Despite concerns about lack of sufficient savings by American workers, retirement confidence is near all-time highs.
Millions of Americans expect to work beyond retirement age — but when they plan to retire versus when they actually do remains a wild card.
D.C.-based Employee Benefit Research Institute released its 29th-annual Retirement Confidence Survey, and it found 82% of retirees are confident in their ability to live comfortably throughout retirement, up from 75% in last year’s survey.
That puts this year’s survey results on par with highs measured in 2005 and 2017.
The percentage of those still working who say they are very confident in their ability to live comfortably throughout retirement reached 23%, levels consistent with the late-1990s and early 2000s.
EBRI also found the age at which Americans expect to retire and when they actually do doesn’t always match up.
“The median age for retirement is 62 (even though) many workers think they’ll be working until 65 for the most part and in many cases beyond that,” Craig Copeland, ERBI senior researcher and co-author of the report, told WTOP.
Retiring earlier than expected can be because of both unexpectedly good news or bad news.
“People have reached a point in their life when they can afford to retire and they choose to retire. They’ve been fortunate with a good pension plan and they’ve been able to save,” Copeland said.
“But on the bad side, the most common reason is for a health or disability problem. And also there are things that happen at the company. They’re downsizing or reorganizing and whatever your skills are don’t match, or they are closing a particular plant or facility where you are at.”
EBRI advises workers planning for retirement to be prepared financially to retire before their goal.
“If you plan to retire at 65, be financially ready at 62 or 60, then if you make it to 65 you have another three years of accumulation or not spending your assets,” Copeland said.
As for retirement confidence, EBRI says it has taken 10 years for confidence to return to pre-financial crisis levels. But there are still headwinds, beyond lack of savings for many.
In its latest survey, only 41% of workers with a major debt problem expressed confidence about retirement, compared to 85% who said debt is not a problem.
“Income stability” is the top guiding principle for managing finances in retirement versus preserving principal. Half of people currently working expect income from something like an annuity, but in reality only a third of current retirees have income from a product like that.
And many expect to continue earning a paycheck in retirement from some type of work. But that many not be realistic.
“Three-quarters of workers believe work for pay will be a source of income in retirement, and only a quarter of retirees actually receive income from work,” said Lisa Greenwald at Greenwald & Associates, which conducted the confidence survey along with EBRI.
“It is risky for workers to assume they will be able to work into retirement when, for so many retirees, this has not been the case,” she said.
The survey included 2,000 Americans, half currently working and half already retired, and was conducted between Jan. 8 and Jan. 23. The survey has a margin of error of 3.16 percentage points.