Is financial stress hurting retirement savings? 4 in 10 workers with a 401(k) don't contribute, CNBC survey finds


A new CNBC Your Money Survey by SurveyMonkey revealed that 74% Americans feel financially stressed. This is up from 70% of respondents in April. In April, only 30% of respondents said they were “very stressed” by their finances. This has increased to 37% in August. The top three stressors were the same as they were in April: inflation rates, lack of savings and rising interest rates. About 2,700 of the CNBC Your Money Survey respondents are full-time or part-time employees. Experts say that 4 out of 10 employees, or 41%, do not contribute to any 401(k) plans. They’re missing out on a significant opportunity to improve their financial security for the future, experts say.

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Yet, the survey found nearly 6 out of 10 workers, 57%, are contributing to a 401(k) or company-based savings account.

The CNBC Your Money Survey found that, among those who are contributing, here’s how they’re funding their 401(k) plan:

46% are contributing as much as they can afford.

24% are putting away as much as their employer will match.

11% are saving up to this year’s employee contribution limit.

8% just save the automatic default amount set by their plan.

401(k) contribution limits, company matches

In 2023, workers younger than 50 years old can save up to $22,500 for retirement in 401(k) plans, and savers who are age 50 and older can put away an extra $7,500 in “catch-up” contributions.

  • Some plans will let you save even more through after-tax 401(k) contributions. Those workers may be able to combine employee deferrals plus the company match, profit sharing and other deposits from their employer to save up to a total 401(k) plan limit for 2023 of $66,000 — or $73,500 with catch-up contributions.
  • The average company match in a 401(k) plan was 4.7% of a worker’s salary in the second quarter of 2023, according to Fidelity, the nation’s largest 401(k) plan provider. Workers are concerned about saving enough
  • Once their 401(k), workers have mixed understandings of their investments. Nearly half, 46%, don’t know what investments are in their 401(k) and a little more than half, 54%, are aware of their investment choices.
  • Still, the majority — 56% — admit they are not on track with their yearly 401(k) savings to retire comfortably, while some 42% say they are on track for a comfortable retirement.

Financial advisors recommend taking these three steps to help ensure you’re on the right track:

Save enough to get the employer match:

Most financial advisors recommend contributing at least enough to a 401(k) to receive the employer match. “If you’re a person making $50,000 a year,

6% match is $3,000 — that’s huge,” said certified financial planner Malcolm Ethridge, executive vice president at CIC Wealth Management in Rockville, Maryland.

Boost your emergency fund:

Why Americans can't stop living paycheck to paycheck

Having cash that you can get to quickly is critical, financial advisors say. Ashton Lawrence is a CFP, director and senior wealth adviser at Mariner Wealth Advisors, Greenville, South Carolina. She says that it’s important to create an emergency fund before focusing on your long-term savings. An emergency fund protects you against unexpected expenses such as medical bills and car repairs. It also prevents you from having to rely on your credit card in an emergency. Lawrence recommends saving three to six month’s worth of living costs in an easily accessible and liquid account. Some high-yield savings accounts let you earn more than 5% interest on your money right now.

Prioritize paying off high-interest debt:

Stashing away less than the maximum employee contribution limit, or sometimes even less than is needed to get the company’s matching contribution, makes sense to some financial advisors, especially if paying off high-interest debt helps reduce your financial stress. Clients tend to be reluctant to reduce retirement savings because they see it as a setback, said Edward Silversmith, CFP, a portfolio manager at Wealth Enhancement Group, Pittsford, New York. Silversmith says that with credit card interest rates exceeding 20%, temporarily adjusting savings to pay off high-interest debts and establish an emergency fund is a good strategy. He said that “the long term is a series short runs.”