Confident Consumers Today; Insecure Retirees Tomorrow
The Employee Benefit Research Institute just released its annual Retirement Confidence Survey which measures, obviously, the current level of U.S. consumers' confidence as it relates to their financial preparedness for retirement.
It appears that worker confidence is generally up from last year but actual financial awareness of retirement needs is sadly lacking and preparedness for a comfortable retirement is grossly inadequate.
The 2010 survey found that the level of worker confidence in being able to save enough for a comfortable retirement, which has been declining over the past two years, has apparently bottomed out at 16% (still around a 20-year low).
Of the people who are already retired, about 19% are confident that they will have a financially secure retirement. Worker confidence in being able to save enough for basic retirement expenses increased to 29% (which beats the 25% in 2009 but is less than the 35% in 2008).
However, the following survey findings highlight the current level of workers’ financial preparedness for their retirement:
- 69% of workers and spouses say they have saved for their retirement (versus 75% in 2009)
- 60% of workers and spouses are currently saving for retirement, (40% are not saving)
- 27% of responding workers have less than $1000 in savings
- 54% of workers state that the total value of their household savings and investments is less than $25,000 (excluding home value and defined benefit plans)
- 54% of workers and spouses haven’t figured out the amount of money they will need for a comfortable retirement by the time they retire
- 33% of workers expect to be working after age 65
- 25% of employees have postponed plans to retire this year
Many employers are now offering a 401k defined contribution retirement plan as opposed to a defined benefit plan, like a pension plan, which was more the norm twenty years ago. And many employees aren’t taking full advantage of their 401k plans because they don’t understand how the contributions work.
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