Economic sentiment has improved among workers even as the labor market sends mixed signals.

What Happened: According to a Charles Schwab study, anxiety surrounding inflation and market volatility have, to a small extent, subsided in the past year.

Of the 1,000 U.S. 401(k) plan participants surveyed, the percentage of workers viewing inflation as an obstacle to retirement fell from 62% to 58% in 2024.

Respondents who listed market volatility as a significant obstacle fell from 42% to 36% over the past year.

How Much Should You Save?

Workers believe they need to save $1.8 million for retirement — the same as in 2023. On average, they expect their retirement funds to last 23 years after an age 65 retirement.

Lee McAdoo is the Managing Director of Schwab Retirement Services.

"Workers are feeling more optimistic about their retirement prospects and an improving economic climate tends to boost financial confidence, but it's not the only factor," McAdoo said. "We're seeing heightened awareness around 401(k) investments and performance – a promising sign that workers are actively engaging with their accounts and cultivating knowledge to help them reach their goals."

The survey found that respondents are more aware of their 401k investments now than in 2023.

Amid declining confidence in social security's future, workers are also seeking other income streams in retirement, the survey found.

Why it Matters: Economic sentiment has largely rebounded among citizens and corporations large and small.

Inflation has cooled in recent months, enough that market experts anticipate the Federal Reserve to cut interest at least once in 2024.

The data is also at odds with the message voters keep hearing from the 2024 Republican presidential field, which insists that the economy is in a poor state. In reality, Americans are pouring money into the stock market — their highest allocation ever — amid the S&P 500's impressive performance in 2024.

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