People have calmed down since the Great Recession, yet research shows many are actually more confident than they should be given their savings situation.
Meet the worriers — the people who are afraid they won’t ever be able to retire or that they will run out of money too early in retirement.
Three out of 10 say they are so stressed out they even think about it at work, according to the Employee Benefit Research Institute (EBRI), a research organization that has been examining for years how prepared Americans are for retirement.
The findings show people have calmed down since the Great Recession, when a broad swath of Americans were horrified as they lost jobs and as the stock market crashed and destroyed a significant portion of the savings they’d worked hard to accumulate.
Now, most are back at work, home values are recovering and the stock market has been kind to anyone with money in a 401(k). Measures of consumer confidence show Americans having a bright view of their future.
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Yet, while people generally are optimistic now about their jobs and putting food on the table, the optimism wanes for many when they ponder whether they will be OK in retirement. According to the EBRI study, only 18 percent are very confident they will have the savings they need for a comfortable retirement.
About a third of people aren’t confident they will be able to cover basic living expenses in retirement. Paying for doctors, hospitals, medicine and other medical care is also a major concern.
About 45 percent of Americans aren’t confident they will be able to cover their medical expenses once they’re retired. If they think ahead about the possibility of a long illness or injury that would leave them unable to care for themselves without help in their homes, 57 percent get worried.
That’s not an unreasonable fear considering estimates of health-care costs in retirement.
According to Fidelity Benefits Consulting, a couple who retired at age 65 last year likely will need $260,000 to cover health-care needs beyond those covered by Medicare. To cover long-term-care needs, Fidelity suggests an additional $130,000.
Only 22 percent of workers aren’t at all stressed about preparing for retirement. And stress is hitting people hardest in their mid-40s, when they start to realize that they are aging and haven’t come up with the savings they thought would materialize as they got older.
People who are already deep into retirement worry the least, according to EBRI research.
“It’s great to have Social Security checks arrive each month and not to have to worry about being fired or laid off,” said Craig Copeland, a senior researcher at EBRI.
Yet EBRI found many are actually more confident than they should be, Copeland said.
Among the people closest to retirement — baby boomers 55 to 64 years old — only 57 percent are likely to have the savings they need to last through retirement.
Income makes a difference, but is not the only factor. Among the upper quarter of earners, 86 percent have been saving enough to cover retirement needs, Copeland said. Among lower middle-income people, it’s 53 percent and among higher middle- income people 72 percent should have enough to cover basic expenses.
Despite income, the people feeling the most comfortable are those who have been doing some saving for retirement. About 56 percent were saving when surveyed by EBRI. Most of those who had 401(k) plans at work were doing some saving, but few save if they don’t have a workplace retirement savings plan like a 401(k).
Yet even among people saving for retirement, EBRI found stress arising from the fact that people weren’t sure if they’d saved enough or worried because they thought they were far behind.
About 54 percent were promising themselves that they’d save more later. But the survey shows what other research has shown: People are procrastinators and “later” often never arrives.
As a result, people in sorry shape for their futures look for another way out. In the EBRI survey, 57 percent said they will work longer than they expected and retire later. That’s a fine plan for people who are short of money as they approach retirement age, but it’s not a solid plan. Surveys of current retirees have shown that most people who had planned to work longer were forced by health issues or layoffs to give up on the plan.
Before worrying, check to see if you are on course with your retirement savings. Do the ballpark estimate at www.choosetosave.org/ballpark/index.cfm?fa=interactive.