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Workers Prioritize 401(k) Amidst Inflation and Volatility, Schwab Study Shows

New data from Schwab’s 2023 401(k) Participant Study reveals that the 401(k) retirement plan remains an indispensable benefit for almost nine in 10 workers. Three in four employees would refuse a new job offer if it lacked a 401(k) plan, emphasizing their dedication to saving for retirement amidst inflation and market volatility.

Marci Stewart, the director of communication consulting and participant education for Schwab Workplace Financial Services, highlights the significant role the 401(k) plays in employees’ future plans. The pandemic’s impact, coupled with inflation and market uncertainty, has further increased the importance of 401(k) plans for workers.

The 401(k) serves as the initial investment experience for most employees, leading to a sense of familiarity and comfort with the plan. However, the primary reason for its prioritization lies in the fact that workers view it as their main source of retirement income. According to the study, employees expect the 401(k) to contribute 40% of their retirement income, while Social Security follows at 20%.

Stewart notes that workers are recognizing the necessity of long-term planning to secure a comfortable retirement, and they rely on their 401(k) as a critical tool to achieve their financial goals. The younger workforce, in particular, has experienced significant workplace changes, including the impact of the COVID-19 pandemic and the Great Recession. These experiences have encouraged them to take ownership of their finances and become more engaged in financial planning.

Embracing the Power of Time

The study encourages workers to seize the power of time and capitalize on the benefits of long-term investing. Stewart advises workers to contribute enough to their 401(k) to receive the full employer match, as failing to do so would be akin to leaving free money on the table.

For those who can’t save up to the match immediately, Stewart recommends revisiting their contribution amounts and increasing their paycheck deferrals whenever they receive a raise. Even a small increase of one or two percentage points can make a significant difference in the long run. Employers often provide an ‘auto-increase’ feature that automatically boosts the savings rate each year, ensuring a strong and consistent savings habit.

Challenges in the Face of Inflation and Volatility

Despite recognizing the importance of 401(k) plans, workers are facing challenges due to inflation and market volatility. The survey of 1,000 employed U.S. 401(k) plan participants aged 21–70 shows that 62% are concerned about inflation, while 42% worry about market fluctuations. These conditions are significantly impacting spending and saving habits, leading 36% of workers to consider delaying their retirement.

Additionally, the study reveals that workers now believe they need to save an average of $1.8 million for retirement. However, confidence in achieving this target has dipped by 10% from the previous year, with only 37% feeling very likely to reach their retirement goals. Despite the challenges, nearly half of the workers still hold a sense of optimism, feeling somewhat likely to reach their retirement goals.


Schwab’s 2023 401(k) Participant Study underscores the enduring significance of the 401(k) as a critical retirement benefit. Workers prioritize this investment tool as they navigate inflation and market volatility while aiming to secure a financially stable retirement. By embracing the power of time and taking advantage of employer matches, employees can build a strong foundation for a comfortable retirement. Though challenges persist, many workers remain hopeful and determined to achieve their retirement goals through disciplined savings and investment strategies.

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