I'll never forget my first day of driver's ed class. This was at a time when it was still part of the "regular" school curriculum, and we were placed in groups based on whether we had actually driven a car before.
Now, at the time, the extent of my driving was no more than backing the family car up and down our short driveway. But driving looked easy enough, and my friends were in the "having driven" group, so I confidently "fudged" the extent of my experience and shortly found myself behind the wheel of the driver's ed class car, along with my high school basketball coach/instructor and a couple of my friends in back.
To make a long story short, there was quite a bit of difference between backing a car up and down a driveway and navigating a car on the open road. And, but for the extra brake on the instructor's side of the vehicle, I might have spent my first driver's ed class waiting to be pulled out of a ditch, my confidence notwithstanding.
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Earlier this year, the 23rd annual Retirement Confidence Survey got a lot of attention. The headlines were mostly about Americans' lack of confidence in their prospects for a financially secure retirement; indeed, the percentage "not at all confident" hit an all-time high for the survey, while the percentage "very confident" remained at the all-time low it notched a year ago. A striking number of inquiries about the report focused on what could be done about retirement confidence.
As it turns out, there are several things that the study linked to higher confidence: having more retirement savings is perhaps the most obvious connection, and so is participation in a workplace retirement savings plan (which was also linked to larger savings balances). However, the survey also found that something as fundamental as having taken the time to do a retirement needs assessment made a positive difference in confidence – even though those who had done such an assessment tended to set higher savings goals. However, fewer than half of workers responding to the survey have completed this assessment, and many of those who have made an attempt to figure out how much they might need do so by guesswork.
Still, asked how much they need to save each year from now until they retire so they can live comfortably in retirement, one in five put that figure at between 20 percent and 29 percent, and nearly one-quarter (23 percent) cited a target of 30 percent or more. Those targets are larger than one might expect, and larger than the savings reported by survey respondents would indicate. They do, however, suggest that some are beginning to grasp the realities of their situation – a realization that could be weighing on their confidence in the future, even as it lays the foundation for change.
Because what really matters is not how confident you feel, but whether you have a reason to feel confident.
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