Americans Retirement Confidence at Record Low
About half (49 percent) of Americans say they are not confident in their ability to live comfortably in retirement. About a quarter (28 percent) say they have “no confidence” that they will have enough money to retire comfortably — this is the highest no-confidence level ever recorded in the 23-year history of this survey.
About two-thirds (66 percent) of current workers now say they are actively saving for retirement, down from 75 percent in 2009. This downward trend is especially concerning when you consider that only three percent of the private-sector U.S. workforce is covered by a traditional defined-benefit pension plan — down from 28 percent in 1979, according to U.S. Department of Labor data compiled by EBRI.
Just over half of Americans (51 percent) said they have some level of confidence in their financial ability to retire: 38 percent are somewhat confident and 13 percent are very confident. But when it comes to knowing how much money they actually need to save for retirement, about half (45 percent) of Americans say they are just guessing. Only 18 percent say they have consulted a financial adviser to help them, and another 18 percent say they have tried to determine this amount themselves.
Perhaps the most alarming statistic of all, however, is that just two percent of current workers (and four percent of current retirees) say that saving and planning for retirement is the most pressing financial issue facing Americans today. “Not only are a large number of Americans unprepared for retirement, but an even larger number doesn’t seem to think that it’s very important,” says David Lerner Associates Branch Manager Jonathan Jarow.
This is further born out by the amount of money many Americans have saved for retirement. Over half (57 percent) of current workers said they have accumulated less than $25,000 in total household savings and investments (excluding their homes). In 2008, just as the financial crisis was beginning to unfold, 49 percent of workers said they had saved less than $25,000.
Longer life spans are exacerbating the problem even further: U.S. men who will turn 65 this year are now expected to live an additional 20.5 years, up a full year from earlier projections, reports the Society of Actuaries. And women who turn 65 this year are expected to live an additional 22.7 years, up from 21.3 years in earlier projections.
While these numbers may look bleak, Jarow urges individuals not to focus too much on broad, macro studies like this. “These studies just provide a snapshot of the overall retirement planning picture in the U.S. This doesn’t mean that any one individual has to be unprepared for retirement.
“Your retirement readiness is mostly up to you,” he adds. “The best way to prepare for retirement is to participate in a retirement plan at your workplace if one is offered by your employer, and then contribute as much money as you can, up to the annual contribution limit. Or, if your employer doesn’t offer a retirement plan, open an IRA on your own and contribute as much as you can up to the annual contribution limit — ideally, by setting up automated monthly transfers of money from your checking or savings account directly into your IRA.”
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. Member FINRA & SIPC.