The good news is that the multiyear pandemic hasn't blunted American workers' confidence about living a comfortable retirement.
The bad news is that inflation and debt are starting to chip away at that belief.
These findings are detailed in the latest annual Retirement Confidence Survey, conducted by the nonprofit Employee Benefit Research Institute and Greenwald Research. Now in its 32nd year, it's the longest-running survey of its kind, measuring worker and retiree confidence about retirement.
“Even with the concerns of the pandemic and rising prices, overall, American workers and retirees still feel positive about their retirements,” Craig Copeland, director of wealth benefits research at EBRI, said in a statement. “The Americans who are more likely to feel that their futures appear grim since the pandemic are those who were already pessimistic about their futures, due to lower incomes, problems with debt, or lower health status.”
Americans generally remain optimistic about living a comfortable retirement, according to the survey's findings. Over 7 in 10 workers are at least somewhat confident, including almost 3 in 10 who are very confident. Retirees also remain confident, with nearly 8 in 10 confident they will have enough money to live comfortably throughout retirement, including 1 in 3 who are very confident.
The survey says the pandemic has had less impact on retirees’ confidence than on workers’. Nearly 7 in 10 retirees report that COVID-19 has not changed their confidence about their ability to live comfortably throughout their retirement. However, only half of workers report this.
Nevertheless, inflation fears are starting to erode confidence, even for those with bolstered savings. Almost three-quarters of retirees who feel more confident in their ability to live comfortably through retirement since COVID reported it was due to having money in savings or having good investments. But half of retirees who feel less confident blame that on inflation.
Retirees say that their lifestyle and spending in retirement for the most part are as expected, but slightly more than 1 in 3 suggest overall spending is higher than expected, according to the survey. This is an increase in those reporting higher spending, compared with the one-quarter who reported higher expenses in 2021.
Furthermore, compared with 2021, a larger share of retirees suggest spending on housing is higher than expected and more indicate that spending on travel and leisure are higher than expected.
“This could reflect increased use and desire for travel and leisure as the pandemic lulls. It can also reflect inflation and the increased cost of travel and entertainment for some,” Lisa Greenwald, CEO of Greenwald Research, said in the statement. “While it is hard to know which reason is driving the higher expenses, a strong majority of retirees still feel their retirement lifestyle and spending are on track.”
Debt is also challenging retirement preparedness, according to the survey. Nearly half of workers say debt has negatively impacted their ability to save for retirement. More so than last year, over 1 in 4 retirees say debt has impacted their ability to live comfortably in retirement.
The survey also found that many Americans don’t know where to turn or who to trust when it comes to information about financial and retirement planning. Almost 4 in 10 workers and 2 in 10 retirees say they don’t know who to go to for financial and retirement planning advice. Many turn to nonprofessional sources, like family and friends (35% of workers and 21% of retirees) or go online to do their own research (29% of workers and 23% of retirees), according to the survey.
That said, workers seem to be satisfied with their workplace retirement savings plans and with the tools and resources available, according to the RCS. More than 4 in 5 workers who are offered a workplace retirement savings plan are satisfied with the benefit. This is important given that workers (82%) remain far more likely than current retirees (47%) to expect their workplace defined-contribution retirement plan to be a source of income in retirement.
The survey of 2,677 Americans was conducted online Jan. 4–26. All respondents were ages 25 or older; they included 1,545 workers and 1,132 retirees.
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Survey findings from the Nationwide Retirement Institute offers pearls of planning wisdom from 60- to 65-year-olds, as well as insights into concerns.
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