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Retirement Confidence Plunges

Retirement Confidence Plunges | Human Resource Executive Online

Saturday, May 2, 2009
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Perhaps not surprisingly, given the state of the economy, the percentage of Americans who say they are very confident of having enough money to live comfortably in retirement has fallen to a record low, according to the 2009 Retirement Confidence Survey.

The survey, which is conducted annually by the Washington-based nonprofit Employee Benefit Research Institute and this year queried 1,257 individuals 25 and older, revealed that only 13 percent of American workers say they're very confident of having enough to live comfortably during retirement -- down from the previous low of 18 percent in 2008 and 27 percent in 2007.

Thirteen percent is the lowest response to the question since it was first asked in the survey in 1993.

Workers also expect to work longer because of the economic downturn: 28 percent of workers in the 2009 survey say the age at which they expect to retire has changed in the past year. The vast majority (89 percent) said they've postponed retirement with the intention of increasing their financial security.

Although 21 percent say they planned on working into their 70s, the median age at which workers expect to retire is at age 65, according to the survey. In actuality, EBRI says, retirees retired at a median age of 62, and nearly half of retirees (47 percent) said they'd retired sooner than planned.

More workers are also planning to supplement their retirement income by working, the survey found: The proportion of workers planning to work after they retire increased to 72 percent in 2009, compared to 66 percent in 2007.

This compares to 34 percent of retirees who report they actually worked for pay at some time during their retirement, according to EBRI.

Meanwhile, the number of workers who say they are very confident in having enough money to take care of basic expenses in retirement has fallen to 25 percent this year, compared to 40 percent in 2007. Only 13 percent feel very confident about having enough money to pay for medical expenses during retirement (down from 20 percent in 2007).

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One item of particular concern from this year's survey was the large number of workers who appear to have done relatively little planning for retirement. Only 44 percent of workers report they and/or their spouses have tired to calculate how much money they will need to have saved by retirement.

"When times are tough, and the need for planning is most pressing, it appears harder for Americans to focus on it," said Matthew Greenwald, CEO of Matthew Greenwald & Associates, during a teleconference to announce this year's survey results.

Greenwald's firm helped sponsor the survey.

"Generally, the amounts people think they need for retirement are far too low," he said. "These are challenges that employers must deal with: Declining confidence in the ability to retire comfortably combined with declining interest in financial planning."

On a more positive note, more respondents this year seemed to have a realistic understanding of what they need to do: Save more and possibly delay the age at which they retire, said Greenwald.

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