A new survey finds that the use of an online retirement calculator has spurred more than half of those who did to take positive actions related to their finances.
The nationwide survey of 1,000 401(k) plan participants by Schwab Retirement Plan Services found that just over half (52%) have used an online retirement calculator, and of those who had nearly three quarters (71%) felt encouraged and wanted to learn more, while 61% went on to take positive actions related to their finances, such as:
- 48% increasing their 401(k) contributions
- 29% changing their spending habits
- 25% increased their contributions to other retirement accounts
- 23% asked a financial professional for advice
On average, participants think they need $1.7 million saved for retirement. But, on average, we’re talking a third saying they need between $1 million and $3 million, with the rest:
- 1% - $10 million or more
- 2% - $5 million to less than $10 million
- 8% - $3 million to less than $5 million
- 14% - $750,000 to less than $1 million
- 11% - $500,000 to less than $750,000
- 10% - $250,000 to less than $500,000
- 7% - $100,000 to less than $250,000
- 4% - less than $100,000
The top obstacles participants face when trying to save for retirement are paying for unexpected expenses like home repairs (37%), paying off credit card debt (31%), and needing enough money for basic monthly bills (30%). For this group, anyway, student debt wasn’t a problem; just 14% cited paying off student loans as an obstacle.
Nearly a quarter (23%) say they are saving “the maximum,” though it wasn’t clear whether that was hitting a statutory, a plan limit, or simply as much as they could afford. Nearly a third (31%) were saving 6-10%, 15% were setting aside 11-15%, 9% were saving more than 15%. Roughly one in five were saving 1-5%.
When deciding how much to contribute to their plan initially, most participants (55%) chose a percentage they were comfortable with and a third (36%) chose the match percentage.
Providing validation for the concepts of auto-escalation and qualified default investment alternatives, a third of participants who were auto-enrolled have never increased their contribution rate, and 44% have never changed their investment selections. On the other hand, that means that two-thirds have increased their contribution rate – and more than 1 in 10 have done so four or more times!
It is perhaps not surprising that most (58%) said the 401(k) was their only (18%) or largest (40%) source of retirement savings, particularly since two-thirds (65%) of those surveyed say participating in a 401(k) plan was their first experience with investing.
Nearly all of those surveyed (95%) acknowledge they would feel confident in making the right financial decisions with professional help, yet just half (52%) of participants feel their situation actually warrants financial advice. Survey participants named some of the specific areas where they would like help, including:
- 41% determining at what age they can afford to retire
- 40% calculating how much they need to save for retirement
- 37% receiving specific advice on how to invest their 401(k)
- 35% figuring out what their expenses will be in retirement
The vast majority of participants (87%) consider a 401(k) a must-have benefit. Only health insurance ranked higher (89%).