The 2023 Retirement Confidence Survey published by the Employee Benefit Research Institute found that retirement confidence fell by a degree not seen since 2009.
In 2022, EBRI found that 73% of workers were very or somewhat confident that they would have enough money to live comfortably through their retirement. For 2023, that number declined to 64%. This is the largest drop that EBRI has documented since 2009, when it fell to 54% from 64%.
The gap was much smaller among retirees, falling to 73% in 2023 from 77% in 2022.
The survey featured a sample of 1,320 workers and 1,217 retirees, totaling 2,537 respondents. The sample was collected between January 5 and February 2 and was weighted by age, sex, caregiving status, income and race.
The survey included an oversample of caregivers, who made up 944 of the 2,537 respondents. The targeted analysis on this group will be published in late June, according to Craig Copeland, EBRI’s director of wealth benefits research. The survey is weighted by caregiver status so that the oversample does not bias the results.
Among workers who are not confident in their ability to retire, 40% cite inadequate savings and 29% cite inflation and the cost of living as reasons for their concern. For retirees, these figures are nearly reversed: Among retirees not confident in their ability to live comfortably through retirement, 42% cited inflation and 25% cited inadequate savings.
Inflation and the general state of the economy haunt both retirees and workers, particularly inflation. Among workers, 86% are very or somewhat worried that inflation will stay high for another year, and 76% of retirees say the same. Other concerns are evident from the 80% of workers who say they are somewhat or very worried about a recession, further increases in interest rates and dramatic policy reforms to the retirement system.
The fears of a recession are accompanied by a lack of faith in the public equity market, as 74% of workers reported worrying about the volatility of the stock market. Among those workers who reported making changes to their retirement savings habits, 16% said they turned to more conservative investments, an increase from 9% in 2022.
Respondents were also surveyed on their understanding of certain investment menu options; 67% of workers said they understood managed accounts somewhat or very well, 58% said the same for income funds, 56% for TDFs and 48% for ESG funds.
Copeland clarifies that this is self-reported data, and respondents were not actually quizzed on their understanding, nor were they asked if they have ever had the opportunity to invest in these funds, so low understanding for some investments, such as ESG funds, might be mediated by their availability. Copeland says he is concerned about the low understanding of TDFs, or target-date funds, which are one of the more common default investments in 401(k) plans and “near universal” in defined contribution plans overall.
Retirement security has also attracted the interest of some legislators. The Social Security Caregiver Credit Act of 2023, introduced by Senator Chris Murphy, D-Connecticut, would calculate Social Security earnings for caregivers without an income as if they had made half the national average income for that month, for a maximum of 60 months.
Murphy’s bill covers caregivers who are caring for dependent relatives aged 12 or younger. However, the EBRI survey addressed caregivers who are caring for an adult, such as an elderly parent, and not ordinary day-to-day parenting.