Inflation is weakening 401(k) savings ability for millions of Americans, says Schwab
When household budgets are squeezed, it can be hard to prioritize finances for the future when bills need to be paid today.
But such is the importance placed on retirement savings by millions of working Americans, that continuing to make contributions to their 401(k) remains a priority even as stubborn inflation is making it harder to make ends meet.
A new survey from Charles Schwab shows that 62% of respondents are finding inflation a challenge to saving for a comfortable retirement (up from 45% last year) while 42% see market volatility as an obstacle (up from 33% last year).
Spending and saving habits are being impacted by these two major factors for almost 8 in 10 poll participants and more than a third say they may need to delay retirement as a result, especially given the $1.8 million that respondents believe they need to save for a comfortable retirement.
“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. “While many workers are trying to cut back on spending, some costs are unavoidable and certain areas of their finances have taken a hit.”
The importance of a 401(k) plan is clear with 88% of respondents saying it is a must-have benefit when changing employer and three quarters stating they would refuse a job that didn’t offer this as a benefit.
“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, Communication Consulting and Participant Education for Schwab Workplace Financial Services. “That’s double what workers
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