The RCS found the percentage of workers very confident about having enough money for a comfortable retirement is 16%, which the EBRI said is statistically equivalent to the 20-year low of 13% measured in 2009. Retiree confidence about having a financially secure retirement has also stabilized, with 19% saying now they are very confident – statistically equivalent to the 20% measured in 2009.
Twenty-nine percent of workers now say they are very confident about having enough money to pay for basic expenses during retirement – up from 25% in 2009, but still down from 34% in 2008. The percentage of retirees indicating they are very confident about paying for basic expenses has stayed level at 33% – statistically equivalent to the 34% observed in 2009.
The percentages of workers very confident about other financial aspects of retirement have held steady at 12% for medical expenses, 10% for long-term care expenses, and 21% for doing a good job of preparing for retirement. However, the percentages not confident continue to creep upward, from 44% in 2009 to 51% in 2010 for medical expenses, from 56% to 61% for long-term care expenses, and from 30% to 35% for doing a good job of preparing for retirement.
In addition, those who have saved for retirement have recovered some confidence in their ability to invest their savings wisely. Thirty-two percent of workers indicate they are very confident (up from 24% in 2009), and another 54% are somewhat confident. Retirees who have saved for retirement show a similar rebound in confidence that they are investing their savings wisely, with 82% saying they are very or somewhat confident (up from 70% in 2009).
But, while their confidence in retirement and investing shows signs of a rebound, Americans continue to lack confidence in institutions. According to the survey, they are most likely to express confidence in private employers (23% of workers and 27% of retirees very confident) and least likely to feel confidence in the federal government (11% of workers and 8% of retirees).
Just 19% of workers and 22% of retirees report they are very confident about banks, while 12% of workers and 13% of retirees say they are very confident about insurance companies. The percentages of retirees somewhat confident about banks (45%, down from 51% in 2009), insurance companies (42%, down from 56%), and the federal government (30%, down from 45%) are declining.
Workers Need Help Preparing for Retirement
The 2010 Retirement Confidence Survey (RCS) by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, a market research firm, found that fewer workers report that they and/or their spouse have saved for retirement (69%, down from 75% in 2009). Moreover, fewer workers say that they and/or their spouse are currently saving for retirement (60%, down from 65% in 2009).
In addition, an increased percentage of workers report they have virtually no savings and investments. Among RCS respondents providing this type of information, 27% say they have less than $1,000 in savings (up from 20% in 2009). In total, more than half of workers (54%) 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. Less than half of workers (46%) report they and/or their spouse have 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.
More than half (54%) of those who have done a retirement needs calculation said they need to accumulate at least $500,000 for retirement.
Few workers report they are likely to purchase a financial product or select a retirement plan option that pays them guaranteed income each month for the rest of their life. Only 11% indicate they are very likely to do so, while 35% say they are somewhat likely. Only 14% of retirees report they purchased a guaranteed-income product or selected a guaranteed-income option from a retirement plan.
The RCS also finds that a growing number of American workers are planning to delay retirement. One-quarter of workers (24%) report they have postponed their planned retirement age in the past year. Reasons cited for delaying retirement include the poor economy (29%), a change in their employment situation (22%), inadequate finances (16%), and the need to make up for losses in the stock market (12%).
Although the age at which workers report they expect to retire shows little change from 2009, a longer-term look finds significant change. The percentage of workers who expect to retire after age 65 has increased over time, from 11% in 1991 to 14% in 1995, 19% in 2000, 24% in 2005, and 33% in 2010.
Over time, the RCS has observed changes in workers’ expected sources of retirement income. In particular: fewer workers are expecting to receive retirement income from Social Security (77%, down from 88% in 1991) and defined benefit plans (56%, down from 62% in 2005). However, more workers report they will rely on employer-sponsored retirement savings plans (75% in 2010, up from 69% in 2005) and employment income (77%, up from 70% in 2005).
An EBRI Issue Brief on its findings, as well as six related fact sheets, are available at http://www.ebri.org/surveys/rcs/2010/.