Was anybody really surprised at the results revealed in the Employee Benefits Research Institute’s most recent Retirement Confidence Survey?
In the last year, the percentage of workers who say they are very confident about affording a comfortable retirement plunged from 27% to 18%. Among retirees, for whom the situation is, so to speak, closer to home, the percentage similarly dropped from 41% in 2007 to only 29% this year.
It’s probably the not-so-mysterious workings of gasoline prices. There seems to be an inverse correlation between rising (not to say, skyrocketing) gasoline prices and consumer confidence. When gas goes up, confidence plummets. And as anyone who drives knows, the price of gasoline is doing a more than fair imitation of 0 to 60 in 5 seconds.
But it’s not only gas, it’s other forms of energy too. And food. And health care. And just about anything else you have to purchase.
And it’s seeing how housing prices have been battered. The decline in value has been like a punch in the stomach to those people who looked at their home as an annuity in the making and who counted on selling it for a big profit so they could bankroll a comfortable retirement.
In the story about this survey in last week’s issue, it was noted that the decline in confidence went across all age groups and income levels.
Mathew Greenwald, whose firm co-sponsored the survey with EBRI, said, “It’s disheartening but understandable that retirement confidence has gone down. But it’s my view that much of the confidence observed in previous years was false confidence.”
Then he added, “Perhaps now people are getting more realistic, which hopefully is a precursor to more effective financial preparation for retirement.”