Don’t shoot the messenger, but too many of today’s workers are doing too little to prepare for retirement. In the latest installment of the longest-running survey on the topic, the Employee Benefit Research Institute (EBRI) today reported that less than half of today’s workers “appear to be taking the basic steps needed to prepare for retirement.”

More specifically, the EBRI’s 2013 Retirement Confidence Survey found that 52% (the highest number in the 23 years of the survey) of people in the workforce age 55 or older have less than $50,000 in savings and investments, excluding the value of their home.

Just 66% of workers say they and/or their spouse have “saved any money for retirement,” and even fewer—57%—are “currently saving for retirement.”

Given those figures, it’s not surprising that worker confidence in being able to afford retirement continues to decline. Some 28% say they are “not at all” confident about having enough money to live comfortably throughout retirement—the highest number in the history of the survey. Just 13% are “very confident.”

What gets in the way of saving for retirement? Cost of living and day-to-day expenses head the list of reasons why eligible workers are not contributing (or contributing more) to their employer’s plan, according to the survey.

Debt is clearly another issue, with 60 percent of workers reporting problems with their level of debt. (39% of current retirees describe their level of debt as a problem.)  Many are also living without a financial safety net.  Only 50% of those currently in the workforce say they “could definitely come up with $2,000 if an unexpected need arose within the next month.” (Current retirees are not in much better shape; just 52% say they could come up with $2,000 on short notice.)

There continues to be a significant disconnect between the expectations current workers have about retirement and the actual experience of today’s retirees. For example,

  • 26% of today’s workers expect to retire at age 70 or older, whereas just 6% of today’s retirees waited that long (health issues are a main reason why people retire earlier than they planned)
  • 69% of today’s workers say they plan to work for pay after they retire, whereas just 25% of today’s retirees have worked for pay during retirement
  • 74% of today’s workers are somewhat or very confident they’ll be able to find paid employment during retirement, whereas just 28% of current retirees are equally confident

One relatively simple step that seems to help motivate people to do what it takes to set aside more money for retirement is estimating how much they are likely to need. If you have never run such an estimate, try Fidelity’s super easy myPlan Snapshot.  When you’re done, click “Create a Plan” to run a more detailed analysis.

What are your reactions to this survey?

Our new Dynamic Asset Allocation investment strategy is off to a great start. Learn more about this strategy, which offers the powerful combination of market-beating returns with significant protection against loss during down markets.

Matt Bell

By Matt Bell

Matt Bell is Sound Mind Investing’s Associate Editor. He is the author of three personal finance books published by NavPress, leads workshops at churches and universities throughout the country, and has been quoted in USA TODAY, U.S. News & World Report, and many other media outlets.

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  • diane.emiller

    Matt, you know I think we all should be fiscally prudent and plan…
    but, who invented this retirement thing anyway? Some days it just seems
    to be another fading American dream, similar to owning your own home…
    Any scriptures to back up our American view of retirement? Honestly, I
    have not found any that support what most Americans think their
    retirement should be.

    • Matt Bell

      That’s a great point, Diane. I know of no scriptures that support the cultural definition of retirement. That said, the Bible is clear about our responsibility to provide for our family. And as this survey and other research has pointed out, even though we may intend to work for pay in our later years, our health may prevent us from doing so. So, we do have a responsibility to save for the future. Better to have some money saved for our later years and find we don’t need all of it.

      • Funny about Money

        In biblical times most people died before they reached retirement age. Those who survived that long were housed, supported, and cared for by their children.

        • Matt Bell

          The multi-generational household made something of a comeback during the last recession out of necessity. But it seems like something that should be talked about more, maybe becoming part of the retirement planning process. It would help people financially, and while there would be some trade-offs, I have to think there would be other benefits as well.

  • John

    I guess I am numb to seeing the same story over and over for the last 30 years. If a person cant manage to save more than $1K/yr over their working career (not even compounding) something is wrong with their plan. Failing to plan is the same as planning to fail. In all the financial counseling I have done it is the rare exception that cant save significantly more than this by making relatively easy lifestyle changes. Our instant gratification culture has already spent their retirement savings and then some.

    • Matt Bell

      John – You’re so right about this type of story being in the news year after year. Something needs to change—actually, lots of things need to change, but a good starting point would be making personal finance classes part of the curriculum starting in grade school. Just as everyone needs to learn math and science, they need to learn to save a portion of all that they earn.

    • Funny about Money

      Many factors that aren’t obvious may apply. It’s unfair to make broad generalizations on this subject.

      For example, large medical costs or other unescapable bills may lead people to draw money out of retirement savings. During a layoff that lasts any length of time, contributions to retirement savings naturally will stop; if, as was the case for many Americans who lost their jobs during the recent recession, the person never finds work with pay comparable to a lost job, contributions will drop or even be impossible to sustain.

      Most Americans today live from paycheck to paycheck. Making substantial contributions to a retirement plan requires a level of affluence that will cover living expenses and emergency expenses with a fair amount left over — and for many of us, that simply is no longer the case. To have a plan, you need to have something to plan with.

      • John

        There are always reasons to do the easy thing instead of the right thing. Our family has been through the medical nightmare of cancer and I have been through the layoff cycle, finally finding work further from home at lower pay. In my opinion that proves the need for planning with what you have not waiting for some higher paying job (that may never come) before you start planning for your long term future.

  • Bob

    So sad to hear so many Americans are not financially ready for retirement. I was 40 years old before I really got a good paying job as an assistant operator at a major oil company lubricants plant, We started saving in the company 401k plan and have a defined company pension. I just retired last year at 61 and begin retirement with $580,000 between 401k and company pension plus we have good equity in our home when we sell it. We are truly blessed. We did without a lot over my working years but saved and continued tithing and offerings and sowing and now will have a good retirement, this fall wll apply for Social Security at age 62. God is good..Tithing is a great financial plan to use.

    • Matt Bell

      Great to hear a positive story about retirement preparedness, Bob. Your comment, “We did without a lot over my working years but saved and continued tithing…” says a lot.

  • Steven J Fromm & Associates

    This is not new news. This has been a problem for decades. The change from (defined benefit) pension plans to defined contribution plans such as 401(k) and profit sharing plans has done our work force no favors. Government allowed and encouraged corporations to gut these more favorable plans. The worst part of it is that defined contribution plans for many are illusory in that people need to save outside these plans in addition to have any chance for a retirement fund of significance.
    Finally, we live in instant gratification society and thrift, savings and diligence are in short supply and not even thought about as an alternative.

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