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.”
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