Workers Bank on 401(k) for Retirement but Need Help Making the Most of It, Says New Schwab Survey

  Workers Bank on 401(k) for Retirement but Need Help Making the Most of It,
  Says New Schwab Survey

  Majority in Survey Say 401(k) Investments Harder to Understand Than Health
                                Care Benefits

Business Wire

SAN FRANCISCO -- August 15, 2013

The majority of  American workers in a new survey accept responsibility for
financing their own retirement and are relying primarily on their 401(k) to
get them there, but many lack the confidence to effectively manage their
retirement savings.

Steve Anderson, Executive Vice President of Schwab Retirement Plan Services
(Photo: Business Wire)

Steve Anderson, Executive Vice President of Schwab Retirement Plan Services
(Photo: Business Wire)

The nationwide survey of more than 1,000 401(k) plan participants,
commissioned by Schwab Retirement Plan Services (“Schwab”), shows a high level
of self-reliance among respondents. Roughly nine in ten (89%) say they are
counting on themselves for the money to support their retirement, and just
five percent expect to rely mostly on the government for financial help after
they stop working full time.

This self-reliance is fueled by anticipated use of 401(k) plans. A large
majority of survey respondents (61%) report the 401(k) is their only or
largest source of retirement savings. More than half of respondents (55%) have
increased their savings rate in the last two years and most (70%) say their
401(k) is in better shape now than ever before.

“It’s gratifying to see so many people taking the reins of their retirement,”
said Steve Anderson, head of Schwab Retirement Plan Services. “In our view,
contributing to a 401(k) plan should be the number one savings priority for
workers. Planning ahead, taking action and getting the help you need along the
way are key steps to help build sufficient retirement savings.”

Still, many are unsure how to invest…

Interestingly, the survey reveals that saving in a 401(k) is not enough to
ensure confidence for many participants. For example:

  *More than half (52%) findexplanations of their 401(k) investments more
    confusing than explanations oftheir health care benefits (48%).
  *Fifty-seven percent wish there was an easier way to figure out how to
    choose the right 401(k) investments.
  *Nearly half (46%) don’t feel they know what their best investment options
    are and one-third (34%) feel a lot of stress over correctly allocating
    their 401(k) dollars.

…And they want help

Today, many 401(k) plans offer some type of professional advice, which can be
vital in helping people take better control of their investments. Of those
surveyed, 61 percent want personalized investment advice for their 401(k).
Participants expressed a desire for guidance on everything from asset
allocation to risk tolerance and retirement income planning.

Most importantly, the survey found that investment confidence nearly doubles
when workers have the help of a financial professional. Approximately
one-third (32%) of survey participants expressed confidence in making the
right 401(k) investment choices based on their own ability, compared to 61
percent if they also had the help of a financial professional.

“Getting more workers engaged in professional 401(k) advice should be a top
priority for employers. We’ve seen the positive impact it can have on both
behaviors and outcomes,” said Anderson. “At Schwab Retirement Plan Services,
Inc., participants who used third-party, professional 401(k) advice tended to
increase their savings rate, were better diversified and stayed the course in
their investing decisions,” he noted.*

Additional findings

Other findings show respondents are engaged and place a priority on their

  *Save it, don’t spend it: Given a choice about how to use a $5,000 bonus,
    nearly two-thirds (64%) would save it in their 401(k) rather than take the
    cash now.Forty-eight percent immediately chose the 401(k) route and an
    additional 16% chose the 401(k) after tax consequences were explained.
  *Post-crisis recovery: Seventy-four percent of respondents said their
    401(k)s have recovered from the financial crisis about as fast or even
    faster than expected.
  *Check the index: Nearly three-quarters (74%) would rather pay low
    investment fees for index funds than pay higher fees for actively managed
    funds that could potentially outperform the market, but may also carry
    greater risk.

About the Survey

This online survey of U.S. 401(k) participants was conducted by Koski Research
for Schwab Retirement Plan Services, Inc. The survey is based on 1004
interviews and has a three percent margin of error at the 95% confidence
level.Survey respondents worked for companies with at least 25 employees,
were current contributors to their 401(k) plans and were 25-75 years old.
Survey respondents were not asked to indicate whether they had accounts with
Charles Schwab. All data is self-reported by study participants and is not
verified or validated. Respondents participated in the study between June 5
and June 11, 2013. Detailed findings can be found at

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals
create a better tomorrow. We have a history of challenging the status quo in
our industry, innovating in ways that benefit investors and the advisors and
employers who serve them, and championing our clients’ goals with passion and

More information is available at Follow us on Twitter,
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Through its operating subsidiaries, The Charles Schwab Corporation (NYSE:
SCHW) provides a full range of securities brokerage, banking, money management
and financial advisory services to individual investors and independent
investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc.
(member SIPC,, and affiliates offer a complete range of
investment services and products including an extensive selection of mutual
funds; financial planning and investment advice; retirement plan and equity
compensation plan services; compliance and trade monitoring solutions;
referrals to independent fee-based investment advisors; and custodial,
operational and trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank
(member FDIC and an Equal Housing Lender), provides banking and lending
services and products. More information is available at and

Schwab Retirement Plan Services, Inc., Schwab Retirement Plan Services
Company, and Charles Schwab & Co., Inc. are separate but affiliated companies
and subsidiaries of The Charles Schwab Corporation. Brokerage products and
services are offered by Charles Schwab & Co., Inc. (MemberSIPC). Schwab
Retirement Plan Services, Inc. and Schwab Retirement Plan Services Company
(collectively, Schwab Retirement Plan Services) provide recordkeeping and
related services with respect to retirement plans. 0813-5544

*Charles Schwab in conjunction with Koski Research, The New Rules of
Engagement for 401(k) Plans, 2010. Retirement plan investment advice is
formulated and provided by GuidedChoice Asset Management, Inc.
(GuidedChoice®), which is not affiliated with or an agent of Charles Schwab &
Co., Inc. (CS&Co.), Schwab Retirement Plan Services, Inc. (SRPS), or any of
their affiliates.

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