Posted on Sunday, March 20, 2011
NEW YORK -- Most Americans have less than $25,000 saved up for retirement. And surprise!: Retirement confidence is at record lows.
More than a quarter, or 27%, of workers say they are "not at all confident" about retirement, according to an annual survey from the Employee Benefit Research Institute and Mathew Greenwald & Associates Inc. That's up from 22% last year, which was the lowest level recorded in the two decades the survey has been conducted.
Meanwhile, only 13% of workers are "very confident" about having enough money to retire, which is unchanged from 2009.
While this sounds dismal, EBRI says it's about time people started waking up to reality. And this drop in confidence may simply be a sign that people are finally realizing how much they must save, instead of being overly confident as they have been in previous years.
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For example, confidence among the worst savers slipped sharply this year. The number of workers with savings of less than $25,000 and who reported being "not at all" confident about their retirement savings surged to 43% this year, from only 19% in 2007.
"People are increasingly recognizing the level of savings realistically needed for a comfortable retirement," said Jack VanDerhei, EBRI research director and co-author of the report. "We know from previous surveys that far too many people had false confidence in the past."
About 56% of workers report having less than $25,000 in savings and investments (not including the value of their primary home and benefit plans) and 29% of workers have less than $1,000 saved.
Plus, while 59% of workers say they are currently saving for retirement, about a third of all Americans -- 34% of workers and 33% of retirees -- were forced to tap into their savings last year just to cover basic expenses.
"People's expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible," said VanDerhei.
About 20% of workers said they now plan to retire later than they had desired, with the number of people expecting to retire after age 65 rising to 36%, compared with 25% in 2006.
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The poor economy is the top reason people are delaying retirement this year, followed by "a lack of faith in Social Security or the government," a change in their employment situation, or simply because they can't afford it.
About 74% of workers now plan to hold paying jobs in retirement, which is up from 70% in 2010 and triple the percentage of current retirees who say they worked for pay in retirement.
Nearly half of current retirees say they retired earlier than they had intended, due mainly to health problems or disability.
By Blake Ellis, staff reporter, (CNNMoney)