Survey Links Optimism to Health

Art by Zaiwei Zhang

Retirees’ confidence in their ability to live comfortably in retirement remains higher than employees’ confidence, with 32% of retirees very confident but just 17% of employees very confident, according the Employee Benefit Research Institute (EBRI) 2018 Retirement Confidence Survey (RCS).

However, retirees are less confident than last year that they will be able to handle basic expenses, in particular medical expenses. More than four in 10 retirees report that their health care costs are higher than they anticipated, and one-quarter say long-term care costs are higher.

The RCS found that being healthy increases retirement confidence: 46% of the confident retirees are in good health, compared with 14% of the unconfident. The same is true for employees: Six in 10 healthy employees are confident, compared with 28% of those who are not confident. The survey report says retirees in fair or poor health are more likely to have difficulty managing their money, including maintaining their pre-retirement lifestyle and managing day-to-day finances and health care costs.

Only 39% of retirees and 19% of employees have tried to calculate how much money they will need to cover health care costs. Retirees who made this calculation are less apt to have had higher-than-expected medical expenses and more apt to say costs are as they anticipated.

Further, the survey found two-thirds of retirees say they consider converting their assets into income a relatively easy task. Asked about their withdrawal strategies from defined contribution (DC) plans and individual retirement accounts (IRAs), many retirees are not withdrawing much. Four in 10 draw only the legally required minimum.