Americans’ confidence in their ability to afford a comfortable retirement has recovered somewhat from the record lows of the past five years. That’s according to the 24th annual Retirement Confidence Survey (RCS) that the nonprofit Employee Benefit Research Institute (EBRI) released on March 18. However, it doesn’t appear the findings are the result of improved […]
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Americans’ confidence in their ability to afford a comfortable retirement has recovered somewhat from the record lows of the past five years.
That’s according to the 24th annual Retirement Confidence Survey (RCS) that the nonprofit Employee Benefit Research Institute (EBRI) released on March 18.
However, it doesn’t appear the findings are the result of improved retirement preparations and those with confidence may be limited to people who are enrolled in retirement plans, EBRI said.
The RCS, the longest-running survey of its kind in the nation, finds that the percentage of workers confident about having enough money for a comfortable retirement increased in 2014.
The percentage had hit record lows between 2009 and 2013, EBRI said.
The survey found 18 percent are currently very confident of having a comfortable retirement, which is up from 13 percent in 2013. At the same time, 37 percent are somewhat confident.
Additionally, 24 percent are not at all confident, which is statistically unchanged from 28 percent in 2013, according to EBRI.
That increase in confidence “was isolated almost exclusively” to people who had a retirement plan like a 401(k), says Nevin Adams, the survey’s co-author.
And it could be either through respondents’ workplaces or an individual-retirement account, he adds.
“When we looked at the people who didn’t have a retirement-savings account and compared those results to last year, there is basically no upward movement at all in their confidence,” says Adams.
Nearly half of workers without a retirement plan were not at all confident about their financial security in retirement, compared with only about 1 in 10 with a plan, according to EBRI.
The increase in confidence between 2013 and 2014 occurred primarily among those contributing to a plan.
Respondents who were very confident rose to 24 percent in 2014, up from 14 percent in the 2013 survey. Those figures compare with level readings among the respondents not contributing to a plan, 9 percent in 2014 down from 10 percent in 2013, EBRI said.
A possible reason for improved confidence is the rising stock market and property values, Jack VanDerhei, EBRI research director, and co-author of the report, said in the news release.
“And it’s entirely possible that people were … reflecting based on the statement they had [received] relative to their retirement savings and, in fact, had seen it rise during the past year,” Adams adds.
He also acknowledges that the authors are only speculating about the reason and don’t know it “with precision.”
The RCS also found retiree confidence in having a financially secure retirement, which historically tends to exceed worker confidence levels, has also increased, with 28 percent very confident (up from 18 percent in 2013) and 17 percent not at all confident (statistically unchanged from 14 percent in 2013).
Nearly two thirds (64 percent) of workers report they or their spouse have saved for retirement (statistically equivalent to 66 percent in 2013), although nearly 8 in 10 (79 percent) of full-time workers say that they or their spouse have done so.
It represents another example in the survey in which participation in a retirement plan mattered: 90 percent of workers enrolled in a retirement plan had saved for retirement, compared with just 1 in 5 of those without a retirement plan.
Cost of living and day-to-day expenses head the list of reasons why workers do not save (or save more) for retirement, with 53 percent of workers citing these factors, EBRI said.
If you ask people why they are not saving more, they tell you basically the day-to-day expenses are “crowding it out,” Adams says.
“They’re having to take care of the here and now, instead of the there and then,” he adds.
Existing debt is clearly an obstacle standing in the way of many needing to save for retirement, and weighing on retirement confidence, according to Matt Greenwald, of Greenwald & Associates, Inc. which conducted and co-sponsored the survey.
“Just 3 percent of workers who describe their debt as a major problem say they are very confident about having enough money to live comfortably throughout retirement, compared with 29 percent of workers who indicate debt is not a problem,” he noted. “Fifty eight percent of workers and 44 percent of retirees say they are having a problem with their level of debt.”
Greenwald & Associates and EBRI, both headquartered in Washington, D.C., conducted the survey in early 2014.
Nearly two dozen organizations underwrote the survey, EBRI said.
Contact Reinhardt at ereinhardt@cnybj.com