401(k) Savers Cut Back on Personal Spending, Not Retirement
Good job staying the course, retirement savers! Charles Schwab’s annual survey of 401(k) participants released today found that savers are maintaining their retirement account contributions while cutting personal spending to battle inflation, cited as the top obstacle (57%) to reaching a comfortable retirement.
“It’s encouraging to see that most savers are prioritizing consistency in terms of their contribution rates and are largely avoiding dipping into their retirement savings.”
Lee McAdoo, Schwab Retirement Plan Services
Among the key findings of the survey of 1,100 U.S. workers with 401(k) plans is that participants are responding to economic conditions by reducing purchases (40%) and buying cheaper products (39%), but they aren’t cutting back on their 401(k)s. Only 11% reduced 401(k) contributions.
In addition, 401(k) loans and hardship withdrawals are down to 21% from 26% a year ago, according to the survey.
“It’s encouraging to see that most savers are prioritizing consistency in terms of their contribution rates and are largely avoiding dipping into their retirement savings—a positive sign that they are focused on their futures,” said Lee McAdoo, Managing Director, Schwab Retirement Plan Services.
The survey also found that about one quarter (23%) say they have adjusted their 401(k) portfolio due to inflation and volatility, and those who made changes primarily shifted their investments to be more conservative (79%).
Interestingly, a large majority—83%—also say they are currently receiving financial advice. They’re most likely to tap their 401(k) plan (38%), family and friends (29%), or financial advisor (29%) for guidance.
“Whether you’re well off, struggling to make ends meet, or somewhere in between, we believe everyone can benefit from financial advice, and should have access to quality support,” said Marci Stewart, Director, Client Experience, Schwab Workplace Financial Services. “Just 27% of participants feel very confident making 401(k) investment decisions on their own. That level of confidence nearly doubles (51%) with the help of a financial professional.”
Savings goals
Inflation and market volatility also has retirement savers spooked about hitting their savings goals. One-third (34%) of participants feel they are very likely to achieve their savings goals, down significantly from 43% in 2024. Gen Z is by far the most confident about doing so, with 53% saying it is “very likely” compared to 32% of Millennials, 31% of Gen X and 36% of Boomers.
On average, workers surveyed by Schwab expect to retire at age 66 and believe they will need $1.6 million saved to do so (more than the $1.3 million found in Schroder’s 2025 U.S. Retirement Survey or the$1.26 million reported in Northwestern Mutual’s 2025 Planning & Progress Study). Schwab survey respondents estimate their savings will last 22 years in retirement.
Taking a closer look at generations, Gen Z also expects to retire earlier than other generations (at age 62), while the average expected retirement age of Boomers surveyed was 69. Millennials (65) and Gen X (66) were more traditional in their expected retirement ages.
Heavier reliance on 401(k)s
In another positive development for the workplace retirement plan market, savers have become increasingly reliant on their workplace plans for retirement income in recent years. On average, they estimate that their 401(k)s will provide 45% of their retirement income, which is up 2% from last year. Social Security is expected to contribute 18% to retirement income, also a 2% increase.
And that’s low—or lower than Social Security itself reports. According to the Social Security Administration and research from the Center on Budget and Policy Priorities, Social Security on average replaces about 37% of past earnings for all retired workers (as of 2023 estimates).
Must-have benefit
401(k) plans (85%) and health insurance (86%) are by far the most critical must-have benefits for workers and continue to be key for attracting talent, the Schwab survey found. Three-quarters (74%) say they wouldn’t take a job without a 401(k).
“We see employers playing a vital, expanding role in employees’ financial lives well beyond providing a paycheck,” said Stewart. “While the outlook for inflation is cloudy and market volatility remains a part of life, workplace benefits, including holistic financial support, can provide a welcome sense of stability and confidence for employees.”
Most participants (57%) say their employer has taken action to help manage their financial stress and the most common way is by increasing pay (33%). Participants also say their employers helped through an increased 401(k) match (15%), additional bonus (14%), and increased or added benefits (14%).
Among those who say their employer expanded or provided additional benefits to manage their financial stress, the most commonly provided benefit was a health savings account.
Schwab’s online survey of 1,000 U.S. 401(k) plan participants and an additional 100 Gen Z plan participants was conducted by Logica Research this spring. Survey respondents were actively employed by companies with at least 25 employees, were 401(k) plan participants, and were 21-70 years old. Survey respondents include participants served by approximately 16 different retirement plan providers. All data is self-reported by study participants and is not verified or validated. Detailed results can be found here.
SEE ALSO:
• How Much Americans Need to Feel ‘Financially Comfortable’ in 2025
• $1.3 Million Needed to Retire Comfortably, Say Workplace Retirement Plan Participants
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
