Retirement confidence has not recovered from 2023 drop, but workers are ‘optimistic’

Retirement confidence is on an upswing in America but still not at peak levels. A new report from Employee Benefit Research Institute and Greenwald Research, called The Retirement Confidence Survey, says there are signs that retirement confidence is making a positive recovery, as 68% of workers and 74% of retirees are confident they will have enough money to live comfortably throughout retirement. However, this is not a significant increase from last year.

The vast majority of workers (88%) expect Social Security to be a source of income in retirement. Retirees confirm this sentiment, as nearly all (91%) report Social Security as a source of income. However, nearly twice as many retirees (62%) report Social Security is a major source of income compared with the share of workers (35%) who expect it to be.

While most claim they understand Social Security, fewer than half of workers have reviewed the amount of their Social Security benefits at their planned retirement age, and 59% have thought about how the age at which they claim Social Security will impact the amount they receive. Expectedly, significantly more retirees than workers have completed either task, with 77% having undertaken each.

Boomers and millennials reported higher confidence in having enough money to live comfortably throughout retirement than Gen Xers. Why?

“Gen Xers are in that middle position where they are close to retirement but not actually there, so they understand the realities of retirement, but they also don’t have time to make up for lower savings since they are near retirement,” explains Craig Copeland, Director, Wealth Benefits Research with EBRI. “They were also the generation that experienced the switch from defined benefit plans to defined contribution plans without being told to save early and often and being covered by auto-enrolled plans to get them started. Whereas, the younger generations were faced with DC plan savings at the start of their career and auto features became common when they were younger, so they better knew to get started and were in an environment that made it automatic.”

The survey goes on to say that two-thirds of workers and almost three-quarters of retirees believe they have enough savings to handle an emergency expense. Additionally, almost half of workers have planned how they will cover an emergency expense in retirement. However, the ability to save for emergencies is at the top of workers’ list of valuable improvements they would like to see be made to their retirement savings plan.

“Workers are looking for help with emergency savings,” adds Copeland. “There is a strong interest in emergency savings accounts as a benefit associated with a retirement plan but could also be offered outside of the plan. Additionally, developing better metrics or information to show if workers are on track with their retirement savings. Providing options and tools for turning assets into income, whether that is guaranteed income products or other mechanisms is desired.

Lastly, some set of tools that examine workers’ total finances, so that they can make better decisions in regard to saving for retirement vs. debt. A financial coach could help in this role of balancing workers’ total finances.”

Related: U.S. retirement preparedness, confidence varies widely by demographic

As retirees head into lifestyle questions and issues, they are anticipating a better than expected retirement. Despite higher-than-expected costs, significantly more retirees this year — three in 10 — believe their overall lifestyle in retirement is better than expected. Additionally, over two-thirds of retirees agree they are having the retirement lifestyle they envisioned. A quarter of retirees strongly agree with this statement

Finally, not only are retirees managing their current expenses, but 58% say they are still saving for the future. In addition, they are planning for the next generation, as nearly two-thirds of retirees are confident they will have enough money to leave an inheritance.