Retirement confidence shaky, but ‘heading in the right direction’: EBRI

While confidence has risen slightly, just 2 in 10 workers are very confident in having enough money to live comfortably in retirement, according to an Employee Benefit Research Institute survey, which was highlighted at a recent EBRI “2024 Retirement Confidence Survey” Results and Insights” webinar.

“Retirement confidence went down for workers in 2023,” said Craig Copeland, director, Wealth benefits research, on the webinar. “We had one of the largest percentage point declines since 2008, 2009 … a lot of that impact was the high inflation during 2022.” However, “it’s heading in the right direction,” he said.

While there are signs that retirement confidence is making a positive recovery, workers still have concerns:

• 83%: Increasing cost of living will make it harder for you to save as much money as you want
• 79%: The U.S. government making significant changes to the American retirement system
• 78%: Inflation will stay high for at least the next 12 months
• 72%: Housing costs will rise
• 71%: The U.S. economy will go into a recession in the next 12 months

For workers, “there are actually different components of retirement confidence,” said Lisa Greenwald, CEO, Greenwald Research, which include:

• 76%: Enough money to take care of your basic expenses during retirement
• 68%: Doing a good job of preparing financially for retirement
• 66%: Enough money to take care of medical expenses during retirement
• 62%: Enough money to keep up with the cost of living/inflation
• 62%: Enough money to last entire life

For one-third of workers, saving for retirement is just not a priority relative to their present needs, particularly those impacted by debt. Consistent with last year, nearly half of workers (47%) agree their debt negatively impacts their ability to save for retirement, said Greenwald.

“There are a number of reasons why saving for retirement wouldn’t be top priority,” she said. “Nearly half of workers (47%) agree that debt is negatively impacting their ability to save for retirement.” Other priorities include building an emergency fund, saving for major purchase, starting a health savings account, saving for an expensive vacation and buying a car.

“So the takeaway for those of you who are responsible for employee benefits,” said Peter Kapinos, Head, Workplace & Investment Marketing, Empower, “is that you’ve got a lot of competing priorities so if they don’t solve for the things outside of retirement, people aren’t going to defer or save as they should.”

He suggested combining the retirement plan with other goals, “so, for example, if you have financial wellness programs where your retirement plan is the centerpiece, but you can weave in other messaging, chances are you’ll get people who are more confident when they feel they are in more control of their competing financial goals.

“We rolled out a different dashboard view of our participant website where people can link accounts, they can create a budget, they know what they’re spending vs. savings is, that group of individuals are savings 30% more than those that perhaps those who aren’t using those extra tools.”

Related: Americans have high anxiety about their retirement: How employers can lend support

Kapinos also mentioned a survey Empower conducted that asked Americans if they needed retirement coaching. “Two in five Americans (44%) said they wish their employer offered more one-on-one financial help,” he said. Some other statistics from the survey:

• 39% say their employer doesn’t offer enough financial planning support
• 71% say retirement plan matching is a top employee benefit
• 54% wish their job automatically enrolled them into a 401(k) plan

Overall, said Kapinos, 67% of employees believe their employer has a responsibility to help with financial planning, “especially for organizations with 401(k) options. People feel if that’s where my nest egg is, that’s where my planning should come from as well.”