The Canadian Press - ONLINE EDITION

Saving enough for retirement? Study finds lack of confidence persists, despite market rebound

  • Print

Workers appear to have little faith that the economic recovery and the stock market's climb have left them better-prepared for retirement.

Confidence in the ability to afford a comfortable retirement remains at the same record low level recorded in 2011, and is slightly lower than last year, according to the Employee Benefit Research Institute, which has conducted the study the past 23 years.

Nearly half of workers surveyed in January had little or no confidence that they'll have a financially comfortable retirement, EBRI said Tuesday. Twenty-eight per cent were not at all confident — the highest level recorded since the survey began in 1991 — with 21 per cent saying they were not too confident.

About 13 per cent were very confident and 38 per cent somewhat confident, figures that weren't substantially greater than the record lows in the 2011 survey.

The survey also shows how many workers live on the edge, with little savings besides the equity they may have if they own a home, and besides any expected income from a pension. Fifty-seven per cent said the total value of their household savings and investments was less than $25,000, excluding any home equity and pension benefits. Among that group, nearly half had less than $1,000 saved.

If there's any positive takeaway, it's that researchers believe workers who are the least prepared for retirement have become increasingly aware that they need to save more.

In 2007, for example, confidence numbers were substantially higher before the economy sank into a recession. Seventy per cent were either somewhat confident or very confident that year.

The decline in confidence in recent years suggests "a much higher degree of realism" about the need to increase savings rates, said Jack VanDerhei, EBRI's research director, and co-author of the report.

That could explain why confidence remains low, despite the economy's gains since the recession and a market rally that lifted the Dow Jones industrial average to a record high two weeks ago.

Despite the realization that they're not saving enough, short-term financial needs are so pressing that long-term goals become secondary.

"Job security and financial security continue to be Americans' major concerns, not retirement," VanDerhei said.

In addition to worrying about their retirement savings, workers "lack confidence in their ability to pay for medical expenses, and even basics such as food, clothing and shelter," he said.

The survey was co-sponsored by EBRI, a private non-profit research organization, and Matthew Greenwald & Associates, a market research firm. Two-dozen public and private organizations, including financial services companies, provided funding. About 1,000 U.S. workers aged 25 and older and 250 retirees were randomly chosen for telephone interviews in January. The statistical margin of error is plus or minus 3 per cent.

The researchers concluded that fewer than half of workers appear to be taking basic steps needed to prepare for retirement. For example, 46 per cent of those surveyed reported that they or their spouse had tried to estimate how much they'll need to save by retirement to ensure that they could live comfortably. The rest made no such calculation.

Two per cent of workers and 4 per cent of retirees said that saving or planning for retirement was the most pressing financial issue that most Americans face. Both groups were most likely to identify job uncertainty as the most pressing concern (30 per cent of workers and 27 per cent of retirees) followed by meeting day-to-day needs (12 per cent for each group).

Participants cited the cost of living and daily expenses as the key reasons why workers either don't contribute to workplace savings plans such as 401(k)s or don't contribute enough.

Fifty-five per cent of workers and 39 per cent of retirees reported having a problem with their debt levels. About half said they could definitely come up with $2,000 if an unexpected need arose within the next month.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Exciting changes expected for Saturday's Santa Claus parade

View more like this

Photo Store Gallery

  • Bright sunflowers lift their heads toward the south east skies in a  large sunflower field on Hwy 206 and #1 Thursday Standup photo. July 31,  2012 (Ruth Bonneville/Winnipeg Free Press)
  • Carolyn Kavanagh(10) had this large dragonfly land on her while spending time at Winnetka Lake, Ontario. photo by Andrea Kavanagh (mom0 show us your summer winnipeg free press

View More Gallery Photos

Poll

Would you visit Dalnavert Museum if it reopened?

View Results

Ads by Google