More Confidence About Retirement, But Why?

Americans are feeling a bit more confident about their prospects for a financially secure retirement, according to the annual Retirement Confidence Survey from the Employee Benefit Research Institute. Americans on the whole still aren’t confident about retirement, and those with confidence still are much lower than at the peak before the 2008 crisis. Confidence seems to be correlated with having a retirement plan, even if it is only an IRA. Those reporting having some kind of plan report being more confident than those without.

But there’s a question why confidence has increased. The survey also asks about how much people have saved for retirement. This hasn’t changed much, despite the improvement in the economy and the markets. So, the question is why some people are more confident about retirement than they were a year or two ago.

One might expect that the increase in retirement confidence noted above would be based on an improvement in retirement preparations, but this does not appear to be the case for many workers. The percentage of workers who reported they and/or their spouse had saved for retirement increased briefly in 2009 (to 75 percent), but this percentage has slowly declined and now stands at 64 percent (Figure 13). The percentage of retirees having saved for retirement climbed slowly from 59 percent in 2000 to 74 percent in 2011 and now stands at 66 percent (Figure 14).

Moreover, not all workers who have saved for retirement are currently saving for this purpose. Fifty-seven percent of workers in the 2014 RCS report that they and/or their spouse are currently saving for retirement (down from 65 percent in 2009, but statistically equivalent to the percentages measured in 2010–2013) (Figure 15).