 17 and May 3.
“Workers are feeling more optimistic about their retirement prospects and an improving economic climate tends to boost financial confidence, but it’s not the only factor,” Managing Director of Schwab Retirement Plan Services Lee McAdoo stated.
Forty-three percent of workers think they are very likely to meet their retirement savings goals, compared with 37% last year, data show. The goal, on average, is to save approximately $1.8 million for retirement, which is the same as last year, and workers said they expect their nest egg to last 23 years after they retire at age 65.
“We’re seeing heightened awareness around 401(k) investments and performance — a promising sign that workers are actively engaging with their accounts and cultivating knowledge to help them reach their goals,” McAdoo said.
Most (92%) of the survey respondents said they know what investments are in their 401(k) account. That percentage is up from 88% in 2023. Workers also are more engaged in choosing investments for their 401(k) accounts and monitoring how the accounts are performing, according to survey results.
One possible reason for increased confidence in 401(k) saving, Schwab said, could be a declining confidence in the solvency of the Social Security program.
“Workers who are within 10 years of retirement expect to rely much more on Social Security than those further from retirement,” according to the firm. “Those who will still be working for at least 11 more years expect to rely more on their 401(k) than those closer to retirement.”
That doesn’t mean that workers are ready to navigate the waters of financial planning without help, however, the experts say.
“Improved 401(k) confidence is not necessarily an indicator that workers are comfortable going it alone,” said Marci Stewart, director of client experience at Schwab Workplace Financial Services.
According to the survey, workers are most likely to say they seek advice directly through their 401(k) plans (39%), followed closely by their financial advisers (35%), family members and friends (27%) and employers (25%).
Human advice still outweighs artificial intelligence for retirement planning, the survey found. Whereas 61% of the respondents said they are comfortable using AI tools (up 49% from 2023), 60% of all respondents said they are likely to follow advice from a professional rather than computer-generated recommendations (19%).
