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A nationwide survey by Charles Schwab of 1,000 currently employed 401(k) participants found that on average, respondents believe they need to save $1.9 million for retirement, a 12% increase compared to 2019.
The average differs slightly by generation: Millennials and Gen X believe they need at least $2 million to retire comfortably, while baby boomers put the number around $1.6 million.
But many believe their retirement goals are out of reach. Only 37% think they are "very likely" to achieve their goals, 49% say they are "somewhat likely" and 14% say it is "not likely" they will achieve their goals at all.
One in five, or 21%, said they expect to retire later than originally planned because of the economic downturn caused by the pandemic.
As a result, the virus-induced crisis is causing Americans to reconsider and make changes to their retirement plans and goals. More than 40% of respondents made changes to their 401(k) as a direct result of the pandemic and the economic downturn that it triggered.
About one in six individuals, or 15%, rebalanced their portfolios, while 12% increased their contribution rate. Another 8% increased their exposure to stock funds and equity, while 7% pared down their exposure.
“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 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."
There is a higher rate of action among the 25% of individuals who consulted a financial professional. Of those who sought guidance, 67% made changes in their 401(k), with 26% rebalancing, 22% increasing the contribution rate and 17% increasing exposure to stock funds and equity.
“Getting help and leveraging the financial planning tools and resources your company makes available can help you understand whether you are on track, or need to make adjustments to meet your long-term retirement goals, despite the challenges of the current environment," Golladay said.