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Retirement Planning > Spending in Retirement > Income Planning

Workers and Retirees Confident in Future, Social Security: EBRI

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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.

Roughly 33% of both workers and retirees work with a financial professional, the study found, and 4 in 10 of workers who don’t have an advisor said they planned to use one in the future. Four in 10 workers and 2 in 10 retirees said they didn’t know who to go to for financial and retirement advice. About 35% of workers and 25% of retirees do their own research.

Age Differentials

Not surprisingly, retirees have saved more and have more assets than younger workers, the survey found. However, just 60% of workers 55 or older have tried to calculate how much money they will need to save to live comfortably. Roughly 46% of those 54 or younger have made the calculation.

Greenwald said in the Zoom call that making this calculation or even just having a workplace plan is a step in the right direction. “Those who engage in more planning tend to be more confident” about retirement, she said.

When delving into specifics on retirement planning, age mattered:

  • 48% of those 55 and over have thought about how much to withdraw from retirement savings and investments vs. 43% of those 45 to 54, while about 35% of those under 45 have thought about it.
  • 55% to 60% of those 45 and older thought how they would occupy their time in retirement, while 45% of younger participants considered it.
  • 48% of those 55 and older calculated how much money they would need for health expenses in retirement, vs. 32% to 39% of those younger.
  • 61% of those over 55 estimated how much they would need on a monthly basis in retirement vs. those younger, which ranged from 42% to 49%.

Just over half of those 55 and older planned how they would pay for emergency or big expenses in retirement, versus 38% to 43% of younger respondents.

Across all age groups, many didn’t expect to retire until they were 70 or older. For those 25 to 34 years old, 30% didn’t expect to retire until age 70 or above or ever, while 25% expected to retire before 60.

But this may be another area where retirement expectations diverge from reality. Retirees reported leaving the workforce at a median age of 62, and the study has found consistently, since 1991, that nearly half of retirees stop working earlier than planned.

Marital Status

The survey also found that marital status was more important than gender when it came to retirement savings, said Craig Copeland, senior research associate of EBRI, in the Zoom call. For example, 81% workers who were married had savings plans, compared with 57% of unmarried workers.

Also, 29% of male workers said they planned to work to 70 years old, vs. 22% of female workers. Similarly, 31% of unmarried workers stated they likely would work to 70, compared with 23% of married workers.

Also, 76% of men vs. 68% of women were confident they would have enough money to retire comfortably.

The RCS also broke out samples of non-white responses, and plans to release those results in June.


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