Retirement Savers Concerned about Inflation and Stock-Market Volatility

A recent survey conducted by Charles Schwab reveals that inflation and stock-market volatility are causing unease among retirement savers. Over 60% of participants in 401(k) plans view inflation as a hindrance to saving for a comfortable retirement. This is a notable increase from the 45% who expressed the same concern last year. Furthermore, 40% of respondents now perceive the stock market as an obstacle to their retirement savings, compared to only one-third in the previous year.

The survey by Schwab encompassed the perspectives of 1,000 401(k) plan participants across 15 different retirement-plan providers. The findings highlight a perceived need to accumulate an average of $1.8 million for retirement among workers; however, only 37% believe they will achieve this goal. This figure represents a decline of 10 percentage points from the previous year, when participants estimated a requirement of $1.7 million.

Worries about the future extend beyond the surveyed group from Schwab. The Schroders 2023 U.S. Retirement Survey, involving 2,000 individuals aged 45 or older, reveals that many Americans in this demographic anticipate needing approximately $1.1 million to retire, but only 20% believe they will reach that target. A majority of workers (60%) expect to have less than half a million dollars saved by retirement.

The importance of saving for retirement is evident in the priorities of employees when seeking employment, with many specifically looking for benefits like a 401(k). The Schwab survey shows that nearly 90% of workers consider a 401(k) to be a necessity, just slightly behind healthcare at 90%. This is understandable considering that workers anticipate deriving 40% of their retirement income from their 401(k) plans, while the remaining funds will come from sources like Social Security, personal savings, pensions, or part-time work.