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Recession Sets Back Many Retirement Plans
As a result of the financial crisis, Americans’ retirement confidence remains at an all-time low, and many workers have had to focus on meeting their daily living expenses rather than saving for the future, according to the 2012 Retirement Confidence Study by the Employee Benefits Research Institute.
This is the 22nd study by EBRI, and the results are grim. Only 14 percent of current workers say they are very confident they will be able to afford a comfortable retirement, which is statistically unchanged from 13 percent in the 2011 study. An additional 38 percent in 2012 say they are somewhat confident, and 23 percent say they are not confident at all.
Among people who already are retired, only 21 percent say they are very confident they will have financial security in retirement, and 19 percent say they are not at all confident.
In general, Americans are more confident that they will be able to pay their basic living expenses in retirement than they are that they will be able to pay for medical care. Some 26 percent of current workers say they are confident they will be able to keep up with their everyday bills, although that is down from 40 percent in 2007. Among current retirees, about 32 percent say they are very confident they will be able to pay their basic living expenses in retirement.
Only 13 percent of current workers say they are very confident that they will have enough money to meet their health care needs, and only 9 percent say that they are very confident they will be able to pay for long-term care expenses in retirement. Slightly more retirees – 24 percent – say they are very confident that they will be able to pay their future medical expenses, and 18 percent they are confident they will be able to pay for long-term care.
And there is reason to lack confidence, according to EBRI. Thirty percent of current workers say they have saved less than $1,000 for retirement. And 60 percent say the value of their total household savings and investments is less than $25,000, not including their primary home and any expected defined benefit plan payments.
More than half – 56 percent – of workers say they have not even calculated how much money they will need to live comfortably in retirement. And 67 percent estimate that they are below where they should be in their retirement savings efforts. Perhaps as a result, 37 percent of workers say they expect to retire after age 65; this is up from 11 percent in 1991 and 18 percent in 2002.
Part of the problem appears to be that workers are too busy trying to stay financially afloat in the present to do much planning for the future. In particular, they might be worried about losing their jobs. Some 42 percent of current workers and 41 percent of retirees said the biggest financial problem facing Americans is job uncertainty.
Other responses were making ends meet, cited by 10 percent of workers and 13 percent of retirees; the economy, 9 percent each; making mortgage payments, 9 percent of workers and 7 percent of retirees; paying down debt, 8 percent of workers and 5 percent of retirees; and paying for health insurance or medical expenses, 7 percent of workers and 6 percent of retirees.
Only 2 percent of workers and retirees said planning for retirement was the most important financial issue facing Americans today.