Confidence in Ability to Afford Retirement Remains Low
At the same time, the percentage of workers saving for retirement continues its gradual decline, and many remain uncomfortable using new technologies to help them manage their finances, according to the Employee Benefit Research Institute (EBRI).
Retirement Confidence
Fourteen percent of workers continue to be very confident about having enough money for a comfortable retirement (statistically equivalent to the 13% measured in 2011), and 38% are somewhat confident. Twenty-three percent are not at all confident (down slightly from 27% in 2011).
Retiree confidence in having a financially secure retirement is also stable, with 21% very confident (statistically equivalent to the 24% measured in 2011) and 19% not at all confident (statistically equivalent to the 17% in 2011).
Many workers have more immediate worries than saving for retirement. Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today, and just 28% are very confident that they will have paid employment for as long as they need it.
Almost two-thirds (62%) of workers consider their current level of debt to be a problem. Only 16% are very confident that their investments will grow in value. These concerns all show a relationship with retirement confidence.
Both workers and retirees continue to express higher levels of confidence about their ability to afford basic expenses in retirement than to pay for post-retirement medical or long-term care expenses. Twenty-six percent of workers and 32% of retirees are very confident about having enough money to pay for basic expenses, but just 13% of workers and 24% of retirees are very confident about paying for medical expenses after retirement. Even fewer—9% of workers and 18% of retirees—are very confident about having the financial wherewithal to pay for long-term care in retirement.Preparing for Retirement
Two-thirds (66%) of workers report they and/or their spouses have saved for retirement, a continuing decline from the three-quarters (75%) measured in 2009. Fifty-eight percent say they and/or their spouse are currently saving (continuing the decline from 65% in 2009). However, these decreases are concentrated primarily among workers with household income under $35,000.
As previous waves of the RCS have found, a sizable percentage of workers report they have virtually no savings and investments. Among RCS workers providing this type of information for the 2012 RCS, 30% say they have less than $1,000. In total, 60% of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
Many workers continue to be unaware of how much they need to save for retirement. More than half (56%) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.
When workers are asked to evaluate their progress in planning and saving for retirement, 67% state that they are a little or a lot behind schedule. Although unchanged from 2011, this is 12 percentage points higher than the 55% of workers who felt they were behind schedule in 2005.
The survey was conducted in January 2012 through 20-minute telephone interviews with 1,262 individuals (1,003 workers and 259 retirees) age 25 and older in the U.S.
More information is available at http://www.ebri.org.