Americans’ fears about their ability to afford a comfortable retirement have hit a record high, according to a new survey.
The 2011 Retirement Confidence Survey, released Wednesday by The Employee Benefit Research Institute (EBRI), a non-profit, non-partisan organization, found that 27 percent of workers are “not at all confident about having enough money for a comfortable retirement.” This is a five percent increase from 2010 and the highest level measured since the survey began 21 years ago. At the same time, the number of workers who say they are “very confident” of a comfortable retirement, shrank to 13 percent from 16 percent in 2010, matching up with the record low in 2009.
A “sizable” percentage of workers say they have virtually no savings or investments, and nearly 30 percent of Americans said they have less than $1,000 in the bank, according to the survey. Fifty-six percent of workers said that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000. What’s more, roughly a third of both workers and retirees said they had to dip into their savings accounts last year to pay for basic expenses.
“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,” said Mathew Greenwald, co-author of the survey. “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.”
Twenty percent of workers say they now intend to retire at an older age than they had previously planned. Those who said they would retire at a later age cited the poor economy, a lack of faith in Social Security or the government, or a change in their employment situation. The number of people expecting to retire after age 65 rose to 36 percent compared with 25 percent in 2006.
EBRI calls the uncertainty about retirement planning ‘the new normal.’ Not surprisingly, the survey found a host of factors that have forced Americans to change their plans including:
- federal, state, and local government fiscal crises
- rising health care costs
- lower investment returns
- a surge in the older population
- stress on social insurance programs such as Social Security and Medicare
- longer life expectancies
But there may be a long-term upside to the grim survey results, according to Jack VanDerhei, EBRI research director and co-author of the report. It seems that more people are recognizing the level of savings they actually will need to comfortably retire. “We know from previous surveys that far too many people had false confidence in the past,” he says. “People’s expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.”
More Americans Worried About Small Nest Eggs (NPR)
Retirement Outlook Continues to Worsen (US News and World Report)
Half of Americans Have Saved Just $25,000 for Retirement (CNN)