Report Finds Americans Gambling with Retirement

Report Finds Americans Gambling with Retirement

The Employee Benefit Research Institute’s 2016 Retirement Confidence Survey had just been released, and what is shows is that many Americans may be suffering from overconfidence. The EBRI has been conducted every January for the past 26 years. This year’s survey included interviews with over 1,000 workers and retirees.

Rising Confidence

The number of workers describing themselves as “very confident” about their prospects for retirement rose from 13 to 21% of respondents between 2013 and 2016. Overall, 63% of respondents said they were confident that they would have enough money for a comfortable retirement. But EBRI’s research director found that most of these confident workers aren’t saving enough. Some weren’t even saving at all.

Short Savings

According to EBRI’s previous surveys, the percentage of workers adequately saving for retirement peaked in 2009 in the midst of the financial crisis. It could be that when the economy is struggling and doom and gloom dominate the headlines, people are more likely to invest in their retirement. Today, with a long stretch of economic growth, just 63% of survey respondents and/or their spouses were saving for retirement.

The Numbers

27% of those aged 45 to 54 had less than $1,000 saved for retirement, and 17% of respondents over the age of 55 had under $1,000 saved. Overall, 42% of workers said that they and their spouses had less than $10,000 saved. What these numbers tell us is that many Americans are simply choosing not to think about retirement savings and the percentage of their current income they need to set aside.

Working after Retirement, Retirement Age, & Retirement Expenses

Two other areas explored by EBRI are working part-time after retirement and planning for retirement expenses. 67% of respondents in 2016 said they plan to work part-time for pay after retirement—and this plan likely explains the lack of retirement savings—but only around 27% of retirees end up actually doing so.

Over the last 25 years, the percentage of workers expecting to retire after the age of 65 has risen from 11% in 1991 to 37% today.

As far as expenses go, many respondents are confident that their savings will cover expenses during retirement. This notion may be based on the misconception that Medicare will cover long-term care. 38% of current retirees are now reporting that expenses are higher than they’d expected them to be.

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