- ‘Fear allocation’ keeping investors from participating in equity market gains and much needed growth
- 88% are worried about the impact of presidential election on their retirement savings
According to the Schroders 2024 U.S. Retirement Survey, Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan), believe they will need $1,200,000 saved to retire comfortably, yet 46% expect to have less than $500,000 in savings at retirement – including 23% who say they will have less than $250,000. Just 29% believe they will reach the $1-million mark before retiring. The average age at which plan participants expect to retire is 63.
“The difference between how much money plan participants say they need to live comfortably and how much they expect to have saved is miles apart for most retirement savers,” said Deb Boyden, Head of US Defined Contribution, Schroders. “While the magic retirement savings number is over $1 million for many plan participants, they are not saving or investing correctly to reach this goal. Without better planning and a roadmap to close the savings gap, a comfortable retirement will be out of reach.”
The Fear Allocation: Plan Participants Want (and Need) More Guidance
More than one-quarter of plan participants (28%) say they have no idea how their retirement assets are allocated. Among those that do, allocations across all retirement investments (including workplace plans, IRAs, or other retirement accounts) suggest they are investing emotionally.
Allocation of retirement investments by Americans who currently participate in a workplace retirement plan:
Equities | 29% |
Cash | 28% |
Fixed income | 19% |
Target date funds | 16% |
Other | 8% |
The most commonly cited reason for holding cash in their retirement accounts was fear – 66% of plan participants say their cash allocation stems from a fear of losing too much money if the stock market goes down, and 24% report they are not sure how to invest their cash holdings.
“Fear can hold us back in many different aspects of life – including retirement planning,” said Boyden. “For savers with long-term horizons, large cash allocations create an opportunity cost that prevents you from taking advantage of the powerful benefits of compound growth.”
More than two-in-three (70%) say their workplace plan is their single most important retirement asset, 59% wish they received more guidance from their employer on how to invest plan assets, and less than half (42%) are working with a financial advisor.
Over One-Third of Plan Participants Have Lost Sleep Worrying About Finances
While nearly half (49%) of plan participants say the value of their investment portfolio increased significantly in 2023, 40% admit they don’t know how to protect these gains. Further, most plan participants (60%) believe they worry too much about money, and 39% have lost sleep worrying about their financial situation.
Additionally, 88% are concerned with how the 2024 US presidential election will impact their retirement savings. However, 32% say they will not make any changes to their retirement investments leading up to the election, 32% are unsure if they will make changes, and 28% plan to make their portfolio more conservative. Just 9% of plan participants expect to get more aggressive with their retirement investments leading up to November.
About the Survey
The Schroders 2024 US Retirement Survey was conducted by 8 Acre Perspective among 2,000 US investors nationwide ages 28-79, including 780 Americans who currently participate in a workplace retirement plan (e.g. 401k, 403b, or 457 plan). The survey was conducted from March 15 to April 5 in 2024.
For more information on the Schroders 2024 U.S. Retirement Survey, visit here.
For further information, please contact:
Jennifer Manser
Head of Corporate Communications, North America
212.632.2947
Jennifer.Manser@schroders.com
Note to Editors
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