Increased Share of Workers Credit Employers for Efforts to Reduce Financial Stress

More 401(k) participants than last year said employers with helped reduce their financial stress, leading to improvements in workers’ financial health, according to an annual Charles Schwab 401(k) participant study.

The study revealed that 64% of employees said their employers have taken steps to alleviate workers’ financial stress, up from 52% last year. Additionally, 24% of workers reported feeling very good about their financial health, compared with 20% last year.

Employer actions that participants said helped reduce financial stress included increasing pay (39%), offering flexible work arrangements (19%) and making higher 401(k) matching contributions (18%).

The study also found that workers have grown more familiar with provisions contained in the SECURE 2.0 Act of 2022, with increases across the board led by awareness of easier 401(k) withdrawals for emergency expenses.

Source: Charles Schwab

Learning Wanted

More than half of workers, particularly those in older generations, are interested in learning more about the federal government’s plan to provide matching contributions to their retirement accounts—and many are eager to better understand other key sections of SECURE 2.0.

The respondents expressed strongest interest in the federal government’s plan to provide matching contributions to workers’ retirement accounts based on income, with 53% of respondents expressing an interest to learn more about this initiative.

Marci Stewart, director of client experience at Schwab Workplace Financial Service, notes that the Savers Match component of SECURE 2.0 is not scheduled to take effect until tax year 2027.

“As the effective date gets closer, advisers can work with their clients and plan providers to develop education strategies for the Savers Match,” she says.

Despite these trends, many workers still reported feeling financially stressed. About half (51%) reported no change in their financial health, while one in five said it has worsened since 2023.

“Plan advisers can work with plan sponsors to determine which provisions of SECURE 2.0 may be most beneficial for participants based on the demographics of the plan and the overall benefits priorities of the plan sponsor,” Stewart says. “For example, sponsors who have a large population of participants with student loan debt may determine that the student loan matching provision has higher value for their workers than other provisions of SECURE 2.0.”

Younger generations are more likely to report improvement, with 37% of Generation Z members and 35% of Millennials saying their financial health has gotten better, compared with 28% of those in Generation X and 21% of Baby Boomers.

This online survey of 1,000 U.S. 401(k) plan participants was conducted by Logica Research from April 17 through May 3. Participants were actively employed by companies with at least 25 employees, were enrolled in a 401(k) plan and ranged in age from 21 to 70 years old.