Inflation and market volatility are making it harder for workers to save for retirement, according to an analysis by Charles Schwab.
More than half (62%) of workers see inflation as an obstacle to saving for a comfortable retirement, up from 45% last year. Meanwhile, 42% said stock market volatility is an obstacle.
Key Takeaways
- 62% of workers see inflation as an obstacle to saving for a comfortable retirement.
- Workers believe they will need $1.8 million in retirement savings.
- Half of all workers think they might reach their goals, yet 40% of Gen-Xers have no retirement savings at all.
Half Think They Might Reach Their Goals
The current economic situation has impacted the spending and saving habits of 78% of Americans, and 36% are putting off retirement, according to the survey.
Workers said they need $1.8 million in retirement savings, up from $1.7 million last year. Only 37% of workers think they’ll save that much, down 10% from last year. Even so, nearly half feel somewhat likely to reach their goals, compared to the 14% that feel not at all likely to do so.
Even this may seem optimistic, given the recent National Institute on Retirement Security (NIRS) report that the average Gen-X household (born between 1965 and 1980) has only $40,000 in retirement savings.
401k Still a Priority
According to Charles Schwab’s report, 38% of workers would like guidance about when to retire, with 40% wanting information on how to invest their 401(k) and 36% wanting to know about creating an income stream for retirement.
“While many workers are trying to cut back on spending, some costs are unavoidable, and certain areas of their finances have taken a hit. Despite these challenges, retirement saving continues to be a priority for workers, who have maintained their 401(k) savings rates and largely stayed on top of their 401(k) investments over the past year,” said Brian Bender, head of Charles Schwab Workplace Financial Services.
Fortunately, many of those 50 and older can take advantage of the current tax code allowing “catch-up” contributions to tax-advantaged retirement plans, like a workplace 401(k) or 403(b). For 2023, participants over 50 can put an extra $7,500 in their traditional or Roth 401(k) or 403(b) plans.