Retirement confidence wanes despite improved economy
Despite the improving economy, a new study by the Employee Benefit Research Institute shows that consumers are less confident than ever about their ability to retire. The report, released on Tuesday, showed the lowest marks in the 22 years the annual poll has been been taken.
Only 58 percent saving for retirement
The study, which was conducted in January, polled 1,003 workers and 259 retirees. Only 58 percent of the working people surveyed said that they or their spouse was saving for retirement. In 2009, that figure was about 66 percent. Likewise, only 14 percent of consumers responding to the survey said they were “very confident” in their ability to retire comfortably. That is down 27 percent from its apex in 2007, just prior to the Great Recession.
Retirement confidence coming later for many
The study also showed that many workers are now pushing back their retirement date. More than a third of respondents said they could not see themselves retired before age 65. That figure has gone up by 11 percent since 1991.
Most of those polled also showed a lack of faith in a continued economic recovery. A meager 8 percent said they believed the economy would grow by 3 percent a year over the next decade.
Job security also continues to worry many American workers. Only about 25 percent responded that they were “very confident” that they will be with their current employers until retirement.
Too much debt, too little savings
Most consumers, according to the survey, also felt little confidence about their savings and investments for the future. Only 19 percent said they felt their growing nest egg would carry them through. Excluding the value of their homes, 60 percent of those surveyed said they had less than $25,000 in savings and investments. A full 62 percent reported having excessive debt.
Half retire early for health
To make matters worse, analysts say that half of all retirees do not make it to their planned retirement age before needing to settle down.
Jack Vanderhei, research director at the EBRI and co-author of the study, wrote:
“Fifty percent of current retirees retired prior to when they would have because of their health status, the health status of a family member or (insufficient) job opportunities. That’s the highest it’s ever been; it used to be in the 40 percent range.”
Employer-sponsored benefits increase confidence
The report went on to implicate employers for not being more clear about employee benefits. Many plans use websites to explain benefits, and most workers do not glean all they should know from them. However, workers whose companies provide 401(K) plans with matching funds very seldom opt out, although they are free to do so.
“We continue to find that employees lucky enough to be working for an employer that sponsors retirement plans — and who choose to take advantage of it — are not only much more likely to have a significantly higher amount of retirement savings, but also much higher confidence.”