Anxious workers stressed about Covid-19 now believe they will need more to retire than they did before the outbreak of the pandemic, according to a new survey by Schwab Retirement Plan Services.

Between May 28 and June 11, Logica Research, on behalf of Schwab, conducted an online survey of 1,000 Americans, ages 25-70 years old, working at companies with at least 25 employees and with 401(k) plan participants. Logica did not ask survey respondents whether they had a 401(k) account with Schwab Retirement Plan Services, Inc.

Schwab found that plan participant anxiety about long-term retirement savings was up. On average, 401(k) participants believed they needed to save $1.9 million for retirement, an increase of 12% from the $1.7 million Schwab reported in last year’s survey. Millennials and Gen-Xers said they would need $2 million to retire, while baby boomers said they would need no more than $1.6 million.

Two in five participants (41%) also said they had made a change to their 401(k) account due to Covid-19, citing rebalancing and increasing contribution rates as the most common changes. Out of the 41% who said they had acted to make changes to their 401(k) account, 14% said they had rebalanced their portfolio and 12% said they had increased their contribution rate.

A quarter of respondents (25%) who took action said they did so after consultation with a financial professional. Two-thirds of those who sought professional guidance (67%) said they made changes to their 401(k). The top three actions those respondents said they had taken were the same as those of the larger pool of respondents, but at a higher rate.

Schwab found that millennials in the study were the most likely group to increase their 401(k) contribution rate and exposure to equities during the pandemic, followed by Gen-Xers and then boomers.

Survey respondents said they anticipated that Covid-19 would have an impact on their retirement savings. More than a third of respondents (37%) said they felt they were "very likely" to achieve their retirement savings goals; nearly half (49%) said they were "somewhat likely" to achieve their retirement savings goals; and 14% said they were "not likely" to achieve their retirement savings goals. In fact, one in five respondents (21%) said they expect to retire later than originally planned because of the pandemic and its effect on their finances.

Across the generations, Gen-X had the lowest confidence about reaching their retirement goals. Only one in three (32%) of Gen-X respondents said it was "very likely" they would reach their retirement savings goals versus 42% of millennials and 39% of boomers.

“Saving for retirement has been a top financial stressor for people even when the markets were setting records and we were living through the longest bull market in history,” Catherine Golladay, executive vice president and head of workplace financial services at Charles Schwab & Co., said in a news release. “Now we are in a new reality where people are trying to navigate their long-term goals. It is a lot, and we know workers can benefit if they talk to a financial professional to help them work out the right steps for their situation.”

 

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