After plunging to levels not seen since the so-called Great Recession, a new survey picked up on a burst of optimism in retirement confidence. And the picture of retirement FROM retirement looks pretty good.
In fact, two-thirds (68%) of the workers and three-fourths (74%) of retirees surveyed were very or somewhat confident about having enough money to live comfortably in retirement—unchanged from 2023, according to the 34th Annual Retirement Confidence Survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research.
A year ago, the survey (albeit canvassing different individuals) found that both workers’ and retirees’ confidence in having enough money to live comfortably throughout retirement dropped—the sharpest decline in confidence since the so-called Great Recession at a time when high inflation, volatile markets, and an uncertain job environment weighed on public sentiments.
Interestingly enough, Boomers and Millennials reported higher confidence in having enough money to live comfortably throughout retirement than Gen Xers.
However, inflation concerns continue to weigh on sentiment, and remains as a top reason for Americans’ lack of confidence. Among those who do not feel confident, 31% of workers and 40% of retirees cite inflation as the reason why. In fact, 7 in 10 retirees are concerned inflation will remain high, and 6 in 10 are concerned the economy will go into a recession in the next year. That said, 39% of workers and 27% of retirees who are not confident feel this way due to their lack of savings.
Social Insecurities?
While the survey found that most workers (88%) expect Social Security to be a source of income in retirement, and two-thirds of workers and three-quarters of retirees claim to understand Social Security and the various employment and claiming decisions that impact their retirement benefits at least somewhat well, fewer than half of workers have reviewed the amount of their Social Security benefits at their planned retirement age, and only 59% have thought about how the age at which they claim Social Security will impact the amount they receive (and, despite their claiming status, just 77% of retirees have).
Workers believe they will start claiming Social Security benefits at a median age of 65, which is the same age workers expect to retire (though that’s no longer full retirement age (FRA) for Social Security). However, most retirees, 7 in 10, report retiring earlier than age 65, with a median retirement age of 62. Also contradicting workers’ expectations, retirees report collecting Social Security later into their retirement but earlier than workers’ expectations at around age 64.
Consistent with last year’s findings, half of retirees say they retired earlier than expected—though not all for “bad” reasons. While 2 in 5 retirees who retired early say they did so because they could afford to, nearly 7 in 10 retirees indicate the reason was out of their control.
Retirement Reassuring
That said, the picture from actual retirement is pretty reassuring; while over half of retirees say their overall expenses in retirement are higher than they originally expected, nearly 4 in 5 say they are able to spend money how they want, within reason. Moreover, despite those higher-than-expected costs, significantly more retirees this year—3 in 10—say their overall lifestyle in retirement is better than expected. Additionally, over two-thirds of retirees agree they are having the retirement lifestyle they envisioned—a statement with which a quarter of retirees strongly agree.
Over half (58%) are still managing to save for the future, and nearly two-thirds of retirees are confident they will have enough money to leave an inheritance (and that’s with about 7 in 10 retirees disagreeing that they need to spend less than they could because they would like to leave a legacy inheritance.
And while three-quarters of workers expect to work in retirement, just 3 in 10 retirees report they actually do.
‘Much’ Ado?
Once again, (just) half of Americans have tried to calculate how much money they will need in retirement—and among those who had, 52% of workers and 44% of retirees started to save more. And once again, the RCS cites retirement income expectations that seem wildly out of line with surveyed respondents’ saving realities (though there’s no delineation by age or tenure in the report that might provide more context).
Despite published reports about gaps in emergency savings, the RCS found that two-thirds of workers and almost three-quarters of retirees believe they have enough savings to handle an emergency expense—and nearly half of workers say they have planned how they will cover an emergency expense in retirement.
As it has in previous years, the RCS found that workers are interested in having investment options that provide guaranteed lifetime income—an option that was second on workers’ list of most valuable improvements to their plan. While over half of workers expect a guaranteed income product to be source of income in retirement, only about a quarter of retirees indicate it is a source of income (one assumes that is not taking into account Social Security).
The 2024 survey of 2,521 Americans (1,255 workers and 1,266 retirees) was conducted online from Jan. 2-31, 2024. All respondents were ages 25 or older and were prompted to respond to questions about retirement confidence, financial health and concerns, retirement savings and preparation, healthcare in retirement, workplace savings, retirement income, transition to retirement and trusted sources of information.
The 34th annual RCS report can be viewed by visiting www.ebri.org/retirement/retirement-confidence-survey.
