Despite the dogged efforts of the financial industry, folks just can’t be prodded into thinking about retirement and taking steps to secure a stable future, with the needle remaining remarkably still over the course of decades.
That’s one of the key takeaways from the 2017 Retirement Confidence Survey, the 27th annual edition of the Employee Benefit Research Institute’s seminal poll of Americans and their perception of financial security during their golden years. The Washington, D.C.-based EBRI queried a little more than 1,000 current American workers aged 25 and up, along with just under 600 retirees, back in January.
The report itself is a treasure trove of data, but when RMD asked co-author and EBRI senior research associate Craig Copeland for the biggest takeaway, he pointed to what was absent from the numbers: any perceptible change in people’s retirement confidence.
“We’ve been doing this survey for a long time, and we don’t really see the numbers budging all that much,” Copeland said in a phone call from Washington, D.C.
For instance, all the way back in 1996, EBRI found that only 30% of retirees described themselves as “very confident” in their ability to live out their retirement years in financial comfort; that number was 32% this year. The numbers are likewise nearly identical for active workers over the decades: 19% of working Americans said they were “very confident” about their future retirement comfort 21 years ago, a single percentage point higher than the metric from the latest report.
Even the headlines on the press releases announcing the studies are eerily similar. “Retirement Not the Golden Age for All,” the EBRI said back in 1996. “Survey reveals that lifestyles and finances fall short for many seniors; experts say reality of life in retirement offers lessons for current works.”
More than two decades later, the EBRI topped the most recent precess release with: “Many Americans Are Stressed About Retirement, Aren’t Taking Steps to Prepare.”
This news might be disheartening for those who work in the retirement-planning industry, especially with firms big and small have advertising the importance of saving as the baby boom generation ages and enters retirement. But Copeland notes that advertising just might not be an effective way of convincing people to think about their retirement future as early as possible.
“Trying to cold-call people, trying to put advertisements out, it really doesn’t seem to have much success,” Copeland said.
Instead, Copeland said companies tend to have more success in one-on-one meetings, particularly in the workplace, since it creates a “personable setting” where consumers may be more receptive to the message and creating an action plan. Still, Copeland noted that just getting consumers to take time for face-to-face meetings can be a challenge, and there are still no guarantees that the employee will heed the advisor’s words.
Then there’s the stark fact that workplace retirement options have been steadily narrowing in the nearly three decades that EBRI has been conducting this study; Copeland said the lack of change in retirement preparedness is especially troubling since guaranteed benefit pensions have become increasingly rare, and the long-term fate of Social Security remains heavily clouded.
It isn’t just general preparedness that hasn’t changed over time. EBRI has tracked a consistent perception gulf between retirees and workers, with the already-retired showing generally higher levels of optimism than those who were still in the workforce.
“What we’ve seen is that once people are either in the situation or very close to the situation, there’s less uncertainty,” Copeland said. “They know what they’re faced with, and they can become more accepting of their position, and they can feel more confident.”
Older folks also have the benefit of steady Social Security payments, and because there are no short-term proposals to radically alter the cornerstone of America’s social safety net, Copeland said retirees remain confident that they can rely on Social Security benefits for the rest of their lives. Younger working Americans, conversely, are generally more cynical about the program’s future, which plays into their lower confidence levels about the future.
In addition, both younger and older people have an inflated sense of how long they can work into their 60s and 70s, Copeland said. People tend not to think about how unexpected medical problems or other unplanned live events can derail a career in the later stages of life — and how even a few extra years’ salary can’t fully cover such emergencies.
“You can’t just work an extra year to pay for those things,” he said. “That’s not a way to go, and there isn’t a lot of people that are doing the work of preparing and saving for retirement.”
Written by Alex Spanko