Retirement Confidence Has Risen

The Employee Benefit Research Institute’s (EBRI’s) 2014 Retirement Confidence Survey revealed that 24% of workers were “not at all confident” about having enough money for a comfortable retirement, a decline from 28% who were in this group in the 2013 survey. About 18% were “very confident,” which is an increase from 13% in the previous survey.

About 22% of workers felt “very confident” that they were doing a good job of retirement preparation, while one-third of respondents felt “not at all” or “not too” confident that they’ve done so.

Savings efforts continued to decline

Almost two-thirds (64%) of workers said they and/or their spouses have saved money for their retirement, which is a very small decline from the 2013 survey. The proportion of respondents who said they and/or their spouse were currently saving remained unchanged at 57%.

As previous Retirement Confidence Surveys have found, an alarming percentage of workers have little or no savings or investments. About 60% of workers reported that their savings and investments, excluding the value of their primary residence and any defined benefit plans, were less than $25,000. Also of concern is that 36% said their savings total was less than $1,000.

Only 11% reported their savings and investments amounted to $250,000 or more.

Too few have set a savings goal

Only 44% of workers said they and/or their spouse have calculated how much they need to save for a comfortable retirement, which is down slightly from the 2013 survey. And 28% said they think they’ll need less than $250,000 for retirement.

Expected retirement age rose

Fifteen percent of survey respondents said their expected retirement would be later than planned. In the 2014 survey, 33% stated that they expect to retire after age 65. Those expecting to retire at age 70 or older represented 22% of those responding.

Confidence in retirement affordability improved

Workers continue to have limited confidence in their ability to pay for basic expenses in retirement (11% were “not at all confident”), medical costs (14% were “not at all confident”), and long-term care expenses (30% were “not at all confident”). These proportions are slightly less than those reported in last year’s study.

Investment advice not widely followed

About 20% reported having received investment advice from a paid financial advisor. Only 27% of this group said they followed all of it, 36% followed most of it, and 29% followed some of the advice they received.

View of Social Security was better

As far as Social Security continuing to provide benefits at least equal to those that retirees receive today, 35% were “not at all confident” this would happen. Similarly, 29% responded that they were “not at all confident” that Medicare would continue to provide benefits at today’s level. These figures are slight improvements over last year’s survey.

EBRI’s survey is at http://tinyurl.com/EBRI2014RCS.

For plan sponsor use only, not for use with participants or the general public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; 877-306-5055; www.kmotion.com

© 2014 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance; nor as the sole authority on any regulation, law or ruling as it applies to a specific plan or situation. Plan sponsors should consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.