Retirement confidence hit hard in 2023: biggest drop since 2008

Retirement


Nearly half (46%) of workers say they need to save $1 million or more by retirement, but 40% of workers and 58% of retirees say they don’t have enough money for retirement, according to a new survey. Respondents said their account balances had decreased in the past 12 months.

(Photo: Shutterstock)

Both working and retired Americans are feeling very insecure about their finances and worry about the impact inflation will have on their savings and spending.

“The last time there was such a decline in confidence was in 2008, during the global financial crisis,” said Craig Copeland, director of research on wealth benefits at EBRI.

“This shows that the current economic climate, especially inflation, is eroding the confidence Americans had in preparing for retirement in the lead-up to the pandemic.”

Copeland discussed EBRI’s latest survey in the June 6 webinar, “Surprises and Expectations from the 2023 Retiree Confidence Survey.” EBRI found that in 2022, 73% of his workers are very or somewhat confident that they will have enough money to live comfortably in retirement. By 2023, that number has dropped to 64%.

“Why were people so confident or unconfident?” he asked. “The biggest thing for confident people was that they had enough savings and had the means to pay their bills. has saved enough.”

The biggest concern is that it differs slightly between active employees and retirees.

“Workers worry that their salaries won’t keep up with inflation and that their debt will rise, while retirees worry about living expenses and expenses,” said Greenwald, who partnered with EBRI on the study. Research CEO Lisa Greenwald said. “Half of retirees report their overall spending is higher than expected, up from a third last year, and the percentage of retirees who feel their retirement life is worse than expected. is gradually increasing.”

46% of workers said they need to save more than $1 million before retirement.

“People who did the math thought they needed more money than people who didn’t,” Copeland said. “There are even more concerns about how much they think they need to save. Only two-thirds of workers say they are saving for retirement, and virtually all are currently saving. They’re so used to it that it’s important to get others to save and save enough.”

Other important findings are:

  • Eighty-four percent of workers and two-thirds of retirees worry that the rising cost of living will make it harder to save money. Three-quarters of workers and 58% of retirees fear inflation will have to cut spending significantly.
  • Workers’ debt problems are likely to worsen in 2023, even though workers’ confidence in their financial savvy remains high. More than six of his 10 workers and more than one-third of his retirees report that debt is a problem.
  • 40% of workers and 58% of retirees said their retirement account balances had decreased in the past 12 months.
  • Many workers do not have access to professional sources of information and advice to help them improve their investment know-how, with only 20% relying on their workplace retirement plan provider.
  • Workers’ trust in Medicare has declined significantly, with only half feeling at least some confidence that Medicare will continue to provide benefits of the same value as they do today.
  • Despite down from last year, nearly two-thirds of employees are still confident they know how much to withdraw from retirement savings and investments.
  • When describing their wealth goals, half of retirees say they are trying to maintain their wealth levels. Fewer people are looking to increase their wealth than last year.

The survey results show that there are opportunities for employers and financial advisors to help workers strengthen retirement planning and savings.

“A big factor is getting people into retirement plans and building their retirement wealth,” Copeland said. “Creating that money out of your paycheck, or before it goes into your paycheck, and putting it into your workplace system contributions can make a big difference in how people prepare for retirement.”



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *