Retirement Expectations at All-Time Low

More than 25% of Americans say they are “not at all confident” about retirement and just 13% say they are “very confident,” according to the Employee Benefit Research Institute’s 2011 Retirement Confidence Survey. The proportion who are confident in their retirement is tied with the rate in 2009—the lowest on record in the 20 years since the survey has been conducted.

The survey also addressed saving habits, finding that about one third of workers and retirees had to draw from savings last year in order to pay for basic expenses. Those with 401(k) or individual retirement accounts were far less likely to tap into their savings, according to the survey.

“To me, these are positive findings: People are increasingly recognizing the level of savings realistically needed for a comfortable retirement. We know from previous surveys that far too many people had false confidence in the past,” said Jack VanDerhei, EBRI research director and co-author of the report. “People’s expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.”

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EBRI suggested the pessimism about retirement is a reflection of “the New Normal,” and co-author Mathew Greenwald, of Greenwald & Associates, said that “Many people are planning to work longer and retire later because they know they simply can’t afford to leave the work place—both for the paycheck and for the benefits. Unfortunately, many retirees also tell us they left the work force earlier than they planned, either because of health problems or layoffs. So it may not necessarily be a bad thing that those who can work longer choose to do so.”

Fifty-nine percent of workers say they are saving for retirement, but more than half say they have less than $25,000 in savings and investments excluding the value of their primary residence and any pension plans, according to the survey. About a third estimate they will need less than $250,000 in order to afford a comfortable retirement. More than a third say they play for retirement by guessing.

Written by Elizabeth Ecker

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  • Why is it such a surprise that retirees are so ill prepared for retirement? What training did they get? Most of those near retirement today were reared by people who knew longevity as 70 and the average life span as 65. Few lived to 80 and only the most hardy lived into their nineties.

    Schools never have treated cash, debt, retirement, or other significant personal financial topics as anything other than things children either learned on their own or from parents. People just did not live that long so why burden the school system with such nonessential and insignificant subjects.

    Basic financial and economic matters need to be taught in schools. Longevity is no longer a dream; we are now facing its harsh realities. The concept of a sandwich generation is no longer a rare event; its reality is now common.

    Although social scientists and the medical field have been pointing to the financial implications of longevity for a few decades, it never was looked at as a matter which needed to be addressed in basic student education. It was thought that June Cleaver (Barbara Billingsley) or Donna Stone (Donna Reed) would teach their children all they needed to know about basic finances or that it was something girls would learn in home ec classes in high school.

    What was thought to be a given or less than necessary due to shorter life spans has proved to be the undoing of many. Retirement education and planning need to start at 12 not 55. By the time a student graduates high school, they should have goals and ideas about their future and how to start staking them out early in their careers. The mess we see today shows the lack of training and understanding imparted into retirees in the earlier years of life.

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