A Depressing Look at U.S. Retirement

Americans have less and less confidence that they will be able to fund a comfortable retirement, according to the latest annual Retirement Confidence Survey by the  Employee Benefit Research Institute. (See some media coverage here.) For many years, the survey indicated that Americans were very confident of having comfortable retirements but pointed out that most people weren’t saving enough to fund such a retirement. Now, more people know that they aren’t saving enough.

The survey needs to be reviewed carefully, because it covers all workers, not only those nearing retirement. The inclusion of young people just starting out skews the results. But it also reveals some alarming information, such as that only 66% are saving anything for retirement, when 75% were in 2009.

But what’s most disturbing is that less than half have made any attempt to estimate their retirement financial needs. The surveys of retirees clearly show that those who made some attempt at planning before retirement were the most satisfied and successful in retirement. You need to make some estimates. You need to get a handle on the lifestyle your current resources can finance and decide if there are steps you can take to improve things.

• Retirement savings may be taking a back seat to more immediate financial concerns: Just 2 percent of workers and 4 percent of retirees identify saving or planning for retirement as the most pressing financial issue facing most Americans today. Both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each).

• Cost of living and day-to-day expenses head the list of reasons why workers do not contribute (or contribute more) to their employer’s plan, with 41 percent of eligible workers citing this factor.