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Retirement Confidence Plummets During Recession
By Spectrum Staff
The
recession is forcing Americans to lower their retirement expectations,
according to the 19th annual Retirement Confidence Survey (RCS) released
in mid-April by the nonpartisan Employee Benefits Research Institute
(EBRI).
The study found that a record low 13 percent of those surveyed were able to say
they are very confident they will have enough money to live comfortably in retirement.
The level of confidence is the lowest since the question was first asked in the
survey in 1993, and it represents a 50 percent decline in worker confidence since
2007.
Many workers said they expect to work longer because of the recent economic downturn,
and many reported they are planning to supplement their income in retirement
by working for pay.
The RCS reported the most primary factors cited for the loss of confidence were
the recent economic uncertainty combined with fears about inflation and the cost
of living.
In addition, negative experiences such as a job loss or pay cut, loss of retirement
savings or an increase in debt, almost always contribute to a loss of confidence
among those who experience them.
The report showed a continued decline in worker confidence that began in 2007.
In 2008, worker confidence in a comfortable retirement was 16 percent. It was
27 percent in 2007.
Among current retirees, confidence in having a financially secure retirement
also dropped to a new low this year, with only 20 percent saying they are very
confident, down from 29 percent in 2008 and 41 percent in 2007.
“Our survey first picked up the drop in retirement confidence last year,” stated
Jack VanDerhei, research director at the EBRI, co-sponsor of the survey with
Mathew Greenwald & Associates, a survey research firm. “Given the uncertainties
which exist about the economy, it is no surprise the downward trend has continued.
By any measure, the two-year results amount to a very significant drop in workers’ and
retirees’ confidence in their retirement prospects.”
Two of the survey’s findings were considered to be of particular significance
concerning workers’ expected retirement date and a growing expectation
to work in retirement.
Workers apparently expect to work longer because of the economic downturn, with
over a quarter of those surveyed reporting that the age at which they expect
to retire has changed in the past year. Of those, 89 percent said that they have
postponed retirement with the intention of increasing their financial security.
More workers are also planning to supplement their income in retirement by working
for pay than in previous years. The proportion of workers planning to work after
they retire has increased to 72 percent in 2009, up from 66 percent in 2007.
Other key findings in the RCS included the fact that most workers who have lost
confidence in their ability to secure a comfortable retirement have reduced their
living expenses, as well.
Almost half have changed the way they invest their money, and almost 40 percent
are working a second job. Twenty-five percent are saving more money and seeking
professional financial advice.
Among all workers, 75 percent say they and/or their spouse have saved money for
retirement, one of the highest levels ever measured by the RCS, but many still
do not have a good idea of how much they need to save by the time they retire.
One surprise was that the economic downturn did not cause many eligible workers
to stop contributing to their workplace retirement savings plan.
The RCS is the country’s longest-running and most comprehensive study of
the attitudes and behavior of American workers and retirees toward all aspects
of saving, retirement planning and long-term financial security.
The 2009 RCS was conducted in January 2009 through 20-minute random digit telephone
interviews with 1,257 individuals age 25 and older in the United States. The
survey has a margin of error of plus or minus three percentage points.
The RCS survey dates to 1991, and questions about worker and retiree confidence
having enough money for a comfortable retirement have been asked consistently
since 1993.
The survey was funded by two dozen organizations. Full survey results appear
in the April 2009 EBRI Issue Brief, available online at www.ebri.org along with
seven supplemental fact sheets.
This page and its contents ©2009
Metropolitan News Company, Inc.
