Most workers are upbeat about having enough money to live throughout retirement, according to the latest annual survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
More than 7 in 10 workers and nearly 8 in 10 (77%) retirees said they are very or somewhat confident they (and their spouses) will have enough money to live comfortably throughout their retirement years, according to a January 2022 online poll of 1,545 workers and 1,132 retirees.
To put this enthusiasm in perspective, in 2009 coming out of the Great Recession, just a little over half (54%) of workers and 67% of retirees were confident about retirement.
“Workers and retirees, for the most part, have remained optimistic coming out of the pandemic,” Craig Copeland, director of Wealth Benefits Research at EBRI, a nonpartisan, nonprofit research institute based in Washington, D.C., and chief researcher for the group's 32nd annual Retirement Confidence Survey, told Yahoo Money. “2020 and 2021 were trying times with significant financial impact on both American workers and retirees. Yet overall confidence in having enough money to live comfortably throughout retirement remains positive.”
But a lot has happened since this poll was conducted. Inflation has been on a tear, interest rates are inching upward, and the stock market has been slipping and sliding, along with growing global economic concerns about the impact of the Russian invasion of Ukraine and China's COVID-zero policy on supply chains.
Still, in the EBRI poll, retirees were buoyant. Nearly 7 in 10 retirees reported that the COVID-19 pandemic has not changed their confidence in their ability to live comfortably throughout their retirement. Four in 5 retirees said that their overall lifestyle, including traveling, spending time with family, or volunteering, is as expected or better.
Workers, on the other hand, were less ebullient. Half said that the pandemic did ding their confidence. For nearly one-half of the workers surveyed, debt had negatively impacted their ability to save for retirement.
Worker confidence in having enough money for expenses is dropping
Although a substantial number of workers, 70.4%, were confident that they have enough money to take care of basic expenses in retirement, that’s a decline from 77% in 2021.
Not surprisingly, the workers least confident about retirement included women, those in fair or poor health, and individuals with household incomes below $35,000. Other factors darkening worker confidence included major debt, no retirement savings, those who were not married, workers with no college degree, and those lacking an employer-provided defined retirement contribution plan such as a 401(k).
In fact, 42% of workers who felt less confident did not have a defined contribution plan, according to the findings.
“Access to a retirement plan is an important driver of confidence— roughly half of American workers don't have that,” Copeland said.
EBRI’s findings are in line with other recent surveys. More than a third of those who don’t contribute to retirement plans say it’s because they can’t afford to do so, according to a MagnifyMoney survey of more than 1,200 working Americans. And nearly 50% of those with annual income of less than $50,000 said they’ve never had a retirement account, according to a Bankrate report.
Retirement savings were not a priority relative to the current needs of their family for one in three workers, according to the EBRI findings. Four in 10 workers said that saving for or paying off a child’s college education reduces the amount they can save for retirement, and the same percentage said that debt is negatively impacting their ability to save for retirement.
And when asked about the pillar retiree benefits programs– Social Security and Medicare, only 14% of workers said they were very confident the Social Security system will continue to provide benefits of at least equal value to the ones retirees receive today, down from 17% a year ago. And a scant 15% of workers are very confident the Medicare system will continue providing benefits of at least equal value to those retirees now receive, a drop from 18% in 2021. To be fair, both of those “very confident” votes were more than triple what they were four years ago.
Kerry is a Senior Columnist and Senior Reporter at Yahoo Money. Follow her on Twitter @kerryhannon