Retirement confidence among American workers has reached a four-year low, according to the Unretirement Index, a poll of nearly 1,500 working Americans by Sun Life Financial Inc. After remaining stable for three years, retirement confidence dropped nearly 20 percent in September compared to the prior year.
The Unretirement Index measures five components, all of which dropped since last year. Nearly 32 percent of those surveyed said they were not confident about the benefits they needed to retire, including defined benefits plans and employee health benefits.
Only 23 percent of those polled felt confident they would meet basic living expenses in retirement, compared to 42 percent in 2010. One in five working Americans say they will never retire and confidence in the future of Social Security plunged to 9 percent in 2011, compared to 22 percent in 2008. Confidence about Medicare benefits also has plummeted to 8 percent in 2011, from 20 percent in 2008.
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Individuals who expect to receive guaranteed lifetime income from annuities by age 67 or who own long-term care insurance products said they feel significantly more confident about retirement.
"This represents the most significant drop in retirement confidence we've seen in the four years we've compiled the Sun Life Unretirement Index," said Wes Thompson, president of Sun Life Financial U.S. "Although the recession officially ended in 2009, average Americans feel that the downturn has not ended for them, which is substantially eroding their trust in their retirement future."
The overall Index is a composite score based on five subject areas, which all showed declines in confidence compared to last year. On a year-to-year basis, confidence dropped 31.7 percent in employee benefits, 25 percent in the economy, 21.6 percent in government benefits, 13.9 percent in personal finances and 13.2 percent in personal health.
The fall in sentiment across all five subject areas in 2011 represents a stark contrast from 2010, when confidence dropped regarding the economy and personal finances yet rose regarding personal health and employee benefits.
Sun Life Financial created the Unretirement Index in 2008 to gauge how changes in the economy, financial markets, societal forces and public policy affect working Americans' confidence about retirement. Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers.
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