A 401(k) is usually workers’ first experience with investing, expert says
If you’re one of the millions of Americans making less or receiving unemployment benefits because of the coronavirus pandemic, you’re probably working to recalibrate your finances.is a must-have benefit, and three in four would refuse a new job if it did not offer one as they prioritize saving for retirement amid inflation and volatility.
"The 401 plays a massive role in so many employees’ future plans," says Marci Stewart, director of communication consulting and participant education for Schwab Workplace Financial Services. "The impact of the pandemic and the inflation and market uncertainty that followed have continued to increase the importance of 401 plans for workers., so it makes sense that they already have a certain level of comfort with it.
"However, that’s not the only reason they are inclined to prioritize it," she continues. "Workers tell us they are relying on their 401 as their primary source of income in retirement. They expect it to deliver 40% of their retirement income, which is double the next closest source, Social Security, at 20% of retirement income.", and they’re counting on their 401 to help them reach their goals.
"Even one or two percentage points can make a big difference over time," Stewart says. "But don’t stop there. If you can up your savings rate a bit each year starting out, you’ll be establishing a powerful habit that will serve you well. Many plans have an ‘auto-increase’ feature that lets you boost your savings rate automatically each year when you get a raise."Among the findings, the Schwab survey of 1,000 currently employed U.S.
The data also reveals that workers now believe they’ll need to save an average of $1.8 million for retirement and 37% of workers think it’s very likely they’ll achieve this target, down by 10% from last year. But, the findings show workers are still hopeful: nearly half still feel somewhat likely to reach their goals and only 14% feel they are not at all likely to reach their goals.
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