The percentage of workers very confident about having enough money for a comfortable retirement decreased sharply – from a mere 27% in 2007 to less than one-in-five (18%) in 2008, the biggest one-year drop in the 18-year history of the survey. Retiree confidence in having a financially secure retirement also decreased, from 41% to just 29%. EBRI noted that decreases in confidence occurred across all age groups and income levels – but was particularly acute among younger workers and those with lower income.
Among workers aged 25–34 the percentage saying they are very confident about having enough money for a comfortable retirement decreased from 31% in 2007 to 18% in 2008, and dropped from 28% to 16% among workers ages 35–44. Similarly, it decreased from 14% to just 5% among workers with household income under $35,000, and dropped in half – from 25% to 13% among those with income ranging between $35,000 and $74,999.
However, the survey found that about half of workers (47%) say they and/or their spouse have now tried to calculate how much money they will need for a comfortable retirement, well up from the low point of 29% in 1996. The 2008 survey found that taking the time to do such a calculation was effective at changing worker behavior; 44% of those who calculated a goal changed their retirement planning, and of those, more than half (59%) started saving or investing more.
Weighing on confidence – health care – and RCS results indicate health costs in particular have become a big concern for retirees, and little wonder. Among retirees who left the work force earlier than planned, more than half (54%) say they did so because of health problems or disability and nearly half (44%) say they have spent more than expected on health care expenses. In fact, more than half of retirees (54%) say they are now more concerned about their financial future than they were right after they retired, a 14 percentage-point increase from a year ago (40%).
“In the nearly two decades we have been conducting the RCS, this year’s results show a very dramatic reduction in the public’s confidence about having a comfortable retirement. The economy and health costs are major concerns,’ said Dallas Salisbury , president of the nonpartisan Employee Benefit Research Institute (EBRI), which conducted the survey with Mathew Greenwald & Associates. “If there is a silver lining, it’s that Americans finally may be waking up to the realities of being able to afford retirement.’
The percentage very confident in having enough money to take care of basic expenses decreased from 40% in 2007 to 34% this year for workers, and from 48% to 34% for retirees. Additionally, workers said they are increasingly not confident about having enough money for medical expenses (43% lacked confidence this year, up from 32% in 2007) and for long-term care expenses (54% in 2008, compared with 44% a year ago).
Retirees were somewhat less likely than in 2007 to believe they can always cut back on their lifestyle if it looks like they might use up all of their savings (61%, down from 70%). At the same time, 39% of retirees now think they are likely to live long enough to use up all of their savings, versus just 29% in 2007.
Barely one-third of all workers now expect to have access to employment-based health insurance in retirement, down 8 percentage points (from 42% in 2007 to 34% in 2008). Even though 41% of retirees say they currently have access to health insurance through a former employer, many employers are eliminating health care coverage for future retirees.
When asked what they think is the most pressing financial issue facing most Americans today, just 5% of workers and a slim 4% of retirees cited saving or planning for retirement. Instead, most mention:
- Making ends meet or the cost of living (17% of workers, 19% of retirees).
- Paying for health insurance or medical expenses (16% of workers, 25% of retirees).
- Making mortgage payments or paying for housing (16% of workers, 10% of retirees).
- Paying down debt or loans (13% of workers, 5% of retirees).
- Fuel or energy costs (9% of workers and retirees).
- Job uncertainty (6% of workers, 8% of retirees).
The 2008 Retirement Confidence Survey was conducted in January 2008 through 20-minute random telephone interviews with 1,322 individuals (1,057 workers and 265 retirees) age 25 and older in the United States. The survey has a margin of error of plus or minus 3 percentage points. Details of the methodology appear in the April 2008 EBRI Issue Brief.
Full results of the survey appear in the April 2008 EBRI Issue Brief should be available online today http://www.ebri.org/RCS/2008/, along with five RCS Fact Sheets that provide additional detail on health costs, saving for retirement, gender issues, age issues, and attitudes on Social Security and Medicare.