A recent CNBC Your Money Survey has shed light on a growing concern among Americans: rising financial stress and its direct impact on retirement savings. The survey was conducted by SurveyMonkey, which polled over 4,300 adults in late August. It found that 74% of respondents are grappling with financial anxieties, a 4% increase from April. Alarmingly, 41% of these workers are not contributing to their 401(k) or employer-sponsored plans, potentially jeopardizing their financial futures.
The primary stressors identified in the report included inflation, escalating interest rates, and insufficient personal savings. While a majority, or 57%, are still contributing to retirement plans, a significant portion of the U.S. workforce seem to be missing this investment opportunity. Among those who are contributing to a plan, 46% contribute what they can afford, 24% save up to their employer’s match limit, 11% reach the year’s employee contribution cap, and 8% stick to the default amount set by their plan.
The 401(k) contribution limits in 2023 stand at $22,500 for workers under 50, with an additional $7,500 “catch-up” for those 50 and older, according to CNBC. It’s reported that some plans even permit after-tax contributions, allowing potential savings of up to $73,500 with catchups. However, the research further reveals that a concerning 46% remain unaware of their 401(k) investments, and 56% feel their savings fall short for a comfortable retirement.
If the trend persists in the U.S., it could lead to a diminished average retirement savings indicating that even more in the workforce will delay retirement — contributing to a workforce with a broader age range. An older average age for employees will likely become a more common observation, with those from the Baby boomer generation working alongside younger Gen Z counterparts.
In light of these findings, both employers and policymakers should strategize to support workers in their retirement savings pursuits, ensuring a secure financial future for all.
