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?
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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.