Workers Confident But Unprepared for Retirement

That was the key conclusion of the latest yearly survey gauging how well Americans think they’ll do after they stop working – the 2002 Retirement Confidence Survey.

Seven out of 10 respondents said in the current survey are confident they’ll have enough to live on in retirement – up from 63% in the 2001 survey. That comes as the number of Americans who have actually calculated their retirement needs fell from 39% in 2001 to 32% in the current study.

Researchers said the 2002 results continue a trend first spotted in the 2001 study – where savings confidence outstrips financial planning activities.

Miscalculating Retirement Needs

Part of the problem with workers’ retirement savings confidence levels, according to the latest results, is that few appear to have a realistic idea of how much they’ll need to live from their retirement to their death. Most financial planners say 70% of pre-retirement income should be sufficient to keep the same lifestyle.

Judging their income stream:

• 17% of respondents say they’ll require less than half their worklife income,
• 25% of respondents put the income figure between 50% and 59%, and
• 14% of workers said they’d require 60% to 69%

Predicting the correct figure of at least 70% of pre-retirement income were 44% of those surveyed.

About 13% of all workers expect Social Security to represent their largest source of income in retirement. About 16% of older workers, age 40 to 59, said they expect to rely on Social Security compared with 7% of younger workers, aged between 20 and 39.

The findings were part of an annual survey released by the Employee Benefits Research Institute, a trade group in Washington, in conjunction with the American Savings Education Council and Matthew Greenwald and Associates. The group interviewed 1,000 people, including 771 workers and 229 retirees.

View rhe results of this year’s survey.