Where is Your Retirement Confidence?
April 20, 2012 by MJP
Filed under Retirement Planning
Or maybe the better question is: Do you have any confidence in your retirement? I do but not without some trepidation. According to recent survey published by the Employee Benefit Research Institute, Americans who feel confident about their retirement are in the minority.
- Only 14 percent of Americans are “very confident” they will have enough money to live comfortably in retirement. This is an historic low number. A lot of this is related to uncertainty in the job market, a concern expressed by 42% of the respondents. Similar financial concerns are linked to an inability to meet future health care and long term care obligations. Employment insecurity looms large: Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.
- For so many people, retirement savings and investments are non-existent. Specifically, 60 percent of workers state that the total value of their household savings and investments (not including pensions and home equity) is less than $25,000. For a worker over 40, that is a scary bad statistic.
- One-half of current retirees surveyed say their retirement was unplanned. Instead, they stopped working because of health problems, a disability, or a job action by their employer (e.g., the infamous ”downsizing”). Folks who rely on the “I’ll just work longer” retirement plan should take careful note of this.
- This next stat is crazy: 56 percent of workers say neither they nor their spouse have tried to calculate how much money they will need save so that they can live comfortably in retirement. This is the “head in the sand” retirement plan. (The adult children of these folks should probably intervene for their own future protection!)
For baby boomers with no meaningful savings, there is not much opportunity to fix the problem, particularly if they become one of the 50% who retire involuntarily. Social Security will be it for them. If they also retire with debt, financial survival is questionable.
There are non-financial reasons to be uncertain about retirement. I think I will write more about those another time.
Where does your retirement confidence fall on a scale of 1-10 where 1=”I’m doomed”, 5=”I might make it if I stay healthy, the markets improve, and inflation is low” and 10=”No worries – I am financially set for a satisfactory retirement lifestyle under all foreseeable cirumstances.”
I would say that we are an 8 for now but shooting for 10.
Here is a link to the EBRI survey.
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I have 100% confidence in the spending records I’ve kept over the past 10 years.
I have 100% confidence in my calculations of the low variance of annual spending.
I have 100% confidence in my “Failsafe Retirement Plan” and confident it will produce 160% of that annual spending level.
But, I have 0% confidence in our prediction of spending in our first year of retirement. On your scale of 1-10, I think that makes me a 2 — this just shows there’s a lot of overlap between the financial and non-financial concerns.
BTW, have you seen Mike Zwecher: “They Each Get Only One Whack at the Cat”? (http://wpfau.blogspot.com/2012/04/mike-zwecher-they-each-get-only-one.html)
The article mentioned above is certainly distressing , especially to those people (in my estimation) that had children later in life. How will you care for yourselves, the aging parents and put the kids through college , all the while trying to shore up your savings for your retirement kitty?
Hubby and I are retired now but he was laid off for several years prior to reaching retirement age and collecting his pension and social security. It was tough going for awhile but I retired from my federal job and I do have pretty good medical coverage (yes, I pay for that, lest you think it is a freebee) and the daughter graduated with no debt, thanks to wise planning and scholarships from a private university. Now,my husband’s elderly mother lives here in our home state and I could write a book on her and her husband’s lack of planning for their own retirement. Thankfully, I was disciplined about my savings and investing habits and managed to leave with a sizable chunk in my TSP account which, through extreme luck, was not decimated by the stock market spiral downturn in 2000 and 2008. With everything going up in price on a daily basis, I wonder if we can sustain our present lifestyle in five or ten more years — we are not extravagant and drive old paid for cars. Our heads are well above water now but who knows if our present good health will last and what would necessitate living expenses should either of us wind up in a nursing care facility. No one has a crystal ball(at least , I don’t) so if I were to give advice to a young person starting out, it would be to save at least 20% of your salary and live below your means. Forgo the new gadgets and latest techie gizmos and don’t feel guilty about not buying every doodad your children want. Saving and investing is a serious matter and unless you come from a wealthy family , don’t expect an inheritance either. The days of company pensions will be history and for the young savers of today, it will be on your shoulders entirely.