Underlying Findings About Retirement Confidence Show Worker Concerns

Many workers feel unprepared for health expenses in retirement, have not prepared very well and plan to work later, the EBRI Retirement Confidence Survey found.

The 2019 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) finds two-thirds of American workers (67%) feel confident in their ability to retire comfortably, though only 23% feel very confident. The share of workers reporting that they feel either very or somewhat confident has increased compared with last year (64% in 2018).

Retirement confidence continues to be strongly related to retirement plan participation, whether in a defined contribution (DC) plan, defined benefit (DB) plan, or individual retirement account (IRA). Workers reporting they or their spouse have money in a DC plan or IRA or have benefits in a DB plan from a current or previous employer are more than twice as likely as those without any of these plans to be at least somewhat confident (74% vs. 39%).

Almost three-fourths of workers (72%) report feeling very or somewhat confident about being able to afford basic expenses in retirement, including 27% who feel very confident. However, 41% of workers are not too or not at all confident they will have enough money for medical expenses in retirement, and 48% do not feel confident about having enough money for long-term care in retirement.

The RCS has consistently found a relationship between debt levels and retirement confidence. In 2019, 41% of workers with a major debt problem say they are very or somewhat confident about having enough money to live comfortably in retirement, compared with 85% of workers who indicate debt is not a problem. On the other hand, 32% of workers with a major debt problem are not at all confident about having enough money for a financially secure retirement, compared with 5% of workers without a debt problem.

Preparing for retirement

Approximately two-thirds of workers (66%) report that they or their spouse have saved any money for retirement. Nearly as many (61%) report that they are currently saving for retirement. Workers who have any retirement plan are dramatically more likely than those who do not have such a plan to report they or their spouse have saved any money for retirement (79% vs. 17%), and to say they or their spouse are currently saving for retirement (75% vs. 12%).

A sizable percentage of workers say they have no or very little money in savings and investments. Among RCS workers providing this type of information, 40% report that the total value of their household’s savings and investments, excluding the value of their primary home and any DB plans, is less than $25,000. This includes 19% who say they have less than $1,000 in savings. Approximately one in 10each report totals of $25,000–$49,999 (9%) and $50,000–$99,999 (9%) and two in 10 report having $100,000–$249,999 (19%) and $250,000 or more (23%). Workers who have a retirement plan have significantly more in savings and investments than do those without a plan. Nearly six in 10 workers without a retirement plan (56%) report having less than $1,000 in savings and investments, compared with just 9% among workers with a retirement plan.

Just four in 10 workers (42%) report they and/or their spouse have ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement. Workers reporting that they or their spouse participate in a retirement plan are significantly more likely than those who do not participate in such a plan to have tried a calculation (50% vs. 12%).

Some workers, but not majorities, report they have taken other steps to prepare for retirement. These include estimating how much income they would need each month in retirement (39%) and calculating how much money they would need to save by the time they retired so they (and their spouse) could live comfortably in retirement (37%). Three in ten workers have thought about how much money to withdraw from their retirement savings and investments in retirement (33%), planned for an emergency expense in retirement (31%), and have calculated how much they would likely need for retirement health expenses (29%).

Nearly three in 10 workers (28%) report that they (and their spouse) are currently working with a professional financial adviser. In addition, a slightly greater share (33%) expects to work with a professional financial adviser if they are not currently working with one. While professional advisers are one of the most used sources of information for retirement planning, workers use many different sources of information including their employer or information from their work (24%), family and friends (22%), and online calculators and planning tools (21%). However, 29% of workers say they use none of the sources offered.

Confidence of retirees

As the RCS usually finds, the level of confidence expressed by those already in retirement continues to be greater than those yet to retire. Eighty-two percent of retirees report feeling either very or somewhat confident about having enough money to live comfortably throughout their retirement years (compared with 75% in 2018). Just over one-third of retirees feel very confident (35%), while 18% say they are not too or not at all confident.

Eighty-five percent of retirees feel at least somewhat confident in their ability to afford basic expenses throughout their retirement years. Eighty percent are very or somewhat confident about having enough money to cover medical expenses, and 59% feel very or somewhat confident in their ability to pay for long-term care.

As in prior years, there is a big gap between when active workers expect to retire and retirees say they actually did. Workers continue to report an expected median retirement age of 65, while retirees report they retired at a median age of 62.

Workers expect to retire later

Workers are notably more likely to say they expect to retire at age 70 or older. More than three in 10 (34%) expect to retire at 70 or beyond or not at all. A small share of workers is adjusting their expectations about when to retire, perhaps in recognition of the fact that their financial preparations for retirement may be inadequate. In 2017, 14% of workers said the age at which they expected to retire changed in the past year, and of those, the large majority (78%) reported their expected retirement age increased.

Workers planning to delay retirement gave the following reasons:

  • Can’t afford to retire (49%);
  • Lack faith in Social Security (46%);
  • Health care costs (45%);
  • Wanting to make sure they have enough money to retire comfortably (44%);
  • Higher-than-expected cost of living (41%);
  • Need to pay current expenses first (36%); and
  • The poor economy (32%).

As one might expect, workers who are not confident about their financial security in retirement plan to retire later, on average, than those who express confidence. For example, 64% of workers who are not confident in their retirement financial prospects say they either will not retire or do not know when they will retire, compared with 27% who are very confident.

Four in five workers (80%) plan to work for pay in retirement, compared with just 28% of retirees who report they have actually worked for pay in retirement.