The New Finance of Longevity

Confidence In Retirement Security Resilient In Face Of Pandemic

Even with changes in the labor market, workers are still optimistic

The Employee Benefits Research Association (EBRI) has released its 2021 Retirement Confidence Survey, revealing a high confidence in our expectations to live comfortably in retirement. A summary of the report can be viewed here.

Despite a global pandemic that created uncertainty in the employment and financial markets, the 2021 Retirement Confidence Survey (RCS) found 8 in 10 retirees are confident in their ability to live comfortably throughout retirement, similar to the 76 percent of retirees who were confident when the survey was last fielded in March 2020. Workers also remain optimistic, with 72 percent of workers expressing confidence in their ability to retire comfortably, up 3 percentage points from last year.

The 31st annual RCS is the longest-running survey of its kind, measuring worker and retiree confidence about retirement. Conducted by EBRI and Greenwald Research, the RCS was fielded in January. Last year, the RCS was fielded twice — once in January prior to the COVID-19 outbreak and then re-fielded through a supplemental survey of key questions from March 20–30, 2020, allowing for comparisons before and during the pandemic.

“Even with changes in the labor market, workers’ confidence in their ability to live comfortably in retirement remains high overall,” said Craig Copeland, EBRI Senior Research Associate and co-author of the report. “However, while resilience may be the watchword for 2021, 3 in 10 workers say the pandemic has negatively impacted their ability to save for retirement, due to reduced hours, income, or job changes. The group that was most likely to have their ability to save impacted was those who were more likely to have low confidence historically, such as those who are low income, not married, and having a problem with debt.”

To better understand differences in retirement-related behaviors and attitudes among workers and retirees, this year’s RCS included oversamples of Hispanic and Black workers and retirees. EBRI and Greenwald researchers will be conducting a fuller analysis of differences by race and ethnicity and will issue a separate report on those findings in June 2021.

2021 Retirement Confidence Survey

The Retirement Confidence Survey (RCS) gauges the views and attitudes of working-age and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The RCS is the longest-running survey of its kind and is conducted annually by the Employee Benefit Research Institute (EBRI) and the independent research firm Greenwald & Associates.

The 2021 survey of 3,017 Americans was conducted online January 5 through January 25, 2021. All respondents were ages 25 or older. The survey included 1,507 workers and 1,510 retirees — which includes an oversample of roughly 500 completed surveys among Black Americans (252 workers and 253 retirees) and roughly 500 completed surveys among Hispanic Americans (253 workers and 249 retirees).

The group that was most likely to have their ability to save impacted was those who were more likely to have low confidence historically, such as those who are low income, not married, and having a problem with debt...

Data were weighted by age, gender, education, household income, and race/ethnicity. Unweighted sample sizes are noted on charts to provide information for margin of error estimates. The margin of error would be ± 2.5 percentage points for both workers and retirees in a similarly sized random sample.

Excerpts From The Survey:

Confidence in Having a Comfortable Retirement

The 2021 Retirement Confidence Survey (RCS) finds just under three-quarters of American workers (72 percent) feel confident in their ability to retire comfortably, though only 29 percent feel very confident. The share of workers reporting that they feel either very or somewhat confident has increased significantly since 2017 (72 percent vs. 60 percent in 2017). Worker confidence now has matched the levels measured in 2007 before the financial crisis of 2008.

Confidence in Other Financial Aspects of Retirement

Three in four workers (77 percent) report feeling very or somewhat confident about being able to afford basic expenses in retirement, including 32 percent who feel very confident. Workers’ confidence in their ability to afford basic expenses is higher than the confidence they report regarding their ability to pay for medical expenses in retirement. Almost 1 in 3 workers (32 percent) are not too or not at all confident they will have enough money for medical expenses in retirement. A similar share is not too or not at all confident in believing that they are doing a good job in preparing financially for retirement (28 percent).

Influence of Debt on Confidence

Workers are more likely to say that debt is a problem for them than retirees. Fifty-four percent of workers say debt is a problem for them, while 46 percent say debt is not a problem. In contrast, just 34 percent of retirees say that debt is a problem for them. Workers are more than twice as likely to say that debt is a major problem as retirees (18 percent vs. 8 percent).

The RCS has consistently found a relationship between debt levels and retirement confidence. In 2021, 47 percent of workers with a major debt problem say they are very or somewhat confident about having enough money to live comfortably in retirement, compared with 85 percent of workers who indicate debt is not a problem. On the other hand, 26 percent of workers with a major debt problem are not at all confident about having enough money for a financially secure retirement, compared with 4 percent of workers without a debt problem.

 

 

 

Complete findings from the Retirement Confidence Survey are available for Partners. More information on becoming a Partner is available by contacting our Membership Relations Specialist.
This survey is made possible with funding support from the following organizations: AARP, American Funds/Capital Group, Aon, Ariel Investments, Ayco, Bank of America, BlackRock, Columbia Threadneedle, Empower Retirement, Fidelity Investments, FINRA Foundation, J.P. Morgan, LGIMA (Legal & General Investment Management America), Mercer, Mutual of America, Nationwide Financial, New York Life, PIMCO, Principal Financial Group, Prudential, Retirement Clearinghouse, T. Rowe Price, Segal, U.S. Chamber of Commerce, and Wells Fargo.

 

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