Confidence in “Comfortable” Retirement is Declining, Survey Says

The 2008 Retirement Confidence Survey, conducted by the Employee Benefit Research Institute, finds that Americans’ confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values.

Confidence about having enough money for a comfortable retirement decreased sharply, from 27% in 2007 to 18% in 2008—a decline of 9% and the biggest one-year drop in the 18-year history of the survey. Retiree confidence in having a financially secure retirement has also decreased sharply, from 41% (very confident) to 29%, or down 12%.

Forty-six percent of workers saving for retirement report a total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $50,000. However, the large majority of workers who have not put money aside for retirement have little in savings at all. Seventy-six percent of these workers say their assets total less than $10,000.

Workers are beginning to push back their expected retirement age, often with the intention of improving their current financial situation or to increase their financial security in retirement. The typical worker expects to retire at age 65 years, and 20% of workers plan to push on into their 70s. However, the typical retiree retired at age 62 years while 51% say they retired sooner than planned.
Aging Well
Among retirees who left the work force earlier than planned, more than half (54%) say they did so because of health problems or disability. Health costs have become a major concern among retirees, as almost half (44%) say they have spent more than expected on health care expenses.

A third of all workers (34%) now expect to have access to employer-paid health insurance in retirement, down from 42% in 2007. Although 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.

This year, significantly fewer workers (26% down from 31% in 2007) and retirees (50% down from 60% in 2007) expressed confidence that the Social Security system will continue to provide benefits of at least equal value to the benefits received by the retirees today. Worker confidence about the future of Medicare benefits remained fairly stable.

One tool that appears to be effective in changing behaviors in financial preparation is a retirement savings calculator. Forty-four percent of those who calculated a goal amount report having made changes to their retirement planning as a result. Most often, these workers say they started saving or investing more (59%). Workers are also more likely to save in a tax-qualified retirement plan at work than they are on their own.

For more information, see report here http://www.ebri.org.