Americans' confidence in their ability to afford a comfortable retirement has recovered from record lows seen in the wake of the financial crisis, but that surge leveled off over the past year due largely to a lackluster stock market, according to the Employee Benefit Research Institute.
Twenty-one percent of workers are very confident they'll have enough money for a comfortable retirement, down slightly from 22% in 2015, according to the Washington, D.C.-based nonprofit's 26th annual Retirement Confidence Survey. The survey, conducted with research firm Greenwald and Associates, polled 1,000 workers and 505 retirees.
Retirement confidence is strongly correlated to participation in retirement plans such as 401(k) plans or ownership of an individual retirement account. These workers are twice as likely to be “very confident” when compared to those without such retirement accounts.
A subpar stock market in 2015 led workers' retirement confidence to level off, as retirement investors didn't see much uptick from investments over the course of the year, said Craig Copeland, senior research associate at EBRI and a co-author of the report. The S&P 500 index returned -0.69% in 2015.
Retirement confidence numbers are up from 2009's record lows, when only 13% of survey respondents were “very confident” following the stock market crash.
There was positive movement from last year among those who were “not at all” confident about their retirement prospects — 19% of respondents for this description in 2016, down from 24% last year and 28% in 2013. These respondents moved mainly into a slightly higher level of confidence, or “somewhat confident.”
“People didn't become overly optimistic this year. They weren't as pessimistic as they were last year,” Mr. Copeland said.
That shift, however, came from those without a retirement plan, Mr. Copeland said, which he attributes to improving job markets.
The survey also indicates a long-term trend in attitudes toward delaying retirement, with more workers expecting to postpone their retirement years, many because they can't afford to retire. Nearly four in 10 workers expect to retire after age 65, up from 11% in 1991.
“That's been a more common way to get out of any potential savings shortfalls, saying I can work longer,” according to Mr. Copeland.
In reality, though, that strategy doesn't pay off for most people, he added — 26% of workers said they plan to wait until at least age 70 to retire, whereas only 8% of retirees said they actually did so. The
majority retire earlier than planned due to a hardship, such as a health problem or disability, according to the survey.
