The percentage of U.S. workers who say they are “very confident” about having enough money for a comfortable retirement plunged to 18% earlier this year, from 27% in 2007.
Retirees’ confidence in their ability to have enough money to live comfortably for the rest of their lives followed a similar path, with the level of retirees saying they are very confident dropping to 29%, from 41%.
Researchers at the Employee Benefit Research Institute, Washington, and Mathew Greenwald & Associates Inc., Washington, have reported those figures in a summary of results from the latest Retirement Confidence Survey, which drew on telephone interviews with 1,057 U.S. workers ages 25 and older and 265 U.S. retirees.
The interviews were conducted in January.
EBRI recorded a sharper drop in confidence for retirees between 1997 and 1998, but the drop in the percentage of workers who say they are very confident about their retirement prospects is the first drop greater than 3 percentage points since EBRI started the survey series in 1993.
Decreases in confidence occurred across all age groups and income levels, but they were particularly acute for younger workers and those with lower income, the researchers report.
“In the nearly two decades we have been conducting the RCS, this year’s results show a very dramatic reduction in the public’s confidence about having a comfortable retirement,” says EBRI President Dallas Salisbury. “If there is a silver lining, it’s that Americans finally may be waking up to the realities of being able to afford retirement.”
The EBRI and Mathew Greenwald researchers did not directly address the effects of recent stock market turmoil on confidence levels.
Working participants were about as likely to express confidence in their investment knowledge and strategies this year as in 2007, but the percentage of retired participants who strongly agreed that they were knowledgeable about investments fell to 18%, from 59%.
Health costs also seem to be getting survey participants’ attention.
The percentage of working participants who said they are less confident about having enough money for medical expenses rose to 43% this year, from 32% in 2007, and the percentage expressing doubts about their ability to pay for long term care increased to 54%, from 44%.
The percentage of workers who expect to have access to employment-based health insurance in retirement fell to 34%, from 42%.
Researchers found that current financial concerns may be limiting Americans’ ability to plan for retirement.
When asked what they think is the most pressing financial issue facing most Americans today, just 5% of workers cited saving or planning for retirement.
About 17% of the workers cited making ends meet or the cost of living; 16%, health insurance and medical expenses; 16%, housing costs; 13%, debt; 9%, energy costs; and 6%, job uncertainty.
In addition to preparing the main survey report, EBRI has released fact sheets that provide more details on health costs, saving for retirement, gender issues, age issues, and attitudes about Social Security and Medicare.
Insurers and other financial services companies underwrote the survey.