Workers’ overall confidence in their ability to live comfortably in retirement remains steady, while the share who feel very confident continues to increase, according to the 2020 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) and Greenwald & Associates.
The 2020 Retirement Confidence Survey (RCS), fielded in early January, found (69%) of workers are confident they will have enough money to live comfortably, including 27% who are very confident—up from 23% in 2019 and 17% in 2018. Two-thirds (67%) of workers are also confident they are doing a good job preparing for retirement, with a similar uptick in those feeling very confident. Still, the majority of workers (61%) report that preparing for retirement makes them feel stressed.
Half of workers (48%) have tried to calculate how much money they will need to live comfortably in retirement, up from 42% in 2019 and 38% in 2018. However, more than eight in 10 indicated they would find it beneficial if their employer offered them help with calculating how much is needed for a secure retirement.
The survey found areas in which workers lack planning. For example, while most workers are confident they know how much monthly income they will need, only 44% report having actually thought about this in order to prepare for retirement. Fewer than four in 10 have planned for emergency expenses, planned for how much to withdraw from savings or calculated how much is needed to cover health expenses.
Craig Copeland, EBRI senior research associate and co-author of the RCS report noted that retirement confidence continues to be closely related to having a retirement plan. “Of workers who are confident, 96% contribute to a defined contribution (DC) plan, and 94% are currently saving for retirement. Good health also impacts confidence, with 68% of confident workers citing being in very good to excellent health,” he said.
Lisa Greenwald of independent research firm Greenwald & Associates told attendees of a media conference the survey “clearly demonstrates the workplace is where retirement savings happens.” She noted that in 2005, 69% of workers said they expected their DC plan to be a significant source of retirement income and 34% of retirees said it was. In 2020, 80% expect their DC plan to be a significant source of retirement income and 34% of retirees said it is. Greenwald said this is second only to Social Security.
Eighty-four percent of workers with a retirement plan reported that they have personally saved for retirement, compared with 17% without a plan. Similarly, workers with a plan are dramatically more likely to report total savings and investments of $100,000 or more (56% with a plan vs. 7% without).
Coronavirus Impact on Retirement Confidence
Recognizing that the coronavirus and its effect on markets, businesses and unemployment may have had an impact on retirement confidence, the researchers refielded a supplemental survey of key questions from March 20 through March 30. The supplemental survey included 505 workers and 499 retirees all age 25 or older.
Among both workers and retirees, overall confidence in being able to live comfortably throughout retirement did not significantly change between the January and March surveys. However, worker confidence is down when it comes to taking care of basic expenses in retirement (24% very confident vs. 33% in January), having enough for medical expenses in retirement (17% very confident vs. 22%), and having enough money to last their entire life (17% very confident vs. 22%).
Greenwald and EBRI acknowledged that the stability in retirement confidence is surprising given the current health and economic crisis impacting Americans. However, RCS researchers said they believe that the survey’s main measure of confidence focuses on long long-term situations, and workers’ continued confidence is likely reflecting Americans’ view that current conditions will pass before they jeopardize long long-term financial security in retirement. “We are asking about long-term things and that can adjust following a short-term impact,” Matt Greenwald of Greenwald & Associates told reporters.
Another important factor, according to researchers, is the time frame in which the supplemental RCS was fielded. It started just after the markets began to go down, but some of the biggest impacts of the coronavirus in the United States—widespread stay-at-home orders and closures of non-essential businesses—had not occurred yet. They note that during the March fielding of the survey, unemployment was nowhere near the unprecedented levels it has since reached, the Families First Act had been passed, and there was news of another stimulus package coming (the Coronavirus Aid, Relief and Economic Security [CARES] Act).
That said, the refielded survey did find that confidence was significantly lower among those who said their employment status had negatively changed since February 1 (11%) or anticipated it to negatively change within the next six months (12%). Only 47% were confident they will have enough to live comfortably throughout retirement, compared with 67% among those who reported no or no expected negative employment status change; only 39% are confident they will have enough money to last their entire life (compared with 62%). Forty-nine percent said they are confident they are doing a good job preparing for retirement (compared with 67%); 55% felt confident they will have enough money to take care of basic expenses in retirement (compared with 72%) and 46% said they were confident they have enough to take care of medical expenses (compared with 63%).
While the researchers said they would not follow up on the RCS again this year, Greenwald said future research typically done each year will include information about the impact of the coronavirus. Lori Lucas, president and CEO of EBRI said, “We will get a feel for retirement confidence similar to the RCS with our future regular research.”
The 2020 RCS survey of 2,042 Americans was conducted online January 6 through January 21. All respondents were age 25 or older. The survey included 1,018 workers and 1,024 retirees.