Schwab Survey: Millennials Face Unique Set of Obstacles When Saving for Retirement

Occasional Indulgences & Student Loan Debt Keeping Young People from
Saving More

SAN FRANCISCO–(BUSINESS WIRE)–A new survey finds that Millennials, more than any other group, may not
be saving enough for retirement because they are unwilling to sacrifice
things that add to their current quality of life – and because many are
also burdened by student loan debt.

The nationwide survey of 1,000 401(k) plan participants, commissioned by
Schwab Retirement Plan Services, Inc. identifies key differences in both
attitudes and behaviors of Millennials (those under age 35), Generation
Xers (those between 35 and 49 years old) and Baby Boomers (those between
50 and 70 years old) when it comes to saving for retirement.

Millennials

The survey found that Millennials face several obstacles to meeting
their retirement savings goals, which disproportionately affect this
group more than any other. Moreover, although this younger generation
believes they would benefit from help, they are using professional
investment advice far less than their older counterparts. Specifically:

• 44 percent are not saving more because they want to treat themselves
  to things like occasional dinners out and vacations, more than Gen
  Xers (34%) and Boomers (29%).
• More than a third (37%) can’t set aside more money for retirement
  because they are still paying off student loans.
• About half of Millennials (49%) feel that they don’t know what their
  best investment options are, and only a third (34%) are extremely or
  very confident in their ability to make the best 401(k) investment
  decisions on their own.
• While three-quarters (76%) claim they would like help managing their
  401(k), only 22 percent are likely to seek out professional investment
  guidance, and just 7 percent are currently receiving it.

“Managing a 401(k) can often be intimidating for young people who have
little to no investing experience,” said Catherine Golladay, vice
president of participant services and administration at Schwab
Retirement Plan Services. “Our survey found that six in ten Millennials
wished there was an easier way to choose the right investments for their
401(k). Getting professional investment advice early on can go a long
way toward easing some of this anxiety, boosting confidence and getting
people started on the right foot.”

Generation X

Survey respondents representing Generation X, while more established in
their careers but not yet approaching retirement, have their own set of
unique conditions affecting their ability to save. In particular:

• Like Millennials, Gen Xers’ greatest obstacle to saving more for
  retirement is an unwillingness to sacrifice their current quality of
  life (34%). A close second, though, is wanting to save for their
  children’s education (32%).
• Only 58 percent know how much they need to have saved for a
  comfortable retirement and only 53 percent believe they are saving
  enough to retire when they want to.
• Gen X is the group most likely to have taken a loan from their 401(k):
  31 percent have done so, compared to just 13 percent of Millennials
  and 29 percent of Baby Boomers.

“Borrowing from a 401(k) is like stealing from your future self,” notes
Golladay. “A 401(k) loan can severely derail your savings plan and comes
with steep tax penalties if you leave your job and can’t repay the loan,
so it should be viewed as a last resort for everyone, regardless of age.”

Baby Boomers

The group nearest to retirement, Baby Boomers, are not as adequately
prepared as they should be. They also tend to be more concerned with the
health aspects of retirement than the financial pressures. In particular:

• Only 63 percent believe they are saving enough to retire when they
  want to. Similarly, only 65 percent think they’ll be retired
  comfortably in 15 years, while another 22 percent say they’ll be
  retired, but not comfortably.
• Even with retirement looming, a third (33%) don’t know how much they
  should have saved for a comfortable retirement.
• More Baby Boomers are currently getting 401(k) investment advice than
  any other generation: 20 percent, compared to 7 percent of Millennials
  and 10 percent of Gen Xers.
• On the whole, this group is more concerned about being healthy enough
  to enjoy retirement (61%) than having enough money to enjoy it (39%).

“As the survey results show, at every stage of life, people have
competing priorities that may interfere with their ability to retire
comfortably at the end of a long career,” concluded Golladay. “While
balancing financial responsibilities can be a tall order, saving in a
401(k) should remain at the top of the priority list.”

About the Survey

This online survey of U.S. 401(k) participants was conducted by Koski
Research for Schwab Retirement Plan Services. The survey is based on
1,000 interviews and has a three percent margin of error at the 95
percent confidence level. Survey respondents worked for companies with
at least 25 employees, were current contributors to their 401(k) plans
and were 25-70 years old. Survey respondents were not asked to indicate
whether they had 401(k) accounts with Schwab Retirement Plan Services.
All data is self-reported by study participants and is not verified or
validated. Respondents participated in the study between May 26 and June
3, 2015. Additional findings can be found on our research
page.

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.

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Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation
(NYSE: SCHW) provides a full range of securities brokerage, banking,
money management and financial advisory services to individual investors
and independent investment advisors. Its broker-dealer subsidiary,
Charles Schwab & Co., Inc. (member SIPC,
www.sipc.org),
and affiliates offer a complete range of investment services and
products including an extensive selection of mutual funds; financial
planning and investment advice; retirement plan and equity compensation
plan services; compliance and trade monitoring solutions; referrals to
independent fee-based investment advisors; and custodial, operational
and trading support for independent, fee-based investment advisors
through Schwab Advisor Services. Its banking subsidiary, Charles Schwab
Bank (member FDIC and an Equal Housing Lender), provides banking and
lending services and products. More information is available at www.schwab.com
and www.aboutschwab.com.

Schwab Retirement Plan Services, Inc., Schwab Retirement Plan Services
Company, and Charles Schwab & Co., Inc. are separate but affiliated
companies and subsidiaries of The Charles Schwab Corporation. Brokerage
products and services are offered by Charles Schwab & Co., Inc. (Member SIPC).
Schwab Retirement Plan Services, Inc. and Schwab Retirement Plan
Services Company (collectively, Schwab Retirement Plan Services) provide
recordkeeping and related services with respect to retirement plans.

©2015 Schwab Retirement Plan Services, Inc. All rights reserved.

(1115-6841)

Contacts

Charles Schwab
Mike Peterson, 330-908-4334
mike.peterson@schwab.com
or
Intermarket
Communications
Neil Shapiro, 212-754-5423
nshapiro@intermarket.com