The retirement confidence of American workers dropped significantly last year, the largest, one-year drop recorded since 2008, according to Craig Copeland, director, wealth benefits research, EBRI.
“The retirement confidence level of retirees also declined… although the drop was not as large as it was for workers,” he said at a recent webinar reviewing findings from the 2023 Retirement Confidence Survey Report (RCC). The longest-running study of its kind, the RCC seeks to measure worker and retiree confidence about retirement and is conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
Among the workers who did not feel too confident or did not feel confident at all about retirement, some had little or no savings, some were unprepared financially, or some could not afford to retire, according to the survey.
Economy impacts retirement confidence
Some workers were also concerned about numerous aspects of the economy and the retirement system, Copeland said. And some thought that the level of inflation will remain high for at least the next 12 months, the U.S. economy will go into a recession, or the U.S. government will make significant changes to the American retirement system. Others believe that interest rates will continue to go up, or the stock market will be increasingly volatile and unpredictable.
Those who had some degree of confidence about their retirement said that they had saved enough money, they can afford to pay their bills, they live below their means or they practice good money management.
Copeland shared the following survey highlights:
Workers and retirees’ retirement confidence dropped significantly in 2023, and workers have many concerns about the economy and their retirement finances.
Nearly two-thirds of workers feel stressed about preparing for retirement.
Only about half of all workers surveyed are doing tasks to prepare for their retirement.
Trusted sources of information
Lisa Greenwald, CEO of Greenwald Research, focused on the financial health of the survey participants and their trusted sources of information.
According to Greenwald, about half of workers believe that their household’s long-term financial needs are unique and are different from those of other households, while only 2 in 5 retirees agree. In addition, a third of workers and a quarter of retirees agree that retirement savings are not a priority, relative to the current needs of their family.
In addition, nearly 4 in 10 workers suggest that they do not know where to go for financial or retirement planning advice, more so than the 2 in 10 retirees who feel the same.
Among the sources that more workers are using this year for information are family and friends, their own research, online resources, a personal professional financial advisor, their employer, or representatives from their workplace-retirement plan.
In addition, 4 in 10 retirees get advice from a personal professional financial advisor, while a quarter use online research that they conduct on their own, or they turn to family and friends. More than a quarter of workers and about a third of retirees also trust their personal professional financial advisor the most.
Greenwald offered these takeaways on what was impacting retirement confidence:
Over 6 in 10 workers and a third of retirees report that debt is a problem for them. Debt is negatively impacting their ability to save for retirement, and more workers are calling debt a problem this year than they did last year, she said.
Half of workers and a third of retirees believe their non-mortgage debt is having a negative impact on their ability to save for an emergency or for a large expense.
However, even though debt is impacting workers’ ability to save for emergencies, two-thirds of workers and three-quarters of retirees still feel they have enough savings to handle an emergency or a large expense. “We did not qualify what large was,” Greenwald said.
Although up from last year, only a quarter of workers use their employer as a source of retirement-planning information, and 2 in 10 use their employer-sponsored plan provider.
Overall, about 2 in 5 workers and 1 in 5 retirees said that they do not know who to go to for good financial or retirement-planning advice.
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
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