Fewer workers expect to hit retirement nest egg number
The number is going up and the percentage of people who think they’ll get there is going down.
The number — that magical figure showing what people think they need to have tucked away to live comfortably in retirement — went up to $1.8 million this year in Charles Schwab’s annual survey of people with 401(k) savings plans.
That’s $100,000 more than last year, when inflation hit a
40-year high.
Even more surprising is the percentage of workers who think they’ll stash enough away for their golden years to hit their number. It fell to 37% — a stunning drop of 10 percentage points from last year’s confidence measure.
Weighing on their confidence — and their ability to save for retirement — are inflation and stock market volatility, according to the survey. Nearly eight in 10 respondents said those factors are influencing their spending and saving habits. Over a third indicated
they plan to delay retirement as a result.
“When inflation persists for an extended period of time, workers are inevitably going to feel a deeper impact on their wallets,” said Brian Bender, head of Schwab Workplace Financial Services, in a statement. “While many workers are trying to cut back on spending, some costs are unavoidable and certain areas of their finances have taken a hit.”
Schwab’s online survey, conducted by Logica Research, collected responses in April and
May from 1,000 Americans with 401(k) savings. Detailed results can be found here.
While confidence might be waning, the survey indicated that retirement savings plans are a priority for workers and 401(k) benefits are a must-have item for job seekers. Three in four surveyed said they’d turn down a job if it didn’t offer such a plan.
“Placing such a high priority on their 401(k) is not surprising since it is their primary
retirement resource, with workers counting on it to deliver 40% of their retirement income,” said Marci Stewart, director of communication consulting and participant education for Schwab Workplace Financial
Services. “That’s double what workers expect from the next closest source, which is Social Security at 20% of retirement income.”
Schwab reported its average retirement account balance was just over $280,000 at the end of 2022, down 20.6% year-over-year.
Other data on what Americans are tucking away for retirement is varied, depending on contribution plans and other sources of savings.
In May, Fidelity Investments said average retirement account balances in 401(k)s that it manages increased for the second straight quarter. The average 401(k) balance increased to $108,200, up 4% from the previous quarter and 5% from five years ago.
In 2022, Vanguard reported that the average retirement savings for its customers 65 and older was just under $280,000. But the median was $87,725. Three in 10 had balances under $10,000.
According to the Economic Policy Institute, the median retirement savings for all working-age households in the U.S. is $95,776. That includes employer-sponsored retirement accounts and individual retirement accounts, but not Social Security benefits.
The most alarming data comes from the Federal Reserve, which said earlier this year that 28% of Americans have no retirement savings.