As more and more baby boomers move towards their golden years in the shadow of the Great Recession, many worry about the toll taken on retirement, job availability, and social security.
Surprisingly, the 2010 Retirement Confidence Survey (RCS) shows that Americans’ confidence in their ability to retire is growing more stable as the recession continues to rebound.
Workers who were very confident about having enough money for a comfortable retirement remained steady at 16 percent. This is statistically equivalent to last year’s results at 13 percent, which was the 20-year low of the study. Also remaining statistically equivalent to last year was the percentage of retirees who felt confident about having a financially secure retirement, with 19 percent in 2010 compared to 20 percent in 2009.
While the survey found that the percentages of workers very confident about affording basic expenses during retirement bounced back from 25 percent in 2009 to 29 percent this year, it is yet to recover completely to 34 percent in 2008. Workers remained steadily very confident about other financial aspects of retirement such as medical and long-term care expenses and doing a good job of preparing for retirement. However, the number of those who do not feel confident is continuing to grow from last year’s numbers.
However, not all the results were positive, or even remaining steady. The survey, which was released March 9, 2010 by the nonpartisan Employee Benefit Research Institute (EBRI) and market research firm, Mathew Greenwald and Associates, shows that preparations Americans take towards retirement are continuing to weaken.
“Unfortunately, while [Americans’] attitudes are stabilizing, their preparation for retirement is not,” said Jack VanDerhei, EBRI research director and co-author of the survey. “A distressing number of people have no savings at all.”
The RCS shows that fewer workers, 69 percent, report that they and/or their spouse have saved for retirement than last years’ 75 percent. Sixty percent of workers report that they and/or their spouse are currently saving for retirement, down from 65 percent in 2009.
Perhaps these findings can be attributed to the fact that many workers continue to be unaware of how much they need to save for retirement. Less than half of workers, at 46 percent, say that they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire in order to live comfortably. This savings goal has increased over time for the workers who have calculated their retirement needs, with 54 percent now in 2010 saying they need to accumulate at least $500,000 for retirement.
So, it comes as no surprise that many are deciding to postpone retirement past their planned age. Twenty-four percent of workers in 2009 report that due to reasons such as the poor economy, a change in their employment situation, inadequate finances, and the need to make up for losses in the stock market, they will be postponing their retirement. These findings have negative implications for the U.S. job market, already dealing with high unemployment rates and growing layoffs. With older employees staying at their jobs past retirement ages, fewer jobs are likely to open up for incoming workers.
When the time does come for retirement, few workers (only 11 percent) report they are very likely to purchase a financial product or select a retirement plan option that pays them guaranteed income each month for the duration of their lives. Only 14 percent of workers report that they have already done this.
Workers’ expected sources of retirement income have changed over the years according to the RCS. Down from 88 percent in 1991, only 77 percent of workers expect to receive income after retirement from Social Security, and 56 percent (down from 62 percent in 2005) expect retirement income from defined benefit plans. For more information, or to view the report for yourself, please visit here.
Written by Kelly Mellott