Retirement Confidence
According to the recently released annual Retirement Confidence Survey by EBRI, people’s belief that they are prepared for retirement has plateaued but remains higher than after the last market crash. But retirement confidence is outpacing savings as even those contributing to a workplace retirement plan or IRA have relatively meager savings.
The overall level of those people very confident that they have enough to retire stayed consistent at 21% this year down from 22% in 2015 but still significantly higher than 13% after the 2008-09 market collapse. Those that indicated some level of confidence grew from 36% last year to 42% in 2016; 26% of people that are actually saving have much higher levels of confidence compared to 10% for those not currently part of a retirement plan.
Debt is a big determinant of confidence. Only 9% of people who indicated that debt was an issue are very confident about their ability to retire while 32% not worried about debt are confident. Shockingly, 39% of people only guess what they will need in retirement.
What are the options for those people not savings enough for retirement?
- Save more later – 20%
- Work in retirement – 15%
- Retire later – 14%
In 1991, 34% of people thought they would retire at 65 compared to 26% in 2016 up from 21% in 2015. Those that think they will retire at 70 or older almost tripled over that same period from 9% to 26%.
There are two major lessons for employers from the EBRI survey; first, people worried about finances and retirement are less focused and productive at work; secondly, those not prepared to retire won’t, increasing a company’s healthcare, disability costs and absenteeism. And though people are living longer, there’s no studies showing that increases in mental acuity have kept pace.
