Data and Research

Moving the Needle on Retirement Confidence

EBRI’s latest survey data shows Americans are gaining confidence in some important areas related to retirement planning, but people realize they could do more to prepare.

By Rebecca Moore editors@assetinternational.com | April 21, 2015
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The 25th Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) finds Americans’ confidence in their ability to afford a comfortable retirement has continued to rebound from the record lows experienced between 2009 and 2013, but this increased level of confidence does not appear to be grounded on objectively improved retirement preparations.

According to the report, “The 2015 Retirement Confidence Survey: Having a Retirement Savings Plan a Key Factor in Americans’ Retirement Confidence,” 22% are now very confident (up from 13% in 2013 and 18% in 2014), while 36% are somewhat confident. Twenty-four percent are not at all confident (statistically unchanged from 28% in 2013 and 24% in 2014).

The increased confidence since 2013 is strongly related to retirement plan participation, the report says. Among those with a plan, the percentage very confident increased from 14% in 2013 to 28% in 2015. In contrast, the percentage very confident remained statistically unchanged among those without a plan (10% in 2013, 9% in 2014, and 12% in 2015).

Retiree confidence in having a financially secure retirement, which historically tends to exceed worker confidence levels, has also increased, with 37% very confident (up from 18% in 2013 and 28% in 2014). The percentage not at all confident was 14% (statistically unchanged from 14% in 2013 and 17% in 2014).

Worker confidence in the affordability of various aspects of retirement also rebounded. In particular, the percentage of workers who are very confident in their ability to pay for basic expenses increased (37%, up from 25% in 2013 and 29% in 2014). The percentages of workers who are very confident in their ability to pay for medical expenses (18%, up from 12% in 2011) and long-term care expenses (14%, up from 9% in 2011) are slowly inching upward.

Sixty-seven percent of workers report they or their spouses have saved for retirement (statistically equivalent to 64% in 2014), although nearly eight in 10 (78%) full-time workers say that they or their spouses have done so. Still, a sizable percentage of workers report they have virtually no savings and investments. Among RCS workers providing this type of information, 28% say they have less than $1,000, though those who indicate they and their spouse do not have a retirement plan, such as an individual retirement account (IRA), defined contribution (DC) or defined benefit (DB) plan, are far more likely than those who have a plan to report this low level of savings (64% vs. 9%) and far less likely to report having saved at least $100,000 (3% vs. 35%).

Cost of living and day-to-day expenses head the list of reasons why workers do not save (or save more) for retirement, with 50% of workers citing these factors. Nevertheless, many workers say they could save a small amount more. Seven in 10 (69%) state they could save $25 a week more than they are currently saving for retirement.