401(k) and IRA portfolio values increase, but retirement concerns remain

Planning for retirement can be stressful, and compounding economic factors can worsen the apprehension. Even if you’ve consistently saved for an extended period, the viability of social security in the long term and the weakening of the dollar can make your future unpredictable.

Market fluctuations , long-term care costs, and survival of social security insurance are among the top concerns for workers and retirees.

Related: Social Security benefits report confirms major changes are coming

Despite these concerns, the overall value of retirement plans—annuities, government pensions, private sector pensions, 401(k)s, 403(b)s, and IRAs—is increasing. Total retirement assets reached $39.9 trillion in Q1 2024, up 4.3 percent from Q4 2023.

Account balances in IRAs increased the most, totaling $14.3 trillion, an increase of 5.5% from Q4 2023. Mutual funds proved to be the most common investment within retirement plans: 65% of assets held in 401(k)s, and 43% of IRA assets were mutual funds.

Despite relatively strong portfolio growth, retirement concerns persist.

Top retirement concerns

Among the top worries for workers, the ability to have enough money saved in retirement accounts to support them through retirement and safeguarding social security insurance are the most pressing.

American workers increasingly feel that Congress doesn’t understand how difficult it is for workers to save for retirement personally and would like the government to take action by preserving Social Security.

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Eighty-seven percent of Americans believe Congress should act now to increase funding for Social Security Insurance instead of addressing the issue before it is scheduled to reduce payouts starting in 2035 . The same share of respondents believe that preserving Social Security should remain a priority, regardless of budget deficits.

Eighty percent of workers are also concerned with the growing costs of long-term care, such as nursing homes, while 66% are worried about rising medical and healthcare expenses as they age.

Market volatility is another strong concern, though investment professionals advise that equity performance almost always bounces back. Holding investments long-term will recoup most losses.

Employer pensions may help increase retirement confidence

A proposed solution to consumer uneasiness about retirement planning is to bring back employer pensions. Seventy-seven percent of workers believe that the disappearance of pensions has made it harder to live the American Dream, and 83% agree that all workers should have a pension plan so they can be self-reliant in retirement.

Related: Dave Ramsey explains how your mortgage is key to early retirement

Eric Stevenson , Prescient of Nationwide’s Retirement Solutions business, suggests that implementing pension plans is the key to easing worker apprehension towards retirement.

He notes that a consistent income stream is linked to greater retirement confidence. Workers with pensions are far more likely to agree that they’re on track for retirement (77%) than those without a pension (59%).

Increased financial comfort in retirement and reduced concerns of longevity risk are among the benefits of having a set pension plan, which can improve long-term happiness and retirees' mental and physical health. Workers who feel more confident in their retirement planning are also less likely to delay retirement, which helps businesses promote younger talent and reduces the costs of keeping high-income workers on their payroll.

Seventy-three percent of Americans also indicate that retirement worries impact productivity, providing another incentive for more businesses to consider sponsoring employer pension plans.

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