More Americans are optimistic about their chances of being financially secure in old age, according to the latest annual retirement confidence survey from the Employee Benefit Research Institute (EBRI). Specifically, two-thirds of surveyed U.S. workers said that they are at least “somewhat confident” they will have enough money to retire comfortably, including 23 percent who said they are “very confident,” the highest reading since 2005. Much of the recent optimism is likely related to the continued economic expansion, uptick in wage growth, and resilient stock market. However, only around four in ten surveyed workers said that they have actually attempted to calculate exactly how much money they would need to achieve their desired retirement lifestyle.
On the bright side, a third of those workers who did try to estimate what size nest egg they could require in old age came up with a figure of at least $1 million, and 29 percent of respondents also tried determine what their expected medical expenses in retirement will be. All of those figures represent a marked improvement from earlier surveys and therefore suggest that more Americans are now aware of just how expensive retirement could be. Further, younger generations will likely have to rely more heavily on personal savings and workplace-provided retirement plans than the government (Social Security) in old age. Fifty-one percent of surveyed workers even reported that their employer-sponsored retirement savings plan will be a “major source” of income in old age, and 48 percent said the same thing about their other personal savings and investments. This growing awareness of the critical role self-funding will play in ensuring a comfortable and financially secure retirement is encouraging since the median surveyed worker still expects to retire at the traditional age of 65 despite continued increases in life expectancy.
Moreover, 43 percent of current retirees in the survey said that they stopped working sooner than anticipated, highlighting one of the many reasons to start saving for retirement as early as possible. There can of course be some obstacles in the way of saving for retirement, which for many surveyed workers included debt and near-term money troubles. Unsurprisingly, seven in ten respondents said that they would find workplace-provided education or advice on how to manage competing financial priorities useful. Sixty-three percent of surveyed employees would find help with basic budgeting similarly beneficial, and nearly half feel the same way about workplace-provided student loan assistance. More generally, when surveyed employees were asked what sources of information they use to help with retirement planning, employers were the most-cited response, followed closely by a professional financial advisor, friends and family, and online calculators and planning tools.
Sources: Employee Benefit Research Institute
Post author: Charles Couch