The Employee Benefit Research Institute (EBRI) recently released their retirement confidence survey, and the news is sobering. 28 percent of Americans are "not at all" confident that they will have enough money to retire comfortably -- the highest level in the study's 23-year history -- and 21 percent are "not too" confident.
The survey notes that Americans have financial issues other than retirement on their minds: both workers and retirees are most likely to identify job uncertainty (30 percent of workers and 27 percent of retirees) and making ends meet (12 percent each) as their primary concerns.
The Society of Actuaries (SOA) updated its mortality projections, and the results confirm that Americans are indeed living longer. In the past 50 years, life expectancy for newborn American males increased by an average of almost two years each decade, from 66.6 years in 1960 to 75.7 years by 2010. For females, the average increase was about 1.5 years per decade, from 73.1 years in 1960 to 80.8 years by 2010. The SOA figures show that males have a 40 percent chance and females have more than a 50 percent chance of living to age 85 (if they reach age 65 and are in average health).
Longer life expectancy means that Americans need to save for two decades of retirement, which explains why many of those surveyed by EBRI are planning to retire at an older age. In 1991, just 11 percent of workers expected to retire after age 65. In 2013, that number more than tripled to 36 percent. Additionally, the percentage of workers expecting to retire before age 65 is now half of what it was two decades ago: down from 50 percent in 1991 to 23 percent in 2013!
Although I have extolled some of the benefits of working longer, the bitter truth is that many 60-somethings may have jobs that are too physically demanding to continue late in life, while others may not be lucky enough to keep their jobs. In fact, while 69 percent of workers say they plan to work for pay after they retire, only 25 percent of retirees have said that they were able to work after retirement.
Prior to the advent of 401(k) plans in the 1980s, many Americans were covered by pension plans, which provided a fixed, guaranteed retirement income. Those days are long gone, according to EBRI. The portion of private-sector U.S. workers covered only by so-called defined benefit plans fell to 3 percent in 2011, down from 28 percent in 1979. Today, American workers face the difficult task of saving for retirement on their own.
The tricky part of funding retirement is that it works best when workers' incomes rise at a quicker pace than inflation. This is where the best intentions for retirement savings may have broken down. Economist Emmanuel Saez of University of California, Berkeley, has recently updated his analysis of income inequality, and the results are sobering. During the recovery from the Great Recession, Saez notes that "real income per family grew modestly by 1.7 percent but the gains were very uneven. Top 1 percent incomes grew by 11.2 percent while bottom 99 percent incomes shrunk by 0.4 percent."
The income gap has become evident in the retirement savings results. 57 percent of workers report savings and investments (excluding their homes and defined benefit plans) of less than $25,000, while 12 percent have $250,000 or more.
After looking over these numbers, it's easy to see why so many Americans are feeling less than confident about retirement. Of course, with anxiety levels high, it's too bad that only 46 percent report that they and/or their spouses have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably. If you haven't calculated yet, head to EBRI's Choose to Save Ballpark E$timate.
We're all rather nervous about new retirement these days; however, with some diligent research and careful planning, a confident, comfortable retirement is still within our reach.
(Jill Schlesinger, CFP, is the Editor-at-Large for http://www.CBSMoneyWatch.com. She covers the economy, markets, investing or anything else with a dollar sign on her podcast and blog, Jill on Money, as well as on television and radio. She welcomes comments and questions at firstname.lastname@example.org.)