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Retirement Confidence Drops
The faltering economy in general, as well as worries about rising health care costs and falling real estate values, have pushed retirement confidence to its lowest level in years, according to an annual survey.
The 2008 Retirement Confidence Survey, conducted by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, says that only 18 percent of current workers are very confident that they will have enough money for a comfortable retirement. This is down from 27 percent in 2007, and the nine-point decline is the biggest one-year drop in the 18 years that EBRI has done the survey. Confidence levels are even lower among young people and people in lower income groups.
Retirees also are less confident that they will be able to enjoy a financially secure retirement. Only 29 percent of the 2008 respondents say they are very confident, compared with 41 percent in 2007. Fifty-four percent of retirees say they are more worried about their financial future than they were right after they retired, a big jump from 40 percent in 2007.
Much of the drop in confidence is due to concerns about health care costs, according to the survey. In 2007, 42 percent of workers said they expected to have employer-paid health insurance in retirement, but that number fell to 34 percent in 2008. Some 44 percent of current retirees say they have spent more than they expected to spend on health care expenses.
If there is a silver lining in the survey’s findings, it is that more people are becoming aware of the need to plan and save for retirement. Although only 47 percent of workers say they or their spouse have tried to figure out how much money they will need to fund their retirement, that is up from 42 percent in 2004-2006, and up significantly from 29 percent in 1996.
In 2008, as in previous years, EBRI finds that doing the math often results in better savings habits: Some 59 percent of workers who did a retirement calculation say they are saving and investing more than they were before they did the calculation.
But those savings rates are still very low. Almost half – 49 percent – of workers say the total value of their savings and investments, not counting the value of their primary home or any defined benefit pension plan, is less than $50,000. Some 22 percent of workers and 28 percent of retirees have no savings at all.
For more information on the Retirement Confidence Survey, visit the EBRI Web site.