American workers and retirees have little confidence in achieving successful retirements, according to the 2011 Retirement Confidence Survey from the Employee Benefit Research Institute. If there is any silver lining to the survey, EBRI says, it's that the dour outlook was likely partly a result of the public's more realistic understanding of the scale of retirement resources needed to support rising healthcare costs and longer life spans. Unfortunately, it added, this recognition has not yet led to more retirement savings or better planning.
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The 21st edition of EBRI's annual survey found workers more pessimistic than in any past survey. Only 13 percent of current employees were "very" confident of achieving a comfortable retirement, while 27 percent were "not at all" confident. During the past year, roughly a third of employees and retirees alike said they had been forced to dip into savings just to help pay for basic living expenses. And 80- to 90-percent majorities of current workers and retirees expressed concerns about possible decreases in Social Security and Medicare benefits, EBRI reported, while at the same time believing that healthcare costs would continue to outpace inflation.
Retirees tend to be more confident about successful retirements than current employees, and this was again the case in the 2011 survey. Here's how retirees answered four core questions about retirement affordability:
1. Confidence about having enough money to live comfortably throughout their retirement years: 60 percent of retirees were very or somewhat confident, compared with a recent peak of 80 percent in 2005.
2. Confidence about having enough money to pay for basic expenses in retirement: 77 percent were very or somewhat confident, slightly better than last year but off the recent high of 84 percent in 2006.
3. Confidence about having enough money to pay for medical expenses in retirement: 68 percent were very or somewhat confident, up from 65 percent in 2010, but down from 77 percent in 2007.
4. Confidence about having enough money to pay for long-term care expenses in retirement: 49 percent were very or somewhat confident, up from 43 percent in 2010, but far short of 60 percent who felt that way in 2007.
EBRI continued to record, as it has in past surveys, a wide gap between the retirement plans of still-employed workers and the actual decisions of retirees. Consistently, workers say they will retire later than actual retirees have. They also say they will continue part-time work during their retirements, whereas actual retirees are much less likely to do so.
"Just 7 percent of workers say they plan to retire before age 60," the survey said, "compared with 30 percent of retirees who report they retired that early. Sixteen percent of workers plan to retire at age 60–64, although 38 percent of retirees retired at these ages. On the other hand, 25 percent of workers (compared with 7 percent of retirees) plan to wait at least until age 70 to retire." Early retirements are often driven by unanticipated health problems or difficulties in finding new work after a layoff, EBRI noted.
Similarly, EBRI said, nearly three-fourths of current employees say they plan to work for pay during their retirement years. However, only 23 percent of actual retirees report doing so.
"It would be heartening if American workers reacted to their decline in confidence by improving their preparations for retirement," the survey concluded, "but this does not appear to be happening."
The survey was conducted by EBRI and Mathew Greenwald & Associates. It was underwritten by 25 large employers and investment and financial services firms, as well as by AARP.