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Retirement Confidence Continues to Rise: EBRI

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Retirement confidence, after plateauing at historically low levels between 2009 and 2013, increased in 2014 and again in 2015. And a key factor in investors’ confidence is whether or not they have a retirement savings plan.

According to the 2015 Retirement Confidence Survey by the nonpartisan Employee Benefit Research Institute and Greenwald & Associates, 22% of workers now say they are “very confident” they’ll have enough money to live comfortably throughout their retirement years, up from 18% last year and a record low of 13% back in 2013. The survey, which interviews both current workers and retirees, found confidence among retirees also increased to 37%, up from 28% in 2014 and 18% in 2013.

“This seems to make sense,” said Craig Copeland, EBRI senior research associate, during a conference call hosted by EBRI on Tuesday morning. “The economy has continued to improve, unemployment is at its lowest level in several years and performance of the stock market has net a year of gains for investors. But, it would be misleading to assume that the increase in retirement confidence applies to all Americans.”

What the survey found was that retirement confidence is strongly related to retirement plan participation and ownership, whether in a defined contribution (DC) plan, a defined benefit (DB) plan or an individual retirement account (IRA).

The increase in retirement confidence between 2013 and 2015 occurred primarily among the two-thirds of workers that reported they or their spouse have saved money for retirement.

Among those with a plan, retirement confidence increased from 14% in 2013 to 28% in 2015. In contrast, the percentages of those without a plan reporting they are “very confident” remained statistically unchanged over the past three years — 10% in 2013, 9% in 2014 and 12% in 2015.

So, workers with money in a DC plan or IRA or have a DB plan from a current or previous employer are more than twice as likely as those without any of these plans to be very confident (28% with a plan vs. 12% without a plan).

As Jack VanDerhei, EBRI research director and co-author of the Retirement Confidence Survey, noted in a statement, “Those without a retirement plan seem to understand they are likely to have difficulties accumulating adequate financial resources for retirement: 44% of workers without a retirement plan are not at all confident about having enough money for a comfortable retirement, compared with only 14% of those who have a plan.”

Another noteworthy trend in the Retirement Confidence Survey’s 25-year history, according to Greenwald & Associates president Mathew Greenwald, is the expectation to stay in the labor force past age 65. “In 1991 — the first year we conducted the survey — just 9% of workers expected to work until age 70 or beyond,” Greenwald said during the conference call. “This year set a new record. A full 26%, almost triple the 1991 level, plan to work until at least age 70.”

The survey shows that the age at which workers expect to retire has been slowly rising over the past 25 years.

“As we know,” Greenwald said, “age 65 has historically been considered the normal age of retirement. In 1991, a third (34%) stand to retire at that age. Now, it’s 21%.”

The percentage of workers expecting to retire before age 65 has also decreased, from 50% in 1991 to 25% in 2015, according to the survey.

“I think it’s important to note that this does not mean that the actual age of retirement is going up that quickly,” Greenwald said. “As we know, when it comes to working later in life plans do not always come to fruition.”

According to the survey, half of the retirees interviewed did not work as long as they’d planned to — “typically for negative reasons beyond their control,” Greenwald said.

“Many of the retirees state that multiple factors forced them to leave the labor force before they wanted to,” he added. “The most cited reason by 60% cited health problems or disability.”

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