Large numbers of today’s workers and retirees feel confident about having enough money to live comfortably throughout retirement. However, many of today’s workers expect to retire at age 70 or later (or to never retire) and, if they do retire, to work for pay to some degree during their retirement, neither of which has been the reality for most of today’s retirees. Those are among the key findings from the Employee Benefit Research Institute’s (EBRI) 35th annual Retirement Confidence Survey.
Feeling confident
Some 67% of today’s workers and 78% of today’s retirees feel somewhat or very confident about their retirement-related finances. For workers, that’s largely the same as last year; for retirees, that’s up from 74% last year.
In terms of actual preparedness, 45% of today’s workers age 55 or older have less than $250,000 in retirement savings.
An expectations/reality gap
As has been true in the past, the latest EBRI survey shows a couple of important areas of disconnect between today’s workers and today’s retirees. For example, whereas 30% of today’s workers expect to retire at age 70 or later, or to never retire, that's only been the experience of 9% of today’s retirees. The plan to work late into life is especially prevalent among today’s oldest workers. Among those age 55 or older, 40% expect to retire at age 70 or older, or to never retire.
Among today’s retirees, 40% left the workforce earlier than planned, mostly for reasons outside of their control, such as health issues for themselves or a loved one or a change at their employer.
As SMI has long suggested, it can be wise to plan to work past the typical retirement age, but it can be unwise to count on being able to.
Another area of disconnect highlighted by the EBRI survey has to do with expectations about working for pay to some degree in retirement. Whereas 75% of today’s workers have that expectation, just 29% of today’s retirees have actually worked for pay in their later years.
The weight of debt
One retirement-related hindrance impacting many of today’s workers is debt. Some 62% say debt is either a minor or major problem. Such workers report far lower levels of retirement confidence than those for whom debt is not a problem.
While the survey didn’t break down debt into specific types, other research has pointed to an increase in the number of people bringing mortgage debt into their later years. As SMI has recommended before, it’s wise to plan to retire your mortgage at least by the time you plan to retire.
An important step
One relatively simple step today’s workers could take to better prepare for their later years is to estimate how much money they may need to have saved by the time they retire. Just 54% of today’s workers have done so — similar to previous year’s findings.
SMI premium members have a uniquely powerful planning tool at their disposal — MoneyGuide. For a one-time fee of just $50, you can avail yourself of this tool that financial advisors consider the gold standard among retirement planning software programs. With MoneyGuide, you can more accurately gauge your retirement preparedness and run your plan against various what-if scenarios.
Having a well-thought-out plan that objectively evaluates your situation and show you what you could do to improve it will do wonders for your retirement preparedness and your peace of mind.
