401(k) and IRA performance increases, but retirement concerns persist

Planning for retirement can be stressful, and the combination of economic factors can compound the fear. Even if you’ve saved consistently for a long time, the long-term viability of Social Security and the weakening dollar can make your future unpredictable.

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

Related: Social Security benefits report confirms big changes coming

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

IRA account balances grew the most, totaling $14.3 trillion, up 5.5% from Q4 2023. Mutual funds were found to be the most common investment in 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 workers’ top concerns, being able to have enough money saved in retirement accounts to see them through retirement and protecting Social Security are most pressing.

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

More on personal finance:

• How your mortgage is the key to early retirement
• The report on Social Security benefits confirms that big changes are coming
• The average American faces a major retirement 401(k) dilemma.

Eighty-seven percent of Americans believe that Congress should act now to increase funding for Social Security, rather than addressing the problem before it is scheduled to cut payments starting in 2035. The same proportion of respondents believe that maintaining social security should remain a priority, regardless of budget deficits.

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

Market volatility is another strong concern, although investment professionals advise that stock performance almost always bounces back. Holding investments for the long term will recover most of the losses.

A retired couple is seen holding hands and walking on a beach.

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Employer pensions can help boost confidence in retirement

One proposed solution to consumer anxiety about retirement planning is to bring back employer pensions. Seventy-seven percent of workers believe the disappearance of pensions has made it harder to live the American dream, and 83% agree that all workers should have a pension plan to be self-sufficient in retirement.

Related: Dave Ramsey Explains How Your Mortgage Is The Key To Early Retirement

Eric Stevenson, Prescient of Nationwide’s retirement solutions business, suggests that implementing pension plans is key to easing workers’ anxiety about retirement.

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

Increased financial comfort in retirement and reduced longevity risk are among the benefits of an established pension plan that can improve the long-term happiness and mental and physical health of retirees. Workers who feel more confident about their retirement planning are also less likely to delay retirement, which helps companies promote younger talent and lowers the cost of keeping high-income workers on the payroll.

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

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