Current Workers More Confident About Retirement Than Actual Retirees
64% of today's workers [1], according to a recent survey by the Employee Benefit Research Institute (EBRI), feel very or somewhat confident in having enough money to retire comfortably. This may seem at odds, however, with the lowered confidence that current retirees have once they are saddled with unplanned living and medical expenses. This disconnect points to the urgency for existing workers to develop a realistic savings and retirement plan, well in advance.
Social Security, Healthcare Expenses Diminish Retiree Confidence
If current workers want a glimpse into potential retirement pitfalls, it’s important to see how unplanned life and healthcare expenses are impacting retiree budgets. For example, in the same survey, 50% of current retirees say they didn't include health expenses in their pre-retirement calculations at all, and another 40% say their healthcare expenses are considerably higher than they expected. Furthermore, while 70% of retirees report that Social Security is a major source of income for them today, only 45% believe that the government program will be able to provide the same level of benefits into the future.
“76% of workers saving into an employer-based plan report high confidence in their ability to retire comfortably…”
Confidence Is Boosted By Saving And Planning To Work Longer
This may be one reason why current workers are looking for other ways to fill the retirement income gap. For example, 68% say they expect to work for pay during retirement, and 80% expect that a workplace retirement plan will be a source of income in their golden years. Interestingly, just participating in an employer retirement plan seems to improve worker confidence. 76% of workers saving into an employer-based plan report high confidence in their ability to retire comfortably, compared to only 46% of those who are not saving.
Planning Early Is Imperative
With lifespans increasing, it’s more important than ever that current workers spend the time required to build a sound savings strategy and retirement plan. Doing so, early, can ensure fewer negative surprises during retirement and help alleviate the stressful circumstances in which many current retirees find themselves.
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Source:
[1] Employee Benefit Research Institute (EBRI), 28th annual Retirement Confidence Survey, 2018.
See Disclosures.