Americans' confidence in their ability to retire appears to be stabilizing, now that the economic volatility of the recession has abated. However, their self-described preparations for retirement continue to erode, according to the 2010 Retirement Confidence Survey (RCS) released on March 9 by the nonpartisan Employee Benefit Research Institute and Mathew Greenwald and Associates, a market research firm.
The RCS also finds that a growing number of American workers are also planning to delay retirement -- which has negative implications for the U.S. job market, where unemployment is high and layoffs continue to grow. As older workers stay at their jobs longer, the RCS results suggest that fewer existing jobs are likely to open up.
"Americans' attitudes toward retirement have clearly tracked the economy the last couple of years, and that seems to be the case in 2010," said Jack VanDerhei, EBRI research director and co-author of the survey, in a statement. "Unfortunately, while their attitudes are stabilizing, their preparation for retirement is not. A distressing number of people have no savings at all."
In addition to looking at long-term trends on workers pushing back their expected retirement age -- which had been steadily growing even before the recent economic recession -- this year's RCS also reveals several other major trends that this unique survey has been tracking over the past two decades.
"The findings affirm that the role of the financial advisor is more critical today than ever," said Tim Minard, vice president, retirement and investor services, Principal Financial Group, in an interview.
"Americans are feeling better about their financial futures, but they need help backing that up with the right actions. The survey shows that more of them are starting to seek the advice of financial advisors. Advisors who have a needs-based approach will clearly appeal more to today's post-market meltdown investor," explained Minard.
Among the survey's key points:
o Stabilizing confidence: The percentage of workers very confident about having enough money for a comfortable retirement remains steady at 16 percent, which is statistically equivalent to the 20-year low of 13 percent measured in 2009. Retiree confidence about having a financially secure retirement has also stabilized, with 19 percent saying now they are very confident (statistically equivalent to the 20 percent measured in 2009).
o Financial aspects of retirement: The percentages of workers very confident about other financial aspects of retirement have held steady at 12 percent for medical expenses, 10 percent for long-term care expenses, and 21 percent for doing a good job of preparing for retirement.
o However, the percentages not confident continue to creep upward, from 44 percent in 2009 to 51 percent in 2010 for medical expenses, from 56 percent to 61 percent for long-term care expenses, and from 30 percent to 35 percent for doing a good job of preparing for retirement.
o Fewer are saving: Fewer workers report that they and/or their spouse have saved for retirement (69 percent, down from 75 percent in 2009 but statistically equivalent to 72 percent in 2008). Moreover, fewer workers say that they and/or their spouse are currently saving for retirement (60 percent, down from 65 percent in 2009 but statistically equivalent to percentages measured in other years).
o Workers postponing retirement: One-quarter of workers (24 percent) report they have postponed their planned retirement age in the past year. Among the reasons cited for delaying retirement are the poor economy (29 percent of those postponing retirement), a change in their employment situation (22 percent), inadequate finances (16 percent), and the need to make up for losses in the stock market (12 percent).
o Later retirement expected: Although the age at which workers report they expect to retire shows little change from 2009, a longer-term look finds significant change. In particular, the percentage of workers who expect to retire after age 65 has increased over time, from 11 percent in 1991 to 14 percent in 1995, 19 percent in 2000, 24 percent in 2005, and 33 percent in 2010.
o Clueless about savings goals: Many workers continue to be unaware of how much they need to save for retirement. Less than half of workers (46 percent) report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement.
o Some reality testing on savings needs: The savings goals cited by workers who have done a retirement needs calculation have increased over time. In the 2000 RCS, 31 percent said they needed to accumulate at least $500,000 for retirement. This percentage gradually increased to 43 percent in 2005 and 54 percent in 2010.
o Guaranteed income products: Few workers report they are likely to purchase a financial product or select a retirement plan option that pays them guaranteed income each month for the rest of their life. Only 11 percent indicate they are very likely to do so, while 35 percent say they are somewhat likely. Only 14 percent of retirees report they purchased a guaranteed-income product or selected a guaranteed-income option from a retirement plan.