Job Concerns Keep Retirement Confidence Low

Concerns about job security and household debt are keeping the retirement confidence of U.S. workers at the lowest levels seen in more than two decades, according to a new report from the Employee Benefit Research Institute (EBRI).

EBRI’s 2012 Retirement Confidence Survey (RCS) revealed that most workers remain unprepared for a financially secure retirement, and that half of today’s retirees left the workforce earlier than planned. Findings of the twenty-second annual survey, which highlight America’s widespread retirement planning predicament, include the following:

Only 14% of survey respondents expressed confidence in having enough money for a comfortable retirement, compared with 27% that expressed that level of optimism in 2007. While the current number is higher than the 13% recorded in 2009 and 2001, EBRI notes it is statistically equivalent to those record lows. In addition, only 19% of workers are now very confident that they are doing a good job of planning for retirement. The same percentage indicated they are “not at all confident.”

Despite the importance of retirement planning for nearly everyone, working Americans generally have no idea how much money they will need to set aside for the future. More than half (56%) indicated that neither they nor their spouse had calculated how much they would need to live comfortably during retirement.

Workers’ assessment of their current level of debt is essentially unchanged from last year, but the RCS makes clear that debt remains a major obstacle to retirement security. There is a clear correlation between level of debt and retirement confidence:

• Only 4% of workers with a major debt problem are very confident of their retirement outlook, versus 23% with no debt problem.
• Those with a major debt problem were three times more likely than those without one to say they are not all confident about retirement (45% versus 14%).

Americans who expect to bridge a retirement savings gap by staying in the workforce longer may not be able to do so. According to the RCS, 50% of current retirees stopped working earlier than they had anticipated due to circumstances beyond their control, such as health problems, downsizing, and the need to provide care to another person.

What are the takeaways from this annual measurement of where Americans stand on the road to retirement? Calculating a retirement savings goal, paying off debt, and creating a “Plan B” in the event of a forced early retirement may be strategies worth pursuing.

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