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Retirement Confidence Dips; Workers Not Counting on Social Security

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Two-thirds of American workers are still trying to recover from the recession that began in December 2007 and ended in June 2009, according to a report released Thursday by Transamerica Center for Retirement Studies.

On a more optimistic note, 16% of workers surveyed said they had fully recovered from the recession, and 21% said the downturn had not affected them, up from 14% and 15%, respectively, in TCRS’ 2014 report.

Meanwhile, confidence in the future of Social Security isn’t exactly stellar, and for the first time, the wide-ranging survey asked respondents if they pictured work as their primary source of retirement income. Fourteen percent of younger workers did.

Harris Poll conducted an online survey in February and March among 4,550 full-time and part-time workers in for-profit companies. Respondents were U.S. residents and 18 or older.

Retirement confidence has eroded slightly since last year’s survey, with 59% of workers somewhat or very confident that they would be able to fully retire with a comfortable lifestyle, compared with 61% in 2014.

Not surprisingly, the level of household income influenced workers’ confidence, with 76% of those with household income of more than $100,000 somewhat or very confident of a comfortable retirement, versus 47% of those bringing in less than $50,000. Relatively few respondents of all income levels said they were “very” confident.

However, only a third of workers expected lower living standards in retirement, well below the 42% who had this expectation in the 2011 survey.

Workers most frequently said travel figured prominently in their post-retirement dreams. Relatively few cited pursuit of an encore career as their top dream.

Respondents’ chief concerns in retirement:

  • Outliving savings and investments:44%
  • Needing long-term care: 36%
  • Social Security being reduced or ending: 36%
  • Not being able to meet the family’s financial needs: 33%
  • Cognitive decline: 26%
  • Lack of adequate/affordable health care: 25%

No ‘Average’ American Worker

Demographics strongly influenced American workers’ readiness for retirement, the report found.

“With regard to saving and planning for retirement, there’s no such thing as an ‘average’ American,” TCRS president Catherine Collinson said in a statement. “Each demographic segment faces its own unique opportunities and challenges.”

Two-thirds of workers reported that their employers offered a 401(k) or other self-funded plan. However, access was greater for workers at large companies with more than 500 employees than at smaller operations. Only 24% of workers said they were offered a traditional company-funded defined benefit plan.

It’s not surprise that workers of different generations look forward to different retirement realities. Forty-eight percent of millennial workers in the survey and 40% of Gen Xers most frequently said they expected 401(k)s, 403(b)s and/or IRAs to be their primary source of retirement income, while 35% of baby boomers most frequently cited Social Security.

Fourteen percent each of the two younger groups and 12% of older workers said they expected working to be their primary source of income.

Among workers who were offered a 401(k) or similar plan, participation increased with age. Seventy-four percent of millennials said they participated in their employer’s plan, compared with 81% of Gen Xers and 83% of boomers, a trend that has remained relatively consistent over the past five years.

The study found that a strong majority of workers saved for retirement, with men slightly likelier than women to do so through an employer-sponsored plan and/or outside of work.

Eighty-one percent of women versus 71% of men expressed concern that Social Security would not be available for them when they were ready to retire.

Male workers reported an estimated median total household retirement savings of $88,000, compared with only $41,000 among their female counterparts. And 28% of men versus 15% of women said they had saved $250,000 or more in total household retirement accounts.

Forty-three percent of men and 39% of women said their retirement savings were invested in a relatively equal mix of stocks and investments, such as bonds, money market funds and cash. However, the survey found that a “concerning” 29% of women said they were not sure how their savings were invested.

Two-thirds of college graduates and three-quarters of those with some graduate school or advanced degree were at least somewhat confident about their future retirement, compared with 56% who had only some college or trade school education and 50% with a high school diploma or less.

Moreover, college graduates reported that they had started saving for retirement at median age 25, while non-college graduates started at median age 30.

About half of workers across all levels of educational attainment said they planned to continue working in retirement. Fifty-six percent of those with some graduate school or advanced degree were most likely to plan to work in retirement, compared with 46% with a high school education or less.

Among workers planning to work in retirement, most planned to do so on a part-time basis.

— Check out 10 Scary Retirement Stats on ThinkAdvisor.


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