Schwab 401(k) Study: Employers Step Up to Help Workers Manage Financial Stress

Increased salary, 401(k) match and flexible work arrangements are among the most impactful benefits

Workers’ financial health has improved slightly this year, and 401(k) participants are increasingly crediting their employers for helping to manage financial stress, according to Charles Schwab’s 2024 401(k) Participant Study. The research finds 64% of workers say their employers have taken action to help them manage financial stress, compared to 52% who said the same last year.

More workers report feeling very good about their financial health (24%) compared to last year (20%), but many continue to feel stressed. About half of workers say their financial health has not changed and one in five say it has worsened. Gen Z (37%) and Millennials (35%) are more likely than Gen X (28%) and Boomers (21%) to say their financial health has improved.

“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 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.”

Flexible work still a priority

More than four years since the start of the COVID-19 pandemic, flexible work arrangements remain important to the vast majority of workers with 401(k) plans and have become more attractive than a salary raise for many. Flexible work arrangements are important to 84% of workers and 57% say they would be willing to forgo a percentage of a salary increase for more autonomy over when and where they do their job.

The percentage of Boomers who are willing to give up a salary increase for a more flexible work arrangement jumped from 29% to 38%. Gen Z (75%) and Millennials (71%) continue to be the most willing to make this trade off. Flexible work arrangements are slightly more important to women (87%) than men (82%), but fewer women would forgo a raise to secure the perk.

Women are more likely to say that the ability to work from home (36%) and have flexibility in work hours and location (45%) are must-have benefits compared to the men surveyed. The ability to work from home is also more of a must-have for Millennials (36%) than Gen X (29%), Gen Z (26%), and Boomers (25%). Gen Z is the most likely to view flexibility in work hours and location as a must-have (52%), followed by Millennials (46%), Gen X (39%), and Boomers (34%).

The potential of SECURE 2.0

Nearly one in three workers (32%) would like help understanding how new regulatory and legislative changes, like the SECURE 2.0 Act, affect their retirement plan.

As employers have begun adopting SECURE 2.0 provisions, more workers have become attuned to the benefits that could help them manage their finances. The most pronounced interest is in the federal government’s plan to make matching contributions to workers’ retirement accounts based on income.

“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. “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.”

About the survey

This online survey of 1,000 U.S. 401(k) plan participants was conducted by Logica Research between April 17 and May 3, 2024. Survey respondents were actively employed by companies with at least 25 employees, were 401(k) plan participants and were 21-70 years old. In order to analyze Gen Z results against other generations, an additional 100 plan participants aged 21 to 27 completed the survey. Survey respondents include participants served by approximately 15 different retirement plan providers. All data is self-reported by study participants and is not verified or validated. Detailed results can be found here.

About Charles Schwab

At Charles Schwab, we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on X, Facebook, YouTube and LinkedIn.

Disclosures

Workplace Financial Services is a business enterprise which offers products and services through Schwab Retirement Plan Services, Inc.; Schwab Stock Plan Services; and Designated Brokerage Services. Schwab Retirement Plan Services, Inc., provides recordkeeping and related services with respect to retirement plans. Schwab Stock Plan Services is a division of Charles Schwab & Co., Inc. providing equity compensation plan services and brokerage solutions for corporate clients. Schwab Designated Brokerage Services (DBS), a division of Charles Schwab & Co., Inc., provides technology solutions for corporate clients with regulatory requirements to monitor employee security transactions. Schwab Retirement Plan Services, Inc., and Charles Schwab & Co., Inc. (“Schwab”) (Member SIPC) are separate but affiliated entities, and each is a subsidiary of The Charles Schwab Corporation.

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