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While retirees remain more confident than workers, with a third (32%) very confident and another 44% somewhat confident that they will have enough money to live comfortably throughout retirement, retirees are less likely than in 2017 to feel confident in their ability to handle basic expenses in retirement as well as medical expenses, according to the just-released 2018 Retirement Confidence Survey.

The 28th annual survey, conducted by the Employee Benefit Research Institute and the independent research firm Greenwald & Associates, measured worker and retiree confidence about retirement.

The 2018 survey of 2,042 Americans was conducted online Jan. 3 through Jan. 16. All respondents were 25 or older, and the survey polled 1,002 workers and 1,040 retirees.

The share of workers who feel very confident in their ability to live comfortably in retirement remains low at just 17%, but another 47% are somewhat confident, the survey found. Combining those that are very and somewhat confident, workers appear to be more confident in retirement than they were in 2017.

Retiree Confidence Slides

Retirees’ overall confidence is declining, but confidence in being able to afford medical and long-term care expenses in retirement is down significantly. Also, retirees’ confidence that Social Security and Medicare will continue to provide benefits equal to what retirees receive today has decreased.

More than four in 10 retirees report that their health care expenses in retirement are higher than they expected, and another one in four say long-term care costs have been higher.

Other factors not measured in the survey may also be dampening retiree optimism, such as low interest rates. As in the past, two out of three retirees reported that they aim to maintain or continue to grow their asset level in retirement. That said, these retirees report the value of their assets is largely what they would expect.

Workers With 401(k) Plan More Confident

Workers’ “very positive” attitude about their workplace defined contribution plans is likely impacting their overall retirement confidence. The survey found that 76% of workers with a DC plan are confident in having enough for a comfortable retirement versus 46% without such a plan.

More than four in five workers with a DC plan report being “very or somewhat” satisfied with the plan overall, and with the investment options available to them.

Workers will “depend heavily” on income from DC plan assets, with 8 in 10 saying DC plans will be a major or minor source of income in retirement, compared with just 50% of retirees. Six in 10 workers also expect income in retirement from an IRA, but this is down from 2017 when nearly two-thirds expected income from an IRA.

Mixed Confidence on Generating Retirement Income

Only half of workers are confident that they know how much income they will need each month in retirement or how to withdraw income from their savings and investments, with only one in eight very confident, the survey found.

Yet two in three retirees report that converting their assets into income is a relatively easy task for them. Asked about their withdrawal strategies from DC plans or IRAs, many retirees aren’t withdrawing a lot from these tax-advantaged plans, with 4 in 10 withdrawing the legally required minimum.

Retirees receive income from predictable, guaranteed sources, with the survey noting that two in three retirees report Social Security is a major source of income, while only about a third of workers believe Social Security will be a major source.

More than 4 in 10 retirees report income from a defined benefit plan is a major source of income, while only 32% of workers expect a DB plan to be a main supply of funds to tap in retirement.

Health Care in Retirement

Just one in five workers and four in 10 retirees say they have calculated how much money they will need to cover health expenses in retirement.

Retirees who calculated how much they would need for health care are more likely to say health expenses in retirement have been as expected.

Among workers employed full or part time, women (76% vs. 68% of men), those who have saved for retirement (74% vs. 64% who have not) and those who have any type of a retirement savings plan (75% vs. 58%) are more likely to say planning for health care expenses in retirement would be helpful if their workplace offered it.

— Check out 10 States With the Most Social Security Recipients on ThinkAdvisor.