July 20, 2021
One of the arguments VSEA members and retirees make against putting state employees in a defined contribution pension plan (a.k.a. 401k) is how most workers are not professional financial planners. A new study from Charles Schwab supports VSEA’s position.
More than ever before, it seems, American workers are looking for and are receptive to receiving retirement planning advice. Across the board, the 2021 numbers are up from last year, suggesting that the shock of the COVID-19 pandemic might have shifted people’s views on advice.
According to Charles Schwab’s “2021 401(k) Participant Study,” more than six in 10 participants (61%) believe their financial situation warrants professional advice, an increase compared with 2020 (50%). Forty-four percent want help calculating how much to save for retirement. And 39% want specific advice on how to invest in their 401(k)s.
Furthermore, 35% want help figuring out an income stream at retirement, and 33% want help determining the best age to retire. Twenty-two percent, each, want help with figuring out how to catch up to their retirement savings goals and managing their expenses so that they can save more for retirement.
Forty percent said they are confident in making financial decisions on their own—but 56% want professional help.
Likewise, participants surveyed for J.P. Morgan’s sixth biennial “Defined Contribution (DC) Plan Participant Survey” report needing direction. More than half (51%) say they are willing to spend time planning for retirement but don’t know where to start. Sixty-two percent wish they could completely hand over retirement planning to an expert.
Three-quarters of participants report they want help with contribution advice and 53% want help with selecting investments. Eighty-five percent indicate they want help with post-retirement income.
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