The 2014 Retirement Confidence Survey released today by the Employee Benefits Research Institute indicates that only 18 percent of workers are now very confident that they will have enough money for a comfortable retirement, while 37 percent are somewhat confident, and 24 percent are not at all confident. When we start to look at the breakdown of numbers, it becomes clear as to why workers are not very confident: there is an overall lack of saving and a problem with increasing amounts of personal debt. Here’s a quick overview of the numbers:
- 36 percent of workers have saved less than $1000 for retirement
- 64 percent of workers say that they and/or their spouse has saved for retirement
- 79 percent of full-time workers say they have saved for retirement
- 58 percent of workers and 44 percent of retirees report having a problem with their level of debt
- 24 percent of workers and 17 percent of retirees indicate that their current level of debt is higher than it was five years ago
- 35 percent of workers and 25 percent of retirees indicate that their current level of debt is lower than it was five years ago
The survey shows a very important correlation between saving and participation in a company –sponsored retirement plan (like a 401k). Approximately 90 percent of workers participating in a retirement plan had saved for retirement, compared with just 1 in 5 of those without a retirement plan through their employer, who had the responsibility of opening an account and saving for retirement on their own (such as a Roth or regular IRA).
What factors are contributing to this lack of retirement savings? Topping the list of reasons why workers aren’t saving (or saving more) for retirement is the cost of living and day-to-day expenses, with 53 percent of workers citing this factor. The report cites that only 29 percent of workers are very confident in their ability to pay for basic expenses. Additionally, 24 percent of workers report they are not at all confident about their ability to pay for medical expenses and 32 percent aren’t confident about being able to afford long-term care expenses. Other factors that contribute to the low savings rate are economic factors, such as stagnant or declining incomes, increasing college tuition costs, uncertainty of healthcare costs, and high amounts of credit card debt. While some of the confidence numbers have improved marginally over the numbers last year, they still remain low and show a disturbing trend of American workers being bogged down in debt and unable or unwilling to save.