The venerable 401(k) plan is widely considered the most common way for U.S. workers to stack cash for the long haul.
Yet 4 in 10 Americans aren’t contributing at all to their 401(k) plans or any other employer-sponsored retirement plans, and finance experts are pointing to financial stress as the main reason.
DON’T MISS: 401k plans in two-year free fall
The data come from the latest CNBC Your Money Survey, which concludes that three-quarters (74%) of Americans "say they are stressed about their personal finances these days," with 37% describing themselves as "very stressed.”
And that's not all, even as financial gurus say the odds that the economy will fall into recession are declining in 2023.
Three of every five (61%) U.S. adults say they’re living paycheck to paycheck. That's up from 58% in March.
That same 61% of people "also say inflation contributes to their financial stress, ticking up two points from March and holding the top spot as the primary financial stressor,” the survey reported.
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401(k) numbers are depleting
It’s the 401(k) numbers that really shine a light on American’s financial anxiety in 2023.
Almost half (46%) of the individuals surveyed in the poll are contributing only “what they can afford” to their 401(k) plans.
That’s depleting total U.S. 401(k) plan contributions in 2023, with the average balance in 401(k) and 403(b) plan accounts sliding to $112,572 from $141,542 in 2021, according to investment-funds giant Vanguard.
That's a 20% loss over a two-year period for a huge investment demographic, which is already falling behind on its long-term savings goals.
Experts point to high inflation and consumer cash outlays, rising interest rates, and an unstable labor market as the main reasons Americans are feeling so much financial angst these days.
It’s also no coincidence that the slide in assets in retirement accounts occurred as the covid-19 pandemic and resulting government lockdowns caused global economies to hit the brakes.
“While certain aspects of the covid-19 pandemic appear to be behind us, it’s created several ongoing challenges” for retirement investors, Vanguard noted.
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