September 2, 2017 — Results from the Employee Benefits Research Institute’s Retirement Confidence Survey (RCS) paint a disturbing picture for many American workers. The percentage of pre-retirees who are very confident in their ability to afford a comfortable retirement continues to be low. On the other hand, people who are already retired report a much higher level of confidence that their finances will provide a comfortable retirement.
It is hard to say why the two groups – pre-retirees and the retired – report different levels of confidence. It could be that folks who are already retired know their situation and do not have the anxiety about the future that people still working have. It could be that more of those already retired profit from better retirement plans than those still in the workforce. More likely, it could be a combination of both factors.
Findings in this year’s RCS:
Confidence in having enough money for a comfortable retirement – pre-retirees. Six out of 10 American workers (60%) feel very or somewhat confident about having enough money for a comfortable retirement, down slightly from the 64% who felt that way in 2016. Just 18 percent feel very confident. Worker confidence now resembles levels measured in 2015 (when 59 percent were either very or somewhat confident).
Confidence for a comfortable retirement – already retired. Seventy-nine percent of retirees report feeling either very or somewhat confident about having enough money to live comfortably throughout their retirement years, including one-third of retirees who feel very confident (32 percent).
Emotionally stressed. In addition to lacking confidence, 3 in 10 workers report that preparing for retirement causes them to feel mentally or emotionally stressed. They report feeling less financially secure and are far less confident about having enough money for a comfortable retirement than those who do not feel stressed.
Worrying at work. Another 30% of workers say that they worry about their personal finances while at work. More than half of these workers believe they would be more productive if they didn’t spend time worrying. About half say that programs on retirement planning, financial planning, or health care planning would be helpful in increasing their productivity at work.
Having a retirement benefit plan helps. Workers who have a retirement plan, whether it is a defined contribution plan, defined benefit plan, or IRA, are far more likely to feel confident about having enough money for retirement. Indeed, they have saved more, have taken more steps to prepare for retirement, and feel less stressed about retirement preparations than those without a plan.
Matching would improve participation. Nearly 3 in 4 workers (73 percent) not currently saving for retirement say they would be at least somewhat likely to save for retirement if contributions were matched by their employer. Approximately two-thirds of non-saving workers say they would be likely to save for retirement if their employers had automatic paycheck deductions with the option of changing or stopping them, at either 3 percent or 6 percent of salary.
How these numbers compare to what we have seen in previous Topretirements surveys
These data from the RCS are similar to what Topretirements members reported in our 2014 survey: 75% were either very or slightly confident they would be able to maintain their standard of living in retirement. In a 2015 survey with the question phrased slightly differently, 46% said they would have enough money to maintain their pre-retirement lifestyle, with another 19% projecting being short by up to a $1000/a month.
Unfortunately, there are a lot of people who are going to be hurting in retirement. Our advice is do what you can now to prevent a shortfall!
Comments? Do you feel confident you will have enough money for a comfortable retirement? Please share your thoughts about your retirement confidence and planning process in the Comments section below. Was it stressful thinking about planning for retirement.