Does simply saying it make it so? In a classic bit of American overconfidence, workers are for the most part confident in their 401(k)-fueled retirement, but are slacking off in actual retirement preparation.
A new survey from (who else?) Employee Benefit Research Institute (EBRI) finds that the percentage of workers very confident about having enough money for a comfortable retirement, at record lows between 2009 and 2013, increased from 13 percent in 2013 to 22 percent in 2015, and has leveled off at 21 percent in 2016.
Also, those somewhat confident increased from 36 percent in 2015 to 42 percent in 2016, while the percentage not at all confident decreased from 24 percent in 2015 to 19 percent in 2016, EBRI found.
Workers reporting they or their spouse have money in a defined contribution (DC) plan or individual retirement account (IRA) or have benefits in a defined benefit (DB) plan from a current or previous employer are more than twice as likely as those without any of these plans to be very confident (26 percent with a plan vs. 10 percent without a plan).
Additionally, workers without a plan are more than three times as likely to say they are not at all confident about their financial security in retirement (11 percent with a plan vs. 38 percent without a plan).
“Among those who are confident about retirement, it’s overwhelmingly among those who have a retirement plan,” said Jack VanDerhei, EBRI research director and co-author of the survey, said in a statement. “Even if you control for discrepancies in age and income, the likelihood that a respondent is either somewhat or very confident that they will have enough money to live comfortably throughout their retirement years is 22 percentage points higher for those who have an IRA, DC plan, and/or DB plan than their counterparts without a retirement plan.”
How are those who aren’t saving enough planning to cope with the shortfall? By either saving more later or working longer, they say—even though many retirees say they were unable to work longer because they were forced to leave the workforce earlier than planned (such as health problems or disability).
Among Americans who know they are saving less than they need for retirement, about 20 percent say they will have to save more later, while 15 percent say they will have to work in retirement and 14 percent say they will have to retire later.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
