MBR Financial, Inc.
2000 West Loop South
Ste. 1510
Houston, TX 77027

Retirement Confidence Declines for Workers, Rises for Retirees

In its 27th annual Retirement Confidence Survey, the Employee Benefit Research Institute discovered that 60% of today's workers feel very or somewhat confident in having enough money to retire comfortably, down from 64% in 2016. Just 18% feel very confident about their financial prospects in retirement, down from 21% in 2016. Moreover, some workers (31%) said they feel mentally or emotionally stressed about their retirement prospects.

By contrast, 79% of today's retirees feel very or somewhat confident about having enough money to live comfortably throughout their retirement years, up from 75% in 2016. Nearly a third (32%) feel very confident. And just 22% recall being worried about their preparations prior to retirement.

Retirement plans offer a key to more confidence

Seventy-three percent of workers say their employers offer a retirement savings plan, such as a 401(k) plan. Of those respondents, 83% say they participate in the plan. Nearly half of all workers say they invest in an IRA, and 39% have a traditional defined benefit (pension) plan. As in past years, the 2017 results found that workers who have a retirement plan are far more confident, more prepared, and feel less stressed than those without a plan.

Workers who say that they or their spouse have a retirement plan are more than twice as likely as those without a plan to be at least somewhat confident (71% vs. 33%) and are 10 times more likely to be saving for retirement. In terms of total amounts saved, 45% of workers with a plan have at least $100,000 in household savings and investments (excluding the value of a primary residence or defined benefit plan), compared to just 5% of those without a plan. Perhaps most concerning, 67% of those without a retirement plan have less than $1,000 in savings.

Workers with a retirement plan are much less likely (26%) to report feeling stressed about retirement preparations than workers without a plan (43%). In addition, 69% of workers with a plan say they feel at least somewhat financially secure, compared to only 32% of those who don't have a plan.

Finally, whereas nearly half of workers with a retirement plan have tried to calculate how much they will need for retirement, just 15% of those without a plan have ever tried to do so.

Workers may need a reality check

The annual survey also polls retirees to compare worker expectations and retirement realities. One of the most consistent findings from year to year is the gap between the expected retirement age among workers and the actual retirement age of today's retirees.

Whereas three-quarters of today's workers hope to retire at age 65 or later, just 23% of current retirees retired at that age. In fact, 39% retired before age 60.

Almost half (48%) of today's retirees actually retired earlier than planned. Reasons given include health problems or a disability (41%), changes at their employer (26%), changes in job skills required or other work-related reasons (20%), and having to care for a family member (14%). Some retired early for positive reasons, including being able to afford it (24%) and wanting to do something else (10%).

Plan ahead and be realistic

Workers can take comfort knowing that the vast majority of today's retirees are at least somewhat confident in their ability to afford a comfortable retirement. It may be beneficial, however, to remember key points the Retirement Confidence Survey reinforces each year:

  1. Participating in some sort of a retirement plan can lead to confidence and higher savings rates.
  2. Calculating a savings goal is an important step.
  3. Although many workers hope to work as long as possible, sometimes life can toss a curveball that causes them to retire earlier than planned. That's why it's important to plan now — no matter what your age — for retirement.

IMPORTANT DISCLOSURES Broadridge Investor Communication Solutions, Inc. does not provide investment, tax, legal, or retirement advice or recommendations. The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable — we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.