The recent 2009 survey by Employee Benefit Research Institute (EBRI) finds that an increasing number of Americans are now less confident in their retirement savings. Workers who are very confident in having enough money for a comfortable retirement is now at 13%, which is the lowest since 1993 when EBRI started conducting these surveys. Continuing economic turmoil, job losses, inflation and cost of living are the main concerns. Larger numbers of Americans now are planning to either delay their retirement or are expecting to continue to work in their retirements to supplement their incomes. Workers are now trying to save more money and cut expenses. On a positive note, 75% of all workers respond that either they or their spouse now have retirement savings which is the highest ever measured.
On a worrying note, less workers are now agreeing with ‘You enjoy financial planning’ or ‘Over the long run, you believe stocks in general will be a very good investment’. Additionally, higher income workers are more likely to agree that stocks will be a very good long run investment compared to the lower income workers.
While the results are in line with what we suspected given the economic situation in the nation, it is still alarming to see that people are getting alienated from the good common sense financial planning ideas that have generally stood the test of time over a long period of time. There is a sense of “This time it is different kind of recession”. It is rarely different and we will come out of this recession as we have always done and stocks will continue to deliver the best long term returns as they have always done. Still, this is a good time to review your retirement plans and asset allocations and make sure that they are in line with your retirement savings goals and the risk tolerance. It also does not hurt to get in the habit of cutting expenses and maximizing your savings.
Source: Ruth Helman, Craig Copeland, and Jack VanDerhei, “The 2009 Retirement Confidence Survey: Economy Drives Confidence to Record Lows; Many Looking to Work Longer,” EBRI Issue Brief, no. 328, April 2009.