Survey: Workers’, retirees’ confidence hasn’t recovered from drop in 2023

Majorities remain optimistic about retirement prospects      

Workers’ and retirees’ confidence has not yet fully recovered from the “significant drop” measured in 2023, but majorities remain optimistic about their retirement prospects and the lifestyle they envisioned. That’s according to the 34th annual Retirement Confidence Survey (RCS), which was published on April 25. RCS is the longest-running survey of its kind measuring worker and retiree confidence and is conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research, both of Washington, D.C.

“Overall, two-thirds of the workers and three-fourths of the retirees are very or somewhat confident about having enough money to live comfortably in retirement, which is unchanged from 2023. The survey also shows that workers and retirees are confident that government programs such as Social Security and Medicare will provide benefits of equal value to today and believe they understand the Social Security program,” Craig Copeland, director of wealth-benefits research at EBRI, said in the survey report. “Confidence is similar across all ages. But, in some cases, younger workers are actually more confident in certain aspects of retirement. For generation specific results, Boomers and Millennials reported higher confidence in having enough money to live comfortably throughout retirement than Gen Xers.” The 2024 survey of 2,521 Americans (1,255 workers and 1,266 retirees) was conducted online from between Jan. 2 and Jan. 31 of this year. All respondents were ages 25 or older and were prompted to respond to questions about retirement confidence, financial health and concerns, retirement savings and preparation, health care in retirement, workplace savings, retirement income, transition to retirement, and trusted sources of information. “Workers and retirees are also concerned that their retirement could be impacted by the U.S. government making changes to the American retirement system. In fact, 79% of workers and 71% of retirees have this concern,” Lisa Greenwald, CEO of Greenwald Research, said in the EBRI report. “Inflation’s impact on their retirement also remains a concern among workers and retirees.”

Key report findings

Workers’ and retirees’ confidence has not yet fully recovered from the significant drop measured in 2023, but majorities remain optimistic about their retirement prospects.  1. Americans’ confidence has not returned to prior levels, but the survey found signs that it is “making a positive recovery” as 68 percent of workers and 74 percent of retirees are confident they will have enough money to live comfortably throughout retirement. However, it’s “not a significant increase” from last year, EBRI noted.  Perhaps contributing to the positive trend upward is workers’ and retirees’ increased confidence in their income. EBRI cites the U.S. Census as indicating wage growth is now outpacing inflation growth. Americans are starting to feel this shift as 28 percent of workers and 32 percent of retirees who are confident feel that way due to their finances. However, inflation remains as a top reason for Americans’ lack of confidence.  Among those who do not feel confident, 31 percent of workers and 40 percent of retirees cite inflation as the reason why. Additionally, 39 percent of workers and 27 percent of retirees who are not confident feel this way due to their lack of savings. 2. Social Security remains the top source of actual and expected income for Americans in retirement. Most workers (88 percent) expect Social Security to be a source of income in retirement. Retirees confirm this sentiment as nearly all (91 percent) report Social Security as a source of income. The survey additionally found that 62 percent of retirees report Social Security is a major source of income, while only 35 percent of workers expect it to be a major source of income.  Most Americans expect/report Social Security as a source of income in retirement, but fewer understand it; those who do understand it are a “clear majority,” EBRI said. Two-thirds of workers and three-quarters of retirees understand Social Security and the various employment and claiming decisions that impact their retirement benefits at least somewhat well.  While most claim they understand Social Security, fewer than half of workers have reviewed the amount of their Social Security benefits at their planned retirement age, and 59 percent have thought about how the age at which they claim Social Security will impact the amount they receive.  Expectedly, “significantly more” retirees than workers have completed either task, with 77 percent having undertaken each. 3. Workers expect to claim Social Security as soon as they retire, but also expect to work for pay in retirement.  Workers believe they will start claiming Social Security benefits at a median age of 65, which is the same age workers expect to retire. While age 65 has been the historical median age workers expect to retire, significantly more workers (28 percent) this year expect to retire at age 65.  Retirees, on the other hand, report retiring at a significantly lower age than workers anticipate. Most retirees, 7 in 10, report retiring earlier than age 65, with a median retirement age of 62. Also contradicting workers’ expectations, retirees report collecting Social Security later into their retirement but earlier than workers’ expectations at around age 64. Similar to last year, half of retirees say they retired earlier than expected.  Two in five retirees who retired early say they did so because they could afford to, but nearly seven in 10 retirees indicate the reason was “out of their control,” EBRI said. 4. Americans’ retirement calculations result in a desire to save more, as estimations drastically differ from what Americans currently have.  Half of Americans have tried to calculate how much money they will need in retirement. In reaction to their calculation, 52 percent of workers and 44 percent of retirees started to save more. Even though seven in 10 workers and nearly eight in 10 retirees have saved for retirement, this renewed interest in saving is spurred by the “drastic difference” in what Americans believe they will need for retirement compared to how much they currently have saved, EBRI said. A third of workers who tried to calculate how much they will need in retirement estimate they will need $1.5 million or more. However, a third of workers currently have less than $50,000 in savings and investments. In addition, 14 percent of workers have less than $1,000 in savings and investments.  As part of their retirement preparations, half of the workers have estimated how much income they will need each month in retirement. One quarter of workers do not know how much pre-retirement income they will need to replace in retirement, but an additional quarter of workers believe they will need to replace 75 percent or more of their pre-retirement income. 5. Workers would like help in saving for emergencies through their retirement plan. Two-thirds of workers and almost three-quarters of retirees believe they have enough savings to handle an emergency expense. Additionally, almost half of workers have planned how they will cover an emergency expense in retirement.  However, the ability to save for emergencies is at the top of workers’ list of valuable improvements they would like to see be made to their retirement-savings plan. Some Americans are already using their retirement plans to pay for emergencies as nearly one in five have taken a loan or withdrawal from their retirement plan.  Many of those who took money from their plan did so to pay for unforeseen circumstances such as making ends meet (30 percent), paying for a home or car repair (17 percent), and covering a medical expense (15 percent). 6. Workers are more likely this year to want to purchase a guaranteed income product with their retirement savings.  Among workers who are offered a workplace retirement-savings plan, one-third believe having investment options that provide guaranteed lifetime income to be the most valuable improvement to their plan, EBRI said.  This landed second on workers’ list of most valuable improvements to their plan. Significantly up this year, more workers who are contributing to their employer’s retirement savings plan, 3 in 10, expect to use savings from their workplace retirement-savings plan to purchase a product that guarantees monthly income for life once they retire.  This is substantiated by the fact that 83 percent of workers who are participating in a workplace retirement plan would be interested in using some or all of their retirement savings to purchase a product that guarantees monthly income. 7. While expenses in retirement are higher than some retirees originally anticipated, retirees’ lifestyle in retirement is better than they expected.  Significantly up this year, over one-third of retirees say their travel, entertainment, or leisure expenses are higher than they expected. Half of retirees say their overall expenses in retirement are higher than they originally expected, but nearly four in five say they are able to spend money how they want within reason.  Despite higher-than-expected costs, significantly more retirees this year, three in 10, believe their overall lifestyle in retirement is better than expected. Additionally, over two-thirds of retirees agree they are having the retirement lifestyle they envisioned. A quarter of retirees strongly agree with this statement.