Workers' confidence about their retirement is at a near-record low. Fewer are salting away money for their later years, and the majority have less than $25,000 in savings and investments.
But their biggest worry isn't retirement. It's job security.
These are some of the findings of the Employee Benefit Research Institute's 22nd annual Retirement Confidence Survey released today.
"They're nervous. They're worried," says Nevin Adams, EBRI director of education and external affairs. "There is a lot of uncertainty out there."
Still, he adds, things could be even grimmer, given that we're still reeling from the 2008 financial crisis. "We had some time for people to feel even worse," he says. "They are hanging in there."
Early this year, EBRI interviewed nearly 1,270 workers and retirees age 25 and up about their attitudes on retirement. Workers' outlook, which hasn't budged much from a year ago, appears tied to the economy. Workers were most confident in 2007, a year before the financial crisis hit
and the stock market crashed.
The study has some disturbing findings. More workers admit to falling behind on saving for retirement. Some are confused and expect to receive a pension even though they don't have one.
And a growing number are counting on working longer, a worthy goal. But EBRI has found that many retirees actually left the workforce much earlier than planned because of poor health, a layoff or another unforeseen event. Obviously, today's workers will need a Plan B.
One bright spot: Workers who participate in retirement plans, who calculate how much they need for retirement or who get professional financial advice are more confident than others, says Greg Burrows, senior vice president with
, one of the study's underwriters.
"That's a positive outcome of taking action," he says.
If you're not doing those things, the EBRI study could be a much-needed wake-up call.
Here are some highlights:
•Only 14 percent of workers are very confident of a comfortable retirement, up from the record low of 13 percent last year. Thirty-eight percent now are just somewhat confident. And nearly half are not too optimistic — or not at all optimistic.
•Two-thirds of workers report being under financial pressure, with debt being a problem for one in five. More than two-thirds of workers acknowledge being a little or a lot behind on financially preparing for retirement.
•Even so, many workers aren't taking steps to secure their future. Three years ago, 75 percent of workers said they or a spouse saved for retirement. Now that figure is down to 66 percent. Overall, 60 percent of workers report having less than $25,000 in savings and investments, not counting their house or traditional pension.
•Asked how much they think they will need to save for retirement, the most frequent answer — cited by 34 percent — was less than $250,000. That's likely not enough for many.
Principal's Burrows says workers at retirement generally should have 10 times their final year's income. So a 65-year-old earning $40,000 the last year on the job would need to save $400,000 to generate enough income in retirement along with Social Security, he says.
EBRI says a growing number of workers hope to make up any nest-egg shortfall by working longer. In 1991, about one in 10 workers planned to retire after age 65. Now, nearly one in four expect to work that long.
But workers need a reality check. Only 8 percent anticipate retiring before 60. But when interviewing retirees, EBRI found 40 percent retired before that age, often because of illness or a job loss.
Working in retirement also isn't as widespread as workers might think. Seventy percent of workers plan to hold a paying job in retirement. In reality, about one-quarter of retirees collect a paycheck, with many retirees saying they rely on Social Security more than they anticipated.
"The point is you shouldn't count on working longer as the solution to your retirement savings issue," says EBRI's Adams. "It may be that it's not something in your control."
You can improve your retirement security even during a weak economy.
First, calculate how much you need to save for retirement, an exercise that less than half of workers undertake. People who do the math, Adams says, "have a more realistic appreciation of what they will need and usually set higher goals."
Online calculators, such as EBRI's Ballpark E$timate at choosetosave.org, can help.
Of course, the earlier you start to save, the better. Last week, Baltimore-based
released its confidence survey, which found many younger workers doubted they would have enough money for retirement.
The investment company recommends workers starting their careers save 15 percent a year — including any contributions from an employer — to be on target for retirement.
Christine Fahlund, Price's senior financial planner, encourages workers to stay on the job in their 60s, if possible.
To make this more appealing, she suggests older workers begin "practicing" retirement. You can stop contributing to the 401(k) or continue to kick in just enough to get the employer match, she says. Then use the extra money for travel or other activities you want to do in retirement, she says.
"Those extra years of employment at the same job or a new one that's part-time will provide a significant additional income for you over that decade," she says.