EBRI survey finds decline in Americans’ retirement confidence

“The confidence both workers and retirees have in their ability to finance their retirements dropped significantly in 2023. The last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis,” Craig Copeland, director of wealth benefits research at EBRI, said. “This shows that the current economic climate, in particular inflation, is eroding the confidence that Americans had in their retirement preparations going into the pandemic,” 

The 2023 survey of 2,537 Americans was conducted online from Jan. 5 through Feb. 2, 2023. All respondents were ages 25 or older. 

The survey included 1,320 workers and 1,217 retirees and this year included an oversample of roughly 944 completed surveys among caregivers (598 workers and 346 retirees). A report on the findings among caregivers will be released this summer.

“Workers worry that their salaries won’t keep up with inflation and report more debt, while retirees worry about cost of living and expenses,” Lisa Greenwald, CEO of Greenwald Research, said in the EBRI report. “Half of retirees report that their overall spending is higher than expected, an increase over last year’s one-third, and the share of retirees who feel their retirement lifestyle is worse than they expected is slowly growing.”

Greenwald Research is an independent research firm specializing in retirement, employee benefits and health-care research for more than 35 years. 

The nonprofit Employee Benefit Research Institute calls itself an independent and unbiased resource organization that provides the “most authoritative and objective” information about critical issues relating to employee-benefit programs in the U.S.

Key findings

The report on the 2023 Retirement Confidence Survey had some key findings that included the following.

Americans’ confidence that they will have enough money to live comfortably throughout retirement declines. 

Compared with 2022, both workers’ and retirees’ confidence in having enough money to live comfortably throughout retirement “significantly” dropped from 73 percent in 2022 for those being very or somewhat confident to 64 percent among workers, and from 77 percent to 73 percent among retirees. 

The last time the survey found a decline in confidence of this magnitude was in 2008 during the global financial crisis. Eighteen percent of workers report feeling very confident. While retirees’ confidence is slightly higher than workers’, still only 27 percent say they feel very confident. Among those who do not feel confident, four of 10 workers and a quarter of retirees state it is due to having little to no savings. 

Inflation also has a “large impact” on Americans’ certainty with 29 percent of workers and 42 percent of retirees stating this is the reason for their lack of confidence, per the EBRI report.

Both workers and retirees report high concerns about inflation and its impact on their savings and spending. 

The effects of inflation are “heavy” on Americans’ minds, as 84 percent of workers and 67 percent of retirees are concerned that the increasing cost of living will make it harder for them to save money, per EBRI. Four in 10 workers and 3 in 10 retirees are not confident their money will be able to keep up with inflation in retirement, which is a “significant” increase compared with the third of workers who felt this way last year. 

Americans’ ability to finance their expenses is in question, as 73 percent of workers and 58 percent of retirees are concerned they will have to make “substantial” cuts to their spending due to inflation, the report said.

Workers’ debt levels are on the rise and are negatively impacting their ability to save for retirement. 

More than four in five Americans feel knowledgeable about managing their day-to-day finances. Despite the confidence in their financial knowledge remaining high, workers’ debt problems appear to be worsening in 2023. “Significantly” up this year compared with 2022, more than six out of 10 workers report their debt is a problem. However, consistent with last year, 34 percent of retirees report the same, EBRI said.

While Americans try to prepare for retirement, drops in the value of retirement accounts have caused concern. 

Half of Americans have tried to calculate how much money they will need to save to have a comfortable retirement. At least seven in 10 workers and retirees say they have personally saved money for retirement. However, Americans’ retirement savings have taken a hit this year. 

Forty percent of workers and 58 percent of retirees report that their retirement-account balances have decreased over the past 12 months.

Understanding of retirement-plan investment options is lacking for some and many don’t consider their plan provider a go-to source for retirement-planning information and advice. 

Many workers feel they understand the investment options their workplace-retirement plan offers. Seven in 10 workers are confident they can choose the right investment options for their situation. However, about four in 10 admit they don’t understand Target Date Funds, three out of 10 workers don’t understand managed accounts, and half do not understand ESG investment options, the report stated.

Many workers aren’t using professional sources of information and advice that can help improve their investment know-how. A large portion of workers (40 percent) turn to their family or friends when seeking information about retirement planning, while only two in 10 turn to their workplace-retirement plan provider. 

Americans’ confidence in Social Security remains mostly unchanged, but worker confidence in Medicare has declined. 

Both workers’ and retirees’ confidence in Social Security remains unchanged as well, as half of workers and 7 in 10 retirees feel at least somewhat confident that the benefits provided will continue to be at least equal in value to the benefits provided today. 

However, workers’ confidence in Medicare has “significantly” decreased, with just half who feel at least somewhat confident it will continue to provide benefits that are of equal value to today, per the report.

Workers are confident they know how much to withdraw from their retirement savings. However, they have different expectations of the role many income sources will play in retirement compared with today’s retirees. 

Despite being down from last year, nearly two-thirds of workers are still confident they know how much to withdraw from their savings and investments in retirement. Retirees’ confidence in their knowledge remains steady, with a quarter being very confident. 

Workers are more likely to expect income from personal retirement savings, IRAs, work for pay, products that guarantee monthly income, and financial support from family and friends than what retirees currently report being sources of income. 

In contrast, workers are less likely to expect Social Security to be a source, whereas almost all retirees report it as a source of income in retirement, EBRI stated.

When describing their asset goals, half of retirees report they try to maintain their asset levels. Fewer than last year aim to grow their assets. 

Additionally, two-thirds of retirees report their financial priority in retirement is income stability over maintaining wealth. Workers share this sentiment as almost three-quarters say they would prioritize income stability, per the report.