In today's economy, plenty of people are worried about their finances. Juggling day-to-day expenses, long-term savings - and everything in between - is no small feat. Even with so many competing priorities on our plates, a recent survey found there's one financial stressor that ranks above all others for workers of every age: saving for retirement.*
The survey found that 40 percent of respondents cite retirement planning as a significant source of financial stress, compared to 24 percent who cite job security, 21 percent who cite credit card debt and 20 percent who cite monthly expenses. This was even true of Millennials, many of whom are bogged down by student loan debt.
While saving for retirement is a challenge, there are ways you can ease the burden. For starters, you can make the most of your workplace 401(k) plan, which most survey respondents cited as their largest or only source of retirement savings. Here are some of my go-to tips for maximizing the benefits of your 401(k):
Save enough to get the full employer match.
One of the biggest advantages of saving in a 401(k) is that many companies offer some matching dollars. For example, your plan might include a match of 50 cents for every dollar you contribute, up to six percent of your salary. If your employer does offer a match, I strongly encourage you to contribute enough to take advantage of it in full. The match is like an automatic return on your investment that you can't get anywhere else. In fact, this should be your number one financial priority, even before paying down debt.
Increase your savings rate.
While contributing enough to get the full match is the right first step, it may not be enough to help meet your long-term savings goals. The recent survey found that more than a third of participants have either not made any changes to their 401(k) savings rate, or have actually decreased it, in the last two years -- which could seriously stagnate their savings efforts. To make sure your 401(k) is helping you towards your retirement goal, try to increase your contribution by a percentage or two each year until you've reached a level that is optimal for you.
Separate your must-haves from your nice-to-haves.
It's clear that the 401(k) is a must-have benefit: 91 percent of survey respondents would think twice about taking a job if the company didn't offer a 401(k) plan. But these same participants also reported that there are many obstacles keeping them from saving more. Chief among these was being unwilling to sacrifice things that add to their quality of life, like occasional dinners out and vacations. While it's fine to devote some dollars to life's little luxuries from time to time, it's critical to make sure that incidental expenses aren't coming at the cost of a comfortable financial future.
Get help from a professional.
If you're stressed out about saving for retirement, talking to a professional can alleviate much of the uncertainty by helping you determine an appropriate savings rate and set priorities. In the aforementioned survey, 74 percent of respondents said they'd feel very or extremely confident in making decisions about their 401(k) with the help of a financial professional, while just 44 percent said they'd feel that level of confidence on their own. Moreover, our data shows that people who take advantage of independent, professional 401(k) advice tend to increase their savings rate, are better diversified and stay the course in their investing decisions. All of that can go a long way towards beefing up your account balance.
While saving for retirement can be stressful, the good news is that you don't have to go it alone. In addition to independent, professional advice, there are plenty of online resources available to help you with everything from budgeting to 401(k) maintenance. The important first step is to make a plan.
*2016 401(k) Participant Survey conducted by Koski Research for Schwab Retirement Plan Services, Inc. Koski Research is not affiliated with Schwab Retirement Plan Services, Inc.
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