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As Economy Impacts Confidence, Many Plan to Work Longer

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If you’re wondering how the economy and the markets are influencing workers’ and retirees’ outlook, check out the Employee Benefit Research Institute’s 2009 Retirement Confidence Survey (RCS). The survey was conducted in January 2009 through 20-minute telephone interviews with 1,257 individuals (1,001 workers and 256 retirees) age 25 and older in the United States. The survey found:

Record-low confidence levels

Workers who say they are very confident about having enough money for a comfortable retirement this year hit the lowest level in 2009 (13 percent) since the Retirement Confidence Survey started asking the question in 1993, continuing a two-year decline. Retirees also posted a new low in confidence about having a financially secure retirement, with only 20 percent now saying they are very confident (down from 41 percent in 2007).

The economy, inflation, and cost of living are the big concerns

Workers overall who have lost confidence over the past year about affording a comfortable retirement most often cite the recent economic uncertainty, inflation, and the cost of living as primary factors. In addition, certain negative experiences, such as job loss or a pay cut, loss of retirement savings, or an increase in debt, almost always contribute to loss of confidence among those who experience them.

Retirement expectations delayed

Workers apparently expect to work longer because of the economic downturn: 28 percent of workers in the 2009 RCS say the age at which they expect to retire has changed in the past year. Of those, the vast majority (89 percent) say that they have postponed retirement with the intention of increasing their financial security. Nevertheless, the median (mid-point) worker expects to retire at age 65, with 21 percent planning to push on into their 70s. The median retiree actually retired at age 62, and 47 percent of retirees say they retired sooner than planned.

Working in retirement

More workers are also planning to supplement their income in retirement by working for pay. The percentage of workers planning to work after they retire has increased to 72 percent in 2009 (up from 66 percent in 2007). This compares with 34 percent of retirees who report they actually worked for pay at some time during their retirement.

How workers are responding: Among workers who have lost confidence in their ability to secure a comfortable retirement, most (81 percent) say they have reduced their expenses, while others are changing the way they invest their money (43 percent), working more hours or a second job (38 percent), saving more money (25 percent), and seeking advice from a financial professional (25 percent). Among all workers, 75 percent say they and/or their spouse have saved money for retirement, one of the highest levels ever measured by the RCS.

Ignorance still a major factor: Many workers still do not have a good idea of how much they need to save for retirement. Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved by the time they retire–and an equal proportion (44 percent) simply guess at how much they will need for a comfortable retirement.

The survey indicates several important changes that advisors should note, says Craig Copeland, a senior research associate with EBRI and a co-author of the study. “Eighty-nine percent of people that said they had changed their retirement date said that they were going to move it to a later date,” he says. “There was also an increase in the percentage of people (who responded) that even if they did retire, they were going to work for some income to supplement their retirement.”

The survey is available at


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