Much has changed since January when the Employee Benefit Research Institute fielded its annual Retirement Confidence Survey (RCS).
Recognizing this, EBRI gave it another go, this time in late March, specifically to see how the COVID-19 pandemic and resulting market shock influenced responses.
In January, it found 77% of retirees were confident in their ability to live comfortably throughout retirement, down slightly from 82% in 2019. Despite the subsequent pandemic, that number barely changed when the survey was re-fielded in March (76%).
Workers also remain surprisingly confident, except when job security was threatened. In January, 69% of all workers reported being very or somewhat confident in their ability to live comfortably throughout their retirement years, comparable to 2019.
In March 2020, the percentage of workers feeling confident is statistically unchanged at 63%.
However, those who fear the current pandemic may impact or has impacted their employment status exhibit lower confidence.
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“Retirement confidence continues to be closely related to having a retirement plan,” Craig Copeland, EBRI senior research associate and co-author of the report, said in a statement. “Of workers who are confident, 96% contribute to a defined contribution (DC) plan, and 94% are currently saving for retirement. Good health also impacts confidence, with 68% of confident workers citing being in very good to excellent health.”
January’s results show that three-quarters of workers are offered a defined contribution plan, and of those, about nine in 10 claims they participate. As of late March, these findings remain unchanged.
Workers who have a retirement plan, either an employer-sponsored DC plan or an individual retirement account (IRA), overwhelmingly report better retirement savings behaviors. More than eight out of 10 workers with a retirement plan report that they have personally saved for retirement, compared with 17% without a plan.
Similarly, workers with a plan are dramatically more likely to report total savings and investments of $100,000 or more (56% with a plan vs. 7% without).
Plan participants are, and remain, highly satisfied with their employer-sponsored retirement plan. In January, 83% were very or somewhat satisfied with their plan overall. The same share expressed satisfaction with the investment options in their plan in March (76% each express satisfaction with the plan overall and with investment options).
Nearly half of workers in 2020 say they tried to calculate how much they need to save for retirement, an influential planning step, up from 42% in 2019 and 38% in 2018.
Four in 10 estimates they will need to save $1 million or more, also up from 34% in 2019 and 27% in 2016. Workers who have attempted this calculation continue to be more confident in their retirement security than those who do not try.
Worker expectations
Workers commonly save in their workplace retirement plans. Consequently, eight in 10 workers expect income from a workplace retirement savings plan (separate from a pension plan) to be a major or minor source of income in retirement, while half of retirees report this is a major or minor source of income.
Furthermore, 57% of retirees report that they had savings in a workplace retirement savings plan at the time they retired.
Of those, slightly more than four in 10 rolled their savings into an IRA, while three in 10 kept it in the plan.
Retirees with DC plan and/or IRA assets do not report significant withdrawals for income, as three in 10 withdraw only the required minimum distribution and nearly as many report that they do not withdraw at all. In fact, three-quarters of retirees state that they aim to maintain, or even increase, their assets.
- SEE THE FULL REPORT HERE: Retirement Confidence Survey