Why Retirement Confidence Remains Low

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Despite recent reports of improving economic trends, the latest version of the Retirement Confidence Survey (RCS) reinforces that confidence in having a secure retirement remains at historicaly low levels. According to the annual survey from the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates, 28% of those still working are "not at all confident" and 21% are "not too confident". For thoe who have already retired, only 18% are "very confident", while 14% are "not at all confident".


In my blog last week and in my first entry last July, I suggested that the key to resolving the retirement savings quandary is to understand that participants realize that saving for retirement is important, but other, more immediate financial priorities and challenges are standing in the way. The 2013 RCS results confirm this. According to the RCS, "Retirement savings may be taking a back seat to more immediate financial concerns." An almost microscopic 2% of workers and 4% of retirees consider saving for retirement to be the most pressing financial issue facing most Americans. By contrast, 30% of workers and 27% of retirees point to job uncertainty, while 12% of both workers and retirees cite making ends meet. The high cost of living and day-to-day expenses are the primary reasons eligible employees don't contribute more or at all to their employer's retirement plan. Another key obstacle is debt, with 55% of workers and 39% of retirees having difficulties in this area. One end result is that people now expect to retire much later than they once did. Back in 1991, only 11% of workers expected to retire after age 65. In 2013, that figure has jumped to 36% - and 7% don't expect to retire at all. 


What does all of this mean? I would suggest that it is imperative that we focus on the individual's complete financial circumstances. Saving for retirement does not occur in a vacuum. Automatic features are wonderful for helping people on the road to a more secure retirement, but the road has many obstacles as well. Perhaps some combination of these automatic features and tools to help overcome other financial challenges is what the doctor ordered. 

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