Not surprisingly, the markets and economic downturns have cast a pall over the retirement expectations of most Americans. Pay cuts, job losses, increasing debt, the cost of long-term health care, sharp declines in investment and retirement portfolios–they’re all looming large in consumers’ minds, and according to the 2009 Retirement Confidence Survey released by the Employee Benefit Research Institute (EBRI), they’re making it a lot tougher for Americans to focus on retirement planning.
“The survey has been done since 1991, so we have seen Americans reacting to good times and to very bad times,” Mathew Greenwald, president of market research firm Greenwald and Associates (which conducted the 2009 Retirement Confidence Survey with EBRI), said in a recent conference call. “The recession we are now experiencing has presented a new and especially difficult set of challenges for Americans’ financial security.”
The greatest challenge highlighted by the 2009 Retirement Confidence Survey, Greenwald said, is the decline in confidence that Americans are currently facing.
According to the survey, workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level (13%) since the Retirement Confidence Survey started asking the question in 1993. Retirees also posted a new low in confidence about having a financially secure retirement: Only 20% now say they are very confident about having enough to live on comfortably in their retirement, down from 41% in 2007, the survey noted.
As the general confidence level has plummeted, so too has peoples’ desire to want to try and plan for the future, Greenwald said. “The time when retirement planning seems toughest is when it seems harder for Americans to focus,” he said.
Confidence Is a Backward-Looking Indicator
Retirement finance experts like Francis M. Kinniry Jr., a principal in Vanguard’s Investment Strategy Group, believe that clients should steer the course and not give up. On the contrary, focus and clarity of thought and planning are needed more than ever, Kinniry says.