Worker and retiree confidence is trending up, good news in an era of longer lifespans and more responsibility for individual retirement saving.
Employee Benefit Research Institute reports that the share of workers who feel very confident in their ability to live comfortably in retirement remains low at just 17 percent. However, Jack VanDerhei and the team find another 47 percent are somewhat confident.
“Combining those that are very and somewhat confident, workers appear to be more confident in retirement than they were in 2017,” EBRI reports.
Retirees remain even more confident than workers, with a third very confident and another 44 percent somewhat confident that they will have enough money to live comfortably throughout retirement.
“Of note, however, are some of the decreases in confidence in specific aspects of retirement among retirees,” it adds. “Retirees are less likely than in 2017 to feel confident in their ability to handle basic expenses in retirement and less confident in their ability to handle medical expenses.”
EBRI says that workers appear to be “very positive” about their workplace defined contribution retirement plans and that may be impacting overall retirement confidence.
“Those with a DC plan are far more likely to be confident in their ability to live comfortably in retirement. More than four in five with a DC plan report being very or somewhat satisfied with the plan overall, and with the investment options available to them. Eight in 10 workers expect that these plans will be a major or minor source of income for them in retirement.”
Still, some workers may be guilty of false confidence and data suggest they may be making some faulty assumptions:
- Workers expect to retire later than retirees actually do.
- Workers plan to work in retirement, and two in three expect work for pay to be a major or minor source of income. Yet only one in four retirees say working is a source of income for them.
- Nearly two in three workers call debt a major or minor problem, and more than four in 10 say it’s negatively impacting their ability to save for retirement. At the same time, about one-quarter of retirees say debt is negatively impacting their lifestyle.
“Retirees’ overall confidence shows signs of decline, but their confidence in being able to afford medical and long-term care expenses in retirement is down significantly,” EBRI concludes. “Relatedly, their confidence that Social Security and Medicare will continue to provide benefits equal to what retirees receive today has decreased.”