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Retirement Planning > Saving for Retirement

Retirement Confidence Hits Lowest Point Since 2008: EBRI

By Michael S. Fischer

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What You Need to Know

  • Workers are worried about inflation and mounting debt, the EBRI Retirement Confidence Survey finds.
  • The survey also found significant interest in guaranteed income.
  • Only a third of workers say they plan to roll their workplace retirement savings into an IRA.

American workers’ and retirees’ confidence that they will have enough money to enjoy a comfortable retirement has dropped more sharply than at any time since the 2008 global financial crisis, Employee Benefit Research Institute and Greenwald Research reported this week.

Only 64% of workers in the EBRI Retirement Confidence Survey purported to be somewhat or very confident in their retirement prospects, down from 73% in 2022. Retirees’ confidence also fell over the past year, from 77% to 73%. 

These findings indicate that it is crucial for financial advisors to understand what workers are thinking when it comes to planning for retirement.

EBRI and Greenwald Research conducted an online survey from Jan. 5 through Feb. 2 among 1,320 workers, 25 and older, and 1,217 retirees. The survey included an oversample of some 944 completed surveys among caregivers, both workers and retirees.

Confidence Sags

Inflation is top of mind among survey respondents, with 84% of workers and 67% of retirees concerned that the increasing cost of living will make it harder for them to save money. Not only that, 73% of workers and 58% of retirees are worried that they will have to make substantial cuts to their spending because of inflation.

A majority of respondents said they feel knowledgeable about managing their day-to-day finances. Even so, workers’ debt problems appear to be worsening in 2023, with 62% reporting it a problem, up from 56% last year. Thirty-five percent of retirees said their debt is a problem, about the same as in 2022.

Sixty-nine percent of workers and 78% of retirees said they have personally saved money for retirement. When EBRI and Greenwald Research first asked this question in 1994, 58% or workers and 53% or retirees said they had done so.

However, respondents’ retirement savings have taken a hit this year. Forty percent of workers and 58% of retirees reported that their retirement account balances have decreased over the past 12 months.

Forty-nine percent of workers and 68% of retirees said they felt at least somewhat confident that the Social Security benefits they will receive would be at least equal in value to the benefits provided today. This is well up from 1992, when only 31% of workers and 48% of retirees said this.

Workers are much less sanguine about Medicare, with 51% at least somewhat confident it will continue to provide benefits that are of equal value to today, down from 57% in 2022. Still, this is way above the 28% recorded in 1992.

Seeking Guaranteed Income

Among surveyed workers who are offered a retirement savings plan, 40% said they would like investment options that provide guaranteed lifetime income, while 34% want better explanations for how much income their savings will produce in retirement and 26% want more investment options designed for their post-retirement years. Also important, 30% want better explanations for whether they’re on track with their retirement savings.

Need for Advice

Seven in 10 workers said they are confident they can choose the right investment options their workplace retirement plan offers for their situation. However, 44% admitted that they don’t understand target date funds, 33% don’t understand managed accounts and 52% don’t understand environmental, social and governance investment options.

Only 34% of respondents say they use professional sources of information and advice that can help improve their investment know-how, and just 19% turn to their workplace retirement plan provider. In contrast, 40% ask family or friends for information about retirement planning.

To Roll Over or Stay?

Thirty-six percent of workers surveyed said they will roll a workplace retirement savings plan into an IRA, 30% will keep the money in their retirement plan and 28% will cash it out and put it into another investment or savings account.

Workers 25 to 44 are likelier than those 55 or older to cash it out and put the money into another investment or savings account and purchase a product that guarantees monthly income for life. Those with $100,000 or more in savings and investments are more likely than those with less than $10,000 in savings to roll over their retirement savings to an IRA or keep the money in the plan.

Sixteen percent were uncertain what they will do with the money.

Workers say they’ll know how much to withdraw from their retirement accounts.

Sixty-four percent of workers said they are somewhat or very confident in knowing how much to withdraw from their retirement savings and investments in retirement, irrespective of age. However, those with incomes of less than $35,000 are less likely to be confident in knowing how much to withdraw than those with incomes of $35,000 or more. This is also true for those with incomes of $35,000 to less than $75,000 vs. those with incomes of $75,000 or more.

Michael S. Fischer

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