What You Need to Know
- Confidence that Social Security would provide the same benefits as now was high across all age groups.
- Younger age groups were more likely to see annuities as a potential income source for retirement.
- Married workers were more likely than unmarried workers to have a retirement plan.
Confidence in Social Security reached an all-time high for both workers and retirees in the 31st Retirement Confidence Survey released Thursday.
Further, despite the pandemic, 8 in 10 retirees felt confident in their ability to retire comfortably, up from 76% when asked in March 2020. And 72% of workers expressed confidence in their ability to retire comfortably, up 3 percentage points from last year.
The online survey of 3,017 Americans 25 years and older was taken between Jan. 5 and Jan 25 by the Employee Benefit Research Institute and Greenwald Research. Workers and retirees were evenly split in numbers.
“The high confidence levels seemed counterintuitive,” said Lisa Greenwald of Greenwald Research in a Zoom call on Thursday. “But retirement confidence is a feeling, not reality.”
She noted the confidence by retirees was “seemingly defiant” of the pandemic, but the market also defied the pandemic in its meteoric rise. And most retirees are invested in conservative products and may not be as affected by market volatility, she said.
Social Security Thumbs-Up
Social Security also received favorable marks from both workers and retirees. Indeed, an all-time high of 53% of workers said they were very or somewhat confident (17% very confident) that the program would continue to provide benefits of at least equal value to the benefits received by workers today. That level is up from 48% (11% very confident) in 2020, and up from 2018, when the confidence level was as low as 28%.
Likewise, an all-time high of 72% of retirees (18% very confident) are confident that Social Security would provide them benefits of equal value to those of previous retirees. That is up from 68% in 2020, and up from 45% in 2018.
Most workers and retirees — roughly 90% — expected most retirement income to come from Social Security. For workers, the expectation of other sources of income were by defined contribution plans (83%), personal savings (76%), IRAs (73%) and work for pay (68%).
But the reality is a bit different, as Greenwald noted. Actual income, retirees said, was from Social Security (92%), followed by personal savings (66%), DB/pension plans (58%), IRAs (55%) and DC plans (46%).
Interestingly, half of today’s workers said they saw products such as annuities that guarantee income for life as a source of income, while only 30% of retirees said the same (down from 36% a year earlier).
Only 33% of workers and 25% of retirees stated that retirement savings were not a priority relative to other needs, such as paying off a child’s college education. Debt is a major issue for more than half the workers, noting their non-mortgage debt hurts their ability to save for retirement or participate in a workplace plan.