Retirement Outlook

Americans With Workplace Retirement Plans Say $1.2 Million Is Needed To Retire Comfortably

Nearly half expect to have less than $500,000

The Schroders 2024 U.S. Retirement Survey reveals ‘fear allocation’ keeping investors from participating in equity market gains and much needed growth. View the full report here.

NEW YORK–(BUSINESS WIRE)–According to the Schroders 2024 U.S. Retirement Survey, Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan), believe they will need $1,200,000 saved to retire comfortably, yet 46% expect to have less than $500,000 in savings at retirement – including 23% who say they will have less than $250,000. Just 29% believe they will reach the $1-million mark before retiring. The average age at which plan participants expect to retire is 63.

“The difference between how much money plan participants say they need to live comfortably and how much they expect to have saved is miles apart for most retirement savers,” said Deb Boyden, Head of US Defined Contribution, Schroders. “While the magic retirement savings number is over $1 million for many plan participants, they are not saving or investing correctly to reach this goal. Without better planning and a roadmap to close the savings gap, a comfortable retirement will be out of reach.”

The Fear Allocation: Plan Participants Want (and Need) More Guidance

More than one-quarter of plan participants (28%) say they have no idea how their retirement assets are allocated. Among those that do, allocations across all retirement investments (including workplace plans, IRAs, or other retirement accounts) suggest they are investing emotionally.

Allocation of retirement investments by Americans who currently participate in a workplace retirement plan:

The most commonly cited reason for holding cash in their retirement accounts was fear – 66% of plan participants say their cash allocation stems from a fear of losing too much money if the stock market goes down, and 24% report they are not sure how to invest their cash holdings.

“Fear can hold us back in many different aspects of life – including retirement planning,” said Boyden. “For savers with long-term horizons, large cash allocations create an opportunity cost that prevents you from taking advantage of the powerful benefits of compound growth.”

More than two-in-three (70%) say their workplace plan is their single most important retirement asset, 59% wish they received more guidance from their employer on how to invest plan assets, and less than half (42%) are working with a financial advisor.

Over One-Third of Plan Participants Have Lost Sleep Worrying About Finances

While nearly half (49%) of plan participants say the value of their investment portfolio increased significantly in 2023, 40% admit they don’t know how to protect these gains. Further, most plan participants (60%) believe they worry too much about money, and 39% have lost sleep worrying about their financial situation.

Additionally, 88% are concerned with how the 2024 US presidential election will impact their retirement savings. However, 32% say they will not make any changes to their retirement investments leading up to the election, 32% are unsure if they will make changes, and 28% plan to make their portfolio more conservative. Just 9% of plan participants expect to get more aggressive with their retirement investments leading up to November.

 

 

 

About The Survey
The Schroders 2024 US Retirement Survey was conducted by 8 Acre Perspective among 2,000 US investors nationwide ages 28-79, including 780 Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan). The survey was conducted from March 15 to April 5 in 2024.
For more information on the Schroders 2024 U.S. Retirement Survey, visit here.
Schroders plc
Schroders is a global investment management firm with £750.6 billion (€866.2 billion; $956.9 billion) assets under management, as at 31 December 2023. Schroders continues to deliver strong financial results in ever challenging market conditions, with a market capitalisation of circa £7 billion and over 6,100 employees across 38 locations. Established in 1804, the founding family remains a core shareholder, holding approximately 44% of Schroders’ shares.
Schroders has benefited from a diverse business model by geography, asset class and client type. It offers innovative products and solutions across four core growing business areas; asset management, solutions, Schroders Capital (private markets) and wealth management. Clients include insurance companies, pension schemes, sovereign wealth funds, high net worth individuals and foundations. Schroders also manages assets for end clients as part of its relationships with distributors, financial advisers and online platforms.
Schroders aims to provide excellent investment performance to clients through active management. It also channels capital into sustainable and durable businesses to accelerate positive change in the world. Schroders’ business philosophy is based on the belief that if we deliver for clients, we will deliver for our shareholders and other stakeholders.

 

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