Article
Retirement Confidence Rebounds for Those Who Plan
Americans' confidence in the ability to afford a comfortable
retirement continues to rebound from the lows reported between 2009
and 2013. The increasing optimism is coming largely from workers
who indicate they and/or their spouse have a retirement plan, such
as a defined contribution (401(k)-type) plan, defined benefit
(pension) plan, or individual retirement account (IRA). This is one
of the key takeaways from the 25th annual Retirement
Confidence Survey (RCS) -- the longest-running survey of its
kind, conducted by the nonpartisan Employee Benefit Research
Institute (EBRI) and Greenwald & Associates.
According to the 2015 RCS, among workers with access to
some type of retirement plan, more than one in five (22%) are "very
confident" they will have enough money to live comfortably in
retirement, up from 13% in 2009 -- a time when devastating losses
to retirement plan assets caused by the financial crisis of
2007-2008 crushed investor confidence. This year an additional 36%
reported being "somewhat confident" in their ability to live
comfortably in their later years, while 24% are "not at all
confident" in their retirement prospects. This percentage has
remained statistically the same for the past two years.
Paying the Bills
The data also showed that workers are becoming more confident in
their perceived ability to pay for living expenses in retirement.
For example, 37% of workers report being "very confident" that they
will be able to pay for basic living expenses -- up from 29% in
2014. Similarly, a smaller but growing percentage of workers
express confidence in their ability to meet medical expenses (18%)
and long-term care expenses (14%) -- up from 12% and 9%
respectively in 2011.
Retirement Plans Make the Difference
Among the total survey population about two-thirds are somewhat
or very confident in the steps they are taking to prepare for
retirement. Yet the story is quite different for workers without
access to a retirement plan. Among this group, only 23% have done a
retirement needs calculation and 64% say they have saved less than
$1,000. By contrast, among those with access to a retirement plan,
35% have saved at least $100,000 compared with just 3% of those
with no plan.
Delaying Retirement May Not Be an Option
Perhaps as a way to make up for their lack of planning, 16% of
workers in the 2015 study say the age at which they plan to retire
has changed and, among this group, 81% plan to retire later than
originally expected. But, the researchers contend, this plan may
fall flat for many. "Workers still expect to work longer to make up
for any savings short falls," stated Craig Copeland, senior
research associate at EBRI and coauthor of the study. "However,
many retirees continue to report that they retired before they
expected to due to an illness or disability, needing to care for
others, or because of a change at their job. Consequently, relying
on working longer is not a solid strategy for retirement
preparedness."
These are just some of the findings in the latest Retirement
Confidence Survey. To learn more or to see the study in its
entirety, visit EBRI's website.
Employee Benefit Research Institute and Greenwald & Associates, 2015 Retirement Confidence Survey, April 21, 2015.