Workers Are Less Confident About Retirement Than Retirees Are

One reason for the lack of confidence among workers about retirement is a perceived lack of knowledge about how to manage retirement savings. A bigger factor is savings, or a lack thereof. Retirees are far more optimistic.

Workers are less confident about their ability to retire comfortably than retirees are. The Retirement Confidence Survey found 60% of workers described themselves as being confident about having enough money to live comfortably throughout their retirement years. This is not only down from 64% in 2016, it is also below pre-financial crisis levels.

Approximately two-thirds of workers say that they are very or somewhat confident about covering basic expenses in retirement. Only 54% think they will be able to cover medical expenses and just 43% think they will be able to cover long-term care expenses.

One contributing reason for the lack of confidence among workers is a perceived lack of knowledge about how to manage retirement savings. Only 53% say they know how much to save. Just 51% feel comfortable about choosing investment products or funds for their retirement savings. Furthermore, only 52% are confident about successfully transitioning from saving for retirement to being retired.

A bigger factor is savings, or a lack thereof. Only six out of 10 workers say that they or their spouses are saving for retirement. Just 56% say they are currently saving for retirement. Among surveyed workers who provided information about their wealth, 47% said that the total value of their household savings and investments is less than $25,000 versus 35% who have $100,000 or more.

Retirees were far more optimistic. Nearly 80% say that they have enough money to live comfortably. Eighty-five percent describe themselves as having enough money to cover medical expenses. Long-term care, however, elicits far less confidence, with just 55% of retirees believing they have enough money to cover such expenses.

Workers’ expectations about when they’ll retire also differ from when retirees say they retired. The median planned retirement age among workers is 65. About two out of five workers plan to work until at least age 70. About 48% of retirees say they retired earlier than expected; the median retirement for all surveyed retirees was 62. Hardships such as health problems, disabilities, layoffs and caring for a family members were cited as reasons for earlier-than-anticipated retirement ages.

The Retirement Confidence Survey is the longest running survey of its kind. This year’s survey interviewed 1,671 individuals ages 25 and over in the United States.

Source: “The 2017 Retirement Confidence Survey,” Lisa Greenwald, Craig Copeland and Jack VanDerhei, Employee Benefit Research Institute, March 21, 2017.