EBRI: Workers’ retirement confidence remains low

American workers’ confidence that they will have enough money to retire comfortably is lagging while they remain concerned about jobs and the economy.

Those are findings in the 2012 Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates, Inc. EBRI is a nonprofit public-policy research organization based in Washington, D.C., and Mathew Greenwald & Associates is a market-research firm based in the same city. 

In this year’s survey, 14 percent of workers said they were very confident they would have enough money to live comfortably in retirement, while 38 percent said they were somewhat confident. Another 24 percent said they were “not too” confident and 23 percent said they were not confident at all.

The results are essentially unchanged from last year, according to Jack VanDerhei, EBRI research director. But 2011 came after a decline in retirement confidence that started in 2008, he said. 

“We find overall retirement confidence this year is statistically unchanged,” VanDerhei said during a conference call to discuss the survey. “But this plateau is at historically low levels.”

Workers appear to be busy with issues other than saving for retirement, VanDerhei said. The survey asked respondents to name the most pressing financial issue for Americans today, and just 2 percent of workers cited saving or planning for retirement.

In contrast, 42 percent of workers said job uncertainty is the most pressing issue, and 10 percent said it is making ends meet. The economy and making mortgage payments were each listed by 9 percent of workers, 8 percent named paying down debt, and 7 percent cited paying for health insurance or medical expenses as the most pressing issue.

“I think a key is concern about our economic futures,” Mathew Greenwald, president and CEO of Mathew Greenwald & Associates, said during the conference call. “Many workers feel they cannot, at this time, respond to their financial stress by saving more. Instead, the portion reporting savings for retirement has gone down.”

In this year’s survey, 58 percent of workers indicated they were currently saving money for retirement. That is down from 59 percent in 2011, 60 percent in 2010, and 65 percent in 2009, respectively.

Many workers feel they are behind the curve on saving and planning for retirement. Just 31 percent said they were ahead of schedule or on track in saving and planning, while 67 percent said they were behind schedule.

That is in line with 2011 results. However, workers have lost confidence in their retirement planning and saving since 2005, when 44 percent of workers believed they were on track or ahead of schedule and 55 percent said they were behind.

One way workers are adjusting is by planning to work longer, according to Greenwald.

“The planned retirement age for workers has increased slowly but steadily since we started conducting the [Retirement Confidence Survey], he said. “Workers are planning to work longer — in some cases far longer — than workers planned to just a decade or two ago.”

In this year’s survey, 26 percent of employees said they planned to retire at age 70 or older. That is about the same as in 2011, but up from just 12 percent in 2002 and 9 percent in 1991, respectively.

Meanwhile, the number of workers who planned to retire at age 65 declined from previous decades. The survey found that as of 2012, 26 percent of workers planned to retire at age 65. Again, that is roughly the same as results in 2011. It is down, though, from 2002, when 29 percent of workers expected to retire at that age. And it is down from 1991, when 34 percent of workers planned to retire at 65 years old.

The survey also found that a gap exists between workers’ actual retirement age and their planned retirement age. Just 8 percent of workers retired at or after their 70th birthday, according to the 2012 survey. 

So, workers are retiring earlier than they say they will. Employees’ reasons for leaving the work force earlier than planned include health problems, being downsized, having to care for a family member, and changes in skills needed for their job, according to the survey.

That gap shows that putting off saving for retirement can be risky, VanDerhei said. Employers can encourage workers to save by sponsoring retirement-savings plans like 401(k) plans, he said.

“They’ve been very powerful in getting employees to contribute money,” VanDerhei said.

The 2012 survey found that 81 percent of workers who were offered employer-sponsored retirement plans contributed to those plans. That portion has held relatively steady throughout the last decade, with 79 percent of workers who were offered plans contributing in 2011 and 81 percent contributing in 2010.

The 2012 Retirement Confidence Survey includes responses from 1,262 individuals age 25 and older across the United States. Of the individuals who were interviewed, 1,003 were workers and 259 were retirees.

Respondents were interviewed by telephone and cell phone in January 2012. The survey has a margin of error of plus or minus three percentage points. Complete results are available at www.ebri.org/surveys/rcs.