Last month, the Employee Benefit Research Institute’s Retirement Confidence Survey found that Americans are much less confident that we in the financial industry would hope. What can we do to change the fact that “Retirement Confidence (is) Still Low Despite (a) Brightening Economy?” Financial Planning’s Margarida Correia reports that half of the workers in America are not confident that they will have enough money for a comfortable lifestyle in retirement. When it comes to those who have already retired, 36% lack this confidence. The EBRI has been performing this study for 23 years and this is the least confident they have found people in one particular category. Of the workers who lack retirement confidence, a full 28% of them said that they are “not at all confident.”
A lot of workers are finally taking charge in figuring out how much they need to save for retirement, and many are just late to the game in saving. Around 20% of workers think they should be saving between 20-29% of their income to put towards retirement. Almost one-quarter of workers think they need to save over 30% of their income to put towards retirement. But one of the report’s authors says that many people are just guessing how much they’ll need to save for retirement. Less than half of working Americans have actually sat down and calculated the amount they will need to save for retirement.
Unfortunately, with the economic environment we’ve had in the past couple of years, retirement savings has become a fairly low priority for some Americans. Immediate money concerns are at the top of most people’s lists, so much so that only 2% of workers and surprisingly only 4% of retirees listed retirement saving as the top financial concern. Job uncertainty was the top concern of 30% of working Americans and 27% of retirees. This was followed by 12% of each group being worried about making ends meet. You’re certainly not that worried about your retirement savings if you can’t pay your bills each month. So one of the best ways to get people to save for retirement is to make sure they are financially sound in all other areas of their life as well.
Back in 2009, 75% of workers or their spouses had saved for retirement. That number went down this year to 66% of workers saving for retirement. In addition to their concerns about keeping their jobs, Americans are also worried about carrying a lot of debt. Fifty-five percent of working Americans and 39% of retirees think that they have too much debt. These are just some of the concerns adding to the lack of retirement savings by Americans. You might think that this lack of retirement confidence would send more Americans to seek advice from a financial advisor, but that doesn’t seem to be the case either.
Professional financial advice was only sought by 23% of workers and 28% of retirees. But of the workers who did seek advice from a pro, many didn’t even heed that advice because of not trusting it, not having the finances to follow through, or thinking that their own ideas were better. While there are many Americans struggling with their retirement savings, there are still a lot of them planning well and making smart choices. If you know that your friend or family member has a good financial plan, maybe they can help point you in the right direction. If you have had success with your own retirement savings and planning, share the wealth with those close to you.
Written by Rachel Summit