Are you confident about having enough money to live comfortably throughout your retirement years?
A new study conducted by the non-partisan Employee Benefits Research Institute (ebri.org) says that only 13% of Americans are "very confident" and that 27% are "not at all confident". These are the most pessimistic figures reported since the survey began two decades ago. Surprisingly, roughly the same percentage of younger workers as older workers (12-15%) described themselves as "very confident" in having enough money to live comfortably in retirement.
Here are some other interesting findings from the study:
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Among those who are already retired, a full 38% were not confident that they would have enough money to live comfortably in their retirement years. This figure is stunning and is 80% higher than ten years ago. This drop in confidence was almost entirely among those with financial assets of less than $100,000.
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A large percentage of Americans have an unrealistically low estimate of how much they need to save for a comfortable retirement. In fact 31% of Americans say they need to save less than $250,000 for a retirement that can last more than 30 years!
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At least 62% of workers say they could save $25 more per week by cutting back their spending, but have not done so. The main things Americans are doing to prepare for a secure retirement is planning to work longer. In 1991, the first year of the survey, 50% of workers planned to retire before age 65. Today it's just 23%. And the proportion planning to retire at or after age 70 has tripled to 25%.
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Despite the fact that huge numbers of Americans (75% or more) feel that Social Security and Medicare benefits will be reduced, eligibility will be delayed and costs for these benefits will rise, there does not appear to be an effort to save more to protect against these risks.
What is clear to us from the EBRI study on worker's confidence about retirement is that Americans lack basic education about personal financial matters. For the most part they have not attempted to calculate how much they may need in retirement, they signal unrealistic expectations about how much is sufficient for a comfortable retirment, and are not saving more for retirement, even though doing so is within their reach.
