According to a study conducted by the Employee Benefit Research Institute and published by the Wall Street Journal, workers’ and retirees’ confidence about their retirement security has deteriorated sharply during the past two years. The survey of 1,257 Americans found that the percentage of workers who are very confident about having enough money to retire comfortably has dropped to 13% this year, a record low. That is down from 18% in 2008, and a record high of 27% in 2007.
According to Jack VanDerhei, a survey co-author, retirees are waking up to what amounts to “a huge gap between what people think it’s going to take to retire comfortably and what it actually takes.” With 49% of people 55 and older having saved less than $50,000, many people will be forced to settle for “a much lower standard of living in retirement than what they had hoped for.”
Additionally, only 25% of today’s workers are highly optimistic about covering basic expenses such as food and housing costs in retirement, down from 34% in 2008. Just 13% say they are very likely to have enough to defray medical expenses, down from 18%. Those figures are down from 40% and 20%, respectively, in 2007.
However, the survey wasn’t all negative, and found that many people are taking action to shore up their retirement plans. Of people who are not confident in their ability to retire comfortably, 81% have cut spending, 38% say they are working more hours or have taken a second job, 25% have sought advice from a financial professional, and 25% are saving more. In fact, only 11% are cutting back their contributions to their retirement accounts.
If you have doubts about your ability to retire comfortably, or would just like to ensure you are still on track to meet your financial goals, now would be a great time to speak with a financial advisor. Please call to schedule a complimentary consultation.