A new survey finds that a record-low percentage of Americans are confident that they will have enough money to live comfortably in retirement. The economic downturn also has many workers believing that they will need to work longer in order to adequately save for retirement.
The Employee Benefit Research Institute (EBRI) found that the percentage of workers “very confident” about having enough money for a comfortable retirement declined to 13 percent in its 19th Annual Retirement Confidence Survey. This figure was the lowest in any past Retirement Confidence Survey and was a drop from the previous low of 18 percent in 2008, and from 27 percent in 2007—representing a 50 percent decline in worker confidence in 2 years.
Why has this figure plummeted? EBRI says participants in the survey cited the recent economic uncertainty, inflation and the cost of living as primary factors. Negative experiences such as a job loss, pay cut, loss of retirement savings or an increase in debt were also factors for those participants who faced them.
“Our survey first picked up the drop in retirement confidence last year,” Jack VanDerhei, research director at the Employee Benefit Research Institute, said in a press release. “Given the uncertainties that exist about economy, it is no surprise the downward trend has continued. By any measure, the two-year results amount to a very significant drop in workers’ and retirees’ confidence in their retirement prospects.”
According to the EBRI survey, workers apparently expect to work longer because of the economic downturn: 28 percent of workers in this year’s survey said that the age at which they expect to retire changed in the past year, and of those, 89 percent reported that they “have postponed retirement with the intention of increasing their financial security.” Also, more workers are planning to supplement their income in retirement by working for pay: whereas 66 percent of workers said they planned to work after retirement in the 2007 survey, this figure rose to 72 percent in 2009.
The survey also found that many workers “still do not have a good idea of how much they need to save for retirement” and that less than half (44 percent) said that they and/or their spouse have tried to calculate how much money they will need to save by the time they retire. Many (44 percent) “simply guess” at how much they will need to comfortably retire.