(Bloomberg) — The retirement confidence of Americans has come a long way since the recession. The percentage of workers either very or somewhat confident that they will be able to afford a comfortable retirement now stands at 63 percent, up from 51 percent three years ago and 49 percent in 2011.
But it isn’t because of a surge in the number of people who are saving, according to the 26th annual Retirement Confidence Survey released today by the nonprofit Employee Benefit Research Institute (EBRI).
The percentage of workers who say they or their spouse saved for retirement is 69 percent in 2016, down from 75 percent in 2009. That number has bounced around a lot, between 57 percent in 1994 to as high as 78 percent in 2000.
Whatever the reason for the significant decline this year, it’s bad news for our retirement prospects — as is the fact that fewer than half of workers (48 percent) have even tried to figure out how much money they’ll need to live on in retirement.
“We’ve seen a decent amount of awareness around retirement issues, but the issue is whether that awareness translates into different behavior,” said Luke Vandermillen, vice president of Retirementand Income Solutions with Principal Financial Group, a retirement services provider and one of the longtime underwriters of the survey.
One likely force behind some of the rise in overall confidence: the housing market. A recent Federal Reserve report showed that since the market hit a low in early 2009, the value of homeowners’ equity has more than doubled.
Ownership of homes is much wider than ownership of stocks and acts as a “kind of stealth offset to falling stock prices,” said Ian Richardson, chief economist at Pantheon Macroeconomics, in this recent Bloomberg story.
Here are some highlights from the EBRI report:
Workers with a retirement plan contributed the most to the higher overall confidence numbers. Many of the “very confident” have, or have a spouse who has, a defined contribution plan, an IRA or a defined benefit plan from a current or previous employer.
Twenty-six percent of workers with such savings plans were “very confident” about being able to afford retirement, compared with 10 percent of those who don’t have accounts.
The percentage of workers without a plan who said they were “somewhat confident” rose from 21 percent last year to 29 percent this year. (One possible reason is a decrease in the unemployment rate, Vandermillen said.)
Still, there’s a big savings gap between those with access to a retirement plan and those without: 34 percent of respondents with a retirement plan who answered a survey question about savings said they had saved at least $100,000. Just five percent of those without a plan said they’d saved that much.
Only 9 percent of workers with access to a retirement plan reported savings of $1,000 or less; it was 67 percent for those without a plan.
Workers were asked to estimate what percent of household income they’d need to save annually, from 2016 until they retire, to have a comfortable retirement. This year, far fewer people said they don’t know: 22 percent, down from 27 percent last year.
The largest chunk of workers surveyed, at 17 percent, said they’d need to save from 20 to 29 percent of annual income. That’s down from the 19 percent who said the same thing in 2015 (which was down from 22 percent in 2014).