Almost two-thirds (64%) of 401(k) participants said their employers took steps to help them manage financial stress this year, up from 52% in the prior year, according to Charles Schwab’s 2024 401(k) Participant Study.
The most common method of mitigating such stress was a pay increase, which 39% of participants said their employers enacted. That action was followed by more flexible work arrangements (19%), an increased 401(k) match (18%), access to financial wellness/education resources (15%) and additional bonus payments (14%).
Only about one-fourth of workers (24%) said they felt “very good” about their financial health, but that’s an improvement over last year (20%). About one-half of workers say their financial health has not changed since last year, and one in five say their finances have worsened.
Younger workers were more likely to say their finances have improved over last year. Indeed, 37% of Gen Z and 35% of millennials said they saw an upgrade of their financial health over last year, while only 28% of Gen X and 21% of baby boomers felt that way.
“While the markets have generally performed well this year, inflation and economic conditions have continued to put pressure on workers’ finances at elevated levels,” said Lee McAdoo, managing director of Schwab Retirement Plan Services, in a release issued in conjunction with the study. “In the face of external economic factors, employers are supporting their employees with a combination of direct financial assistance and accompanying resources to help them manage financial stress and overall well-being.”
More than four years since the emergence of the COVID-19 pandemic, flexible work arrangements are important to 84% of workers with 401(k) plans. Moreover, 32% of workers said they would be willing to forgo a salary increase of 15% for more autonomy over when and where they do their job.
Flexible work arrangements are slightly more important to women (87%) than men (82%), but fewer women would forgo a raise to obtain the perk.
In addition, the survey found that nearly one-third (32%) of workers want help in understanding how new regulatory and legislative changes, like the SECURE 2.0 Act, will affect their retirement plan. The most pronounced interest was related to the federal government’s plan to make matching contributions to workers’ retirement accounts based on income, which was requested by 53% of workers.
“As employers navigate changes they can make within their retirement plans, it’s important to evaluate which provisions could add the most value for their employees,” said Marci Stewart, director of client experience at Schwab Workplace Financial Services, in the release. “It’s still early days for SECURE 2.0 adoption as employers consider the potential it holds to build on the support they are offering employees across a range of financial needs.”
The online survey of 1,000 U.S. 401(k) plan participants was conducted between April 17 and May 3.
