Participants in 401(k) retirement plans say they need an average of $1.9 million for retirement, up 12% from the $1.7 million reported last year, according to a survey from Schwab Retirement Plan Services. Younger investors, including millennials and Gen X, say they’ll need an average of $2 million, while boomers believe they’ll need $1.6 million to retire comfortably.
While saving for retirement is often the top source of financial stress for 401(k) participants, COVID-19 has exacerbated their anxiety around long-term retirement savings, the Schwab survey of 1,000 currently employed 401(k) plan participants found.
“Saving for retirement has been a top financial stressor for people even when the markets were setting records and we were living through the longest bull market in history,” said Catherine Golladay, executive vice president and head of Workplace Financial Services at Charles Schwab. “Now we are in a new reality where people are trying to navigate the health and financial challenges right in front of them, while also worrying about their long-term goals. It is a lot, and we know workers can benefit if they talk to a financial professional to help them work out the right steps for their situation.”
Two in five participants said they made a change to their 401(k) account due to the pandemic, including rebalancing and boosting contribution rates. Those working with a financial professional were more likely to take action, with 67% of those folks making changes in their 401(k)s.