Workers feeling retirement-ready as they reimagine their relationship with 401(k)s

Despite ongoing economic challenges, nearly two-thirds of American workers feel financially prepared for retirement, according to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute.

The study draws on polling conducted by Edelman Data and Intelligence, which took responses from thousands of private and public plan sponsors, participants, and financial advisors in July.

The survey found that 65 percent of employees believe they are on track for retirement, with younger workers (ages 22-34) expressing even more confidence at 71 percent—a 15-point increase from 2023. This optimism has been bolstered by active engagement in retirement planning, with 76 percent of workers checking their 401(k) balances monthly and three-tenths making regular adjustments to their contributions or rebalancing on a monthly basis.

Employees are also shifting how they view retirement savings, increasingly considering 401(k)s as a source of monthly income (59 percent) rather than simply a savings balance (26 percent).

"I'm thrilled to see that retirement plan participants are viewing 401(k) plans as so much more than just a savings vehicle by thinking about them as a comprehensive tool to help prepare for and live in retirement," Cathy Marasco, vice president of Protected Retirement solutions at Nationwide, said in a statement revealing the findings.

However, concerns remain. Fifty-six percent of employees worry about outliving their retirement income, and 61 percent are unsure how long their savings need to last. Inflation and high living costs are weighing heavily on workers, with 80 percent of both public and private employees expressing concern. As a result, 28 percent of employees aged 45 and older now anticipate delaying retirement due to insufficient savings.

The study also shed light on how financial professionals can play a role, particularly in raising employers' awareness of guaranteed income solutions and ensure access for plan members. With most employers expressing interest in having target-date funds with guaranteed income options (including 85 percent in the private  sector and 91 percent of public employers) or managed accounts (81 percent private, 87 percent public), advisors have a soft target for providing education around retirement income opportunities.

"The next opportunity is to enable automatic income in retirement with protected retirement solutions—and that's not just a nice-to-have. It's a necessity," Marasco said.