Increasingly more are feeling stressed about their own preparationsExcerpted from new research from Employee Benefit Research Institute (EBRI), written by Lisa Greenwald, Greenwald & Associates; and Craig Copeland, Ph.D., and Jack VanDerhei, Ph.D. Reprinted with permission. Read the full report here.
The 27th annual Retirement Confidence Survey (RCS), the longest-running survey of its kind in the nation, finds that
6 in 10 American workers feel confident in their ability to retire comfortably, though few (18 percent) feel very
The share of workers reporting that they feel either very or somewhat confident has declined compared with
last year (60 percent from 64 percent in 2016). Specifically, the percentage of workers who feel very confident has
declined (18 percent from 21 percent), while the percentage feeling somewhat confident has remained level (42 percent
in 2017 and 42 percent in 2016). Worker confidence now resembles levels measured in 2014 (the last time 18 percent
were very confident) and levels measured in 2015 (when 59 percent were either very or somewhat confident).
Nearly one-quarter of workers feel not too confident (24 percent) and 1 in 6 (16 percent) feel not at all confident about
having enough money to live comfortably throughout their retirement years. The percentage of workers who report
they are either not too or not at all confident is statistically comparable to levels measured last year (39 percent in 2017
and 35 percent in 2016).
The level of confidence expressed by those already in retirement continues to be greater than confidence levels
expressed by those yet to retire. Retiree confidence about having enough money for a comfortable retirement remains
high. Seventy-nine percent of retirees report feeling either very or somewhat confident about having enough money to
live comfortably throughout their retirement years (compared with 75 percent in 2016). One-third of retirees feel very
confident (32 percent), while 8 percent say they are not at all confident.
Retirement confidence continues to be strongly related to retirement plan participation, whether in a defined
contribution (DC) plan, defined benefit (DB) plan, or individual retirement account (IRA). Workers reporting they or
their spouse have money in a DC plan or IRA or have benefits in a DB plan from a current or previous employer are
more than twice as likely as those without any of these plans to be at least somewhat confident (71 percent with a plan
vs. 33 percent without a plan).
Confidence in Other Financial Aspects of Retirement
In addition to overall retirement confidence, sizable minorities of workers report feeling not too or not at all confident in
other aspects of retirement. This year, 65 percent of workers report feeling very or somewhat confident about being
able to afford basic expenses in retirement. The corresponding percentage of workers who feel not too or not at all
confident about having enough money for basic expenses in retirement is one-third (34 percent). Workers’ confidence
in their ability to afford basic expenses remains higher than the confidence they report regarding their ability to pay for
medical expenses in retirement.
Forty-five percent of workers are not too or not at all confident they will have enough money for medical expenses in
retirement. An even greater share are not too or not at all confident in their ability to pay for long-term care (LTC)
expenses in retirement. Nearly 6 in 10 do not feel confident about having enough money for long-term care expenses
Retirees, who are already in that life stage, express higher levels of confidence than workers in each of these financial
aspects of retirement. More than 4 in 5 retirees (85 percent) feel at least somewhat confident in their ability to afford
basic expenses throughout their retirement years, while 15 percent say they are not too or not at all confident.
Similarly, the percentage of retirees who are very or somewhat confident about having enough money to cover medical
expenses is high (77 percent) compared to workers.
Still, roughly 1 in 5 retirees are not too or not at all confident in their ability to pay for medical expenses (23 percent). Retirees appear most uncertain about their ability to pay for long-term care. Nearly half report feeling not too or not at all confident in their ability to pay for long-term care, such as a nursing home or home health care, should they need it during retirement (45 percent).
Stress About Preparing for Retirement
Only about half of all workers are very or somewhat confident that they are doing a good job of preparing financially
for retirement (56 percent), including just 18 percent who feel very confident that they are doing a good job. Retirees
tend to be more confident in their retirement preparations, as 71 percent are very or somewhat confident that they did
a good job preparing.
Preparing for retirement is stressful for some workers, as 3 in 10 workers report feeling very or somewhat mentally or
emotionally stressed about preparing for retirement (31 percent). By comparison, 22 percent of retirees
recall being mentally or emotionally stressed about preparing for retirement before they retired.
These stressed workers have a median age of 46 (higher than the median of 42 among those not stressed), and tend
to have lower education and income levels than workers who do not feel stressed about retirement preparation (Figure
7). Workers who feel stressed about retirement preparation are notably more likely to say that their debt level is a
major problem (30 percent vs. 12 percent of workers who do not feel stressed). Furthermore, stressed workers are less
likely to feel very or somewhat financially secure (30 percent vs. 71 percent of workers who do not feel stressed)
In addition, stressed workers (63 percent) are more than three times as likely as unstressed workers (17 percent) to report that they worry about their personal finances while at work. Overall, 30 percent of workers say that they worry about their personal finances at work. More than half of those who worry about personal finances at work feel they would be more productive at if they did not spend time worrying. Many say financial education or advice programs at work would be helpful for increasing their productivity.
Specifically, about half of workers believe that retirement planning (53 percent) and financial planning programs (49 percent) would be very or somewhat helpful in increasing their productivity at work. Another 47 percent feel that health care planning would be at least somewhat helpful.
Workers who feel stressed about retirement are, perhaps not surprisingly, less likely to feel confident in their ability to
have enough money to live comfortably in their retirement years. Only 33 percent of stressed workers feel very or
somewhat confident in their ability to retire comfortably, compared with 73 percent of workers who are not stressed.
In addition to stress, 18 percent of all workers describe their level of debt as a major problem and another 41 percent
call it a minor problem. Just 32 percent of workers who describe their debt as a major problem say they are very or
somewhat confident about having enough money to live comfortably throughout retirement, compared with 78 percent
of workers who indicate debt is not a problem (Figure 11). Workers who describe their debt as a major problem also
are much more likely to say that they are emotionally or mentally stressed about preparing for retirement than those
who do not view their debt as problematic (52 percent who say debt is a problem feel stressed vs. 19 percent who do
not see debt as a problem feel stressed).
Retirement Savings & Investments
Six in 10 workers (61 percent) report that they and/or their spouse have saved for retirement and nearly as many
(56 percent) say that they are currently saving for retirement. By comparison, 3 in 4 retirees (76 percent) say that they
personally saved for retirement before they retired.
A sizable percentage of workers say they have no or very little money in savings and investments. Among RCS workers
providing this type of information, 47 percent report that the total value of their household’s savings and investments,
excluding the value of their primary home and any DB plans, is less than $25,000.
This includes 24 percent who say they have less than $1,000 in savings. Approximately 1 in 10 each report totals of $25,000–$49,999 (8 percent), $50,000–$99,999 (10 percent), $100,000–$249,999 (15 percent), and 2 in 10 report having $250,000 or more (20 percent). Similar shares of retirees estimate their total household savings at under $1,000, but retirees are more likely to claim savings and investments of $250,000 or more.
Workers who participate in a retirement plan are 10 times more likely to be currently saving for retirement (74 percent
with a plan vs. 7 percent without). These workers have significantly more in savings and investments than do those
without a plan. Two-thirds of workers without a retirement plan (67 percent) report having less than $1,000 in savings
and investments, compared with just 9 percent among workers with a retirement plan.
Many workers acknowledge their savings shortfalls for retirement, stating they need to save a sizable, perhaps
unmanageable, share of their total household income in order to live comfortably in retirement. Of those willing to
provide an estimate, half of workers believe they need to save less than 20 percent of their income, 24 percent
estimate they need to save between 20 and 29 percent of their income, and another 1 in 4 (25 percent) indicate they
need to save 30 percent or more .
While many workers recognize the need to save sizable amounts to live comfortably in retirement, lower percentages of
workers say they are currently saving these high amounts. For example, 63 percent say their needed savings is 15 percent
or more of their incomes, compared with 61 percent of those currently saving who say they are saving less than
15 percent .
Workers who are currently saving less than they think they need for retirement acknowledge some negative impact. Six
in 10 (57 percent) believe they will need to retire later and nearly as many (54 percent) say they will need to save more
later. More than half believe that saving less than is needed will mean they will have less to live on in retirement and
will have less money for travel or entertainment (54 percent each). Half of those who say they are saving less than
they need say they plan to work in retirement (50 percent). Smaller shares think they will have to rely on government
services (17 percent), community services (8 percent), or family (8 percent).
Read the full report here.