Those earning less than $75,000 aren't feeling nearly as confident that they'll have a retirement that's comfortable.
Retirement confidence is on the upswing after five years of record lows. That’s good news, right? Well, yes – but it’s true only among the well-to-do.
The recently released 24th annual Retirement Confidence Survey by the Employee Benefit Research Institute found that retirement confidence is impacted by two main factors.
This increased confidence is observed almost exclusively among those with higher household income, but it was also found that confidence was strongly correlated with household participation in a retirement plan.
Other study findings include:
- Bigger debt. Fifty-eight percent of workers and 44 percent of retirees said they’re worried about their level of debt. Many reported higher debt now than five years ago.
- Scant savings. More than a third of retirees and workers say they have less than $1,000 in savings. Sixty-eight percent of households with an annual income of less than $35,000 have less than $1,000 set aside.
- Planning. About 90 percent of workers participating in a retirement plan had saved for retirement, compared with 1 in 5 without a plan. But only 44 percent of people said they’d tried to figure out how much money they’ll need to have saved in order to retire. Workers with an idea of the amount of retirement funds they’ll need tend to save more.
- Working retirement. While 65 percent of those surveyed said they planned to work during retirement, only about 27 percent of retirees report to work for pay after retirement.
- Retirement confidence. Just 18 percent of workers say they’re “very confident” they’ll have enough money to retire in comfort. While relatively low, that confidence level has increased from 13 percent in 2013. But nearly a quarter say they are “not at all confident.” Of the top earners, with incomes of $75,000 and above, 36 percent reported being “very confident” about retiring in comfort, compared with 11 percent of those with incomes between $35,000 and $74,000.
- Seeking help. Only 1 in 5 workers report getting investment advice from a financial adviser. And of those who sought help, only 27 percent reported following all of the advice.
The statistics – low worker savings and very few workers taking the steps necessary to plan for retirement – paint a dismal picture. According to USA Today:
The survey “highlights the impending retirement crisis that we will face over the next 20 years,” says Mark Fried, president of TFG Wealth Management in Newtown, Pa. “When I see these numbers I have ask the question: How did we get here? We need more financial education in the schools, in the media, in the workplace.”
If possible, people 40 and older should try to save up to 20 percent of their income, he says. “If you can’t afford to do that right now then set this as a target, and as you get annual raises put aside part of each raise until you reach the 20 percent number,” Fried says.
Not convinced? Money Talks News founder Stacy Johnson explains in this video why Social Security won’t be enough to support a retirement to look forward to.
Are you confident about your retirement savings? Do you have retirement saving tips? Please share your comments below or on our Facebook page.