June 1, 2008

Retirement Confidence Plummets in EBRI Survey

The percentage of workers very confident about having enough money for a comfortable retirement decreased sharply, from a mere 27% in 2007 to fewer than one in five (18%) in 2008, the biggest one-year drop in the 18-year history of the Employee Benefit Research Institute's (EBRI) Retirement Confidence Survey.

Reported by Nevin E. Adams

Retiree confidence in having a financially secure retirement also decreased, from 41% to just 29%. EBRI noted that decreases in confidence occurred across all age groups and income levels—but were particularly acute among younger workers and those with lower income.

About half of workers (47%) say they and/or their spouses have tried to calculate how much money they will need for a comfortable retirement. The 2008 survey found that taking the time to do such a calculation was effective at changing worker behavior; 44% of those who calculated a goal changed their retirement planning and, of those, more than half (59%) started saving or investing more.

The percentage very confident in having enough money to take care of basic expenses decreased from 40% in 2007 to 34% this year for workers, and from 48% to 34% for retirees. Additionally, workers said they are increasingly not confident about having enough money for medical expenses (43% lacked confidence this year, up from 32% in 2007) and for long-term care expenses (54% in 2008, compared with 44% a year ago). Retirees were somewhat less likely than in 2007 to believe they can always cut back on their lifestyle if it looks like they might use up all of their savings (61%, down from 70%). At the same time, 39% of retirees now think they are likely to live long enough to use up all of their savings, versus just 29% in 2007.

Full results of the survey are available here.