As I noted earlier in another context, the Employee Benefit Research Institute issued its 23rd annual Retirement Confidence Survey yesterday and it shows that despite some economic recovery, many Americans remain terrified of their retirement prospects. Indeed, almost half of American workers (49 percent) and more than a third of retirees (36 percent) lack confidence that they will have enough money to live comfortably in retirement. Of the workers who lack retirement confidence, 28 percent said they are “not at all confident,” the largest percentage expressing this view in the survey’s long history.
One reason for the low confidence level is that “workers may be waking up to just how much they may need to save,” according to EBRI’s announcement. One in five said they believe they would need to save between 20-29 percent of their income to achieve a financially secure retirement and 23 percent indicated they would need to save 30 percent or more. Yet only 46 percent report any effort to calculate how much money they actually will need to have saved by the time they retire so they can live comfortably in retirement.
Despite the high level of concern expressed, other financial risks are generally deemed more immediate than retirement, as only 2 percent of workers and 4 percent of retirees identify it as their most pressing financial issue. Both workers and retirees are most likely to cite job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each) as their top worry.
Debt is also a problem, according to the survey. More than half of workers (55 percent) and 39 percent of retirees reported having a debt problem with only half saying they could readily come up with $2,000 if an unexpected need arose within the next month. Given these concerns about debt and job security, it’s no surprise that retirement saving has lessened among workers, with just 66 percent reporting they or their spouses had saved for retirement, down from 75 percent in 2009.
It is also noteworthy that relatively few report turning to advisors for help. Only 23 percent of workers and 28 percent of retirees say they have obtained investment advice from financial advisors. Workers are also unlikely to follow the financial advice given in its entirety as well, with only 27 percent saying they did. About four in 10 workers (41 percent) say they followed most of the advice and about three in 10 (31 percent) say they followed only some or none of it. Surprisingly (at least to me), the top reason for not following the advice wasn’t not being able to afford it (18 percent). It was not trusting the advice (33 percent), followed by having their own ideas or other plans or goals (20 percent).