Retirement Confidence Stable but Savings Lag

Debt has a significant impact on the ability to retire

By Stephen Miller, CEBS Mar 28, 2016

While overall confidence about being able to afford a comfortable retirement has plateaued among U.S. workers, preparations to save for retirement are still lagging, according to the 2016 Retirement Confidence Survey (RCS) by the nonprofit Employee Benefit Research Institute (EBRI) and research firm Greenwald and Associates.

Retirement confidence is part of a worker’s overall sense of financial wellbeing, which is associated with lower stress and higher productivity. Workers who lack retirement confidence also may feel they are locked in place and unable to retire, which leads to workforce challenges such as fewer promotional opportunities for younger workers.

The survey, conducted in January 2016 through telephone interviews with 1,000 workers and 505 retirees, found that among U.S. workers who know they are saving less than they need for retirement:

About 20 percent say they will have to save more later.

15 percent say they will have to work in retirement.

14 percent say they will have to retire later.

Workers reporting that they or their spouse have money in a defined contribution (DC) plan or an individual retirement account (IRA), or have benefits in a defined benefit (DB) plan from a current or previous employer, were more than twice as likely as those without any of these plans to be very confident about their ability to retire (26 percent with a plan vs. 10 percent without a plan).

“Even if you control for discrepancies in age and income, the likelihood that a respondent is either somewhat or very confident that they will have enough money to live comfortably throughout their retirement years is 22 percentage points higher for those who have an IRA, DC plan and/or DB plan than their counterparts without a retirement plan,” said Jack VanDerhei, EBRI research director and co-author of the 2016 RCS report.

About two-thirds (66 percent) of those with money in an employer plan also report that they or their spouse have money invested in an IRA, which may have originated as a rollover from an employment-based plan.

Among other findings:

Assets. A sizable percentage of workers say they have no or very little money in savings and investments. Workers without savings are concentrated among those without a retirement plan; among these workers, 83 percent report that the total value of their household’s savings and investments, excluding the value of their primary home, is less than $10,000. In contrast, 35 percent of workers with a retirement plan say their value of these assets is $100,000 or more.

Debt. The presence of debt has a significant impact on workers’ confidence. In 2016, just 9 percent of workers who describe their debt as a major problem say they are very confident about having enough money to live comfortably throughout retirement, compared with 32 percent of workers who indicate debt is not a problem.

“Unfortunately, more workers see debt as a major problem, up to 15 percent this year from a low of 13 percent last year. But it’s quite a bit lower than the high of 22 percent set in 2011,” said Luke Vandermillen, vice president of retirement and income solutions at Principal Financial Group, which co-sponsored the RCS study. “Getting a handle on debt is one of the most important things workers can do to improve their financial situation.”

Retirement planning. Less than half (48 percent) of workers report that they or their spouse at some point have tried to calculate how much money they will need to have saved so that they can live comfortably in retirement. More than a third of all workers (39 percent) simply have guessed how much they will need to accumulate, rather than doing a systematic retirement needs calculation.

Workers who have done a retirement needs calculation tend to report higher savings goals than workers who have not done such a calculation.

Steady Savings Reaps Rewards

Another report on workers’ savings released in March found that 1in 3 U.S. workers had nothing saved for retirement. According to the savings survey by personal finance website

56 percent of U.S. workers have less than $10,000 saved for retirement.

Women were 27 percent more likely than men to have no retirement savings.

72 percent of Millennials have saved less than $10,000 for retirement―or nothing at all.

The survey asked 4,506 respondents, “By your best estimate, how much money do you have saved for retirement?” Responses were as follows:

Less than $10,000


$10,000 to $49,000


$50,000 to $99,000


$100,000 to $199,000


$200,000 to $299,000


$300,000 or more


I don’t have retirement savings


“The fact that so many Americans do have $300,000 or more saved for retirement goes to show how the amount of money in your retirement fund can grow over time if you are dedicated to contributing regularly,” said Kristen Bonner, GOBankingRates’ research lead for this survey—and that’s a message plan sponsors should be communicating to employees.

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow me on Twitter.

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