Pension & Benefits News Confidence in retirement security reaches pre-financial crisis levels
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Thursday, June 13, 2019

Confidence in retirement security reaches pre-financial crisis levels

By Pension and Benefits Editorial Staff

In 2019, 82 percent of retirees say they are confident in their ability to live comfortably throughout retirement, up from 75 percent last year and comparable to highs measured in 2005 and 2017, according to recent research from the Employee Benefit Research Institute (EBRI). The 2019 Retirement Confidence Survey (RCS) also found that the percentage of workers who say they are very confident in their ability to live comfortably throughout retirement reached 23 percent, up from last year’s 17 percent and now reflecting levels measured more consistently in the late 1990s and early 2000s, prior to the financial crisis of 2008.

According to EBRI, in 2019, retirees are also much more likely than in 2018 to be confident in their ability to afford the lifestyle they are accustomed to (77 percent vs. 70 percent) and having enough money to last their entire life (76 percent vs. 67 percent). Eight in ten retirees indicate they are very or somewhat confident they will have enough money to take care of medical expenses, compared with 70 percent in 2018, and retirees are less likely than last year to say their overall expenses, health care expenses, and long-term care expenses are higher than they expected.

The RCS finds that two-thirds of American workers (67 percent) feel confident in their ability to retire comfortably, with 23 percent feeling very confident. This reflects a 6 percentage point increase in the workers who feel very confident over 2018, EBRI noted. Though comparable to highs last seen 1997 through 2006 and in 2015 and 2016, worker confidence in 2019 still falls short of the 27 percent high measured in 2007, pre-financial crisis.

“Retirement confidence continues to be closely related to having a retirement plan,” said Craig Copeland, EBRI senior research associate. “Workers reporting they or their spouse have money in a defined contribution plan or IRA, or have benefits in a defined benefit plan, are nearly twice as likely to be at least somewhat confident about retirement (74 percent with a plan vs. 39 percent without a plan).”

While 72 percent of workers are very or somewhat confident about being able to afford basic expenses in retirement, 41 percent are not confident about their ability to cover medical expenses and nearly half (48 percent) do not feel confident about having enough money for long-term care in retirement.

Workers are also more likely to cite debt as a concern compared with retirees. Sixty-one percent of workers say debt is a problem for them, compared with 26 percent of retirees. “Historically, the RCS has found a correlation between debt levels and retirement confidence,” said Copeland. “In 2019, 41 percent of workers with a major debt problem say that they are very or somewhat confident about having enough money to live comfortably in retirement, compared with 85 percent of workers who indicate debt is not a problem. Thirty-two percent of workers with a major debt problem are not at all confident about their prospects for a financially secure retirement, compared with 5 percent of workers without a debt problem.”

SOURCE: Employee Benefit Research Institute (EBRI): The 2019 Retirement Confidence Survey.

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