- Eighteen percent of workers are now very confident, up from 13 percent in 2013
- Retiree confidence increased even more with 28 percent now very confident, up from 18 percent in 2013
The increase in confidence was almost exclusively among those with higher household income and those participating in a retirement plan—defined contribution, defined benefit, or individual retirement account (IRA). The percent of workers in a plan who are very confident increased from 14 percent in 2013 to 24 percent in 2014. Only nine percent of those not in a plan were very confident, essentially unchanged from 10 percent in 2013. Workers without a plan are four times (46 percent) more likely to say they are not at all confident about retirement than those with a plan (9 percent).
Overall reported worker savings remain low and only a minority appear to be taking basic steps to prepare for retirement. Managing daily expenses and the cost of living are the number one reasons workers give for not saving more. Debt is a problem for 58 percent of workers. The exception is among those who have taken some kind of action to plan and save.
“Our analysis shows those who are participating in a retirement plan, have calculated their savings need or worked with a financial professional are not only more confident, they have less debt and higher levels of savings,” said Greg Burrows, senior vice president of retirement and investor services at The Principal?. “Having a plan for both spending and saving can help manage short term needs and pave the way for more security in the future. The key is to take action.”
The Principal analysis of the survey data found those in a retirement plan were twice as likely to calculate their retirement need, receive investment advice from a financial professional and report they retired as planned.
Among other key findings available on the EBRI website at www.ebri.org:
- Workers have high savings goals: Twenty-two percent of workers say they need to save between 20 and 29 percent of their income. Another 22 percent indicate they need to save 30 percent or more. However, those without a retirement plan (IRA, defined contribution, or defined benefit) are more likely to set the target at 50 percent of income or to say they don’t know how much they need to save.
- Most haven’t calculated savings needs. Only 44 percent of workers report they and/or their spouse have tried to calculate how much money they will need to have saved for a comfortable retirement. But workers who do, tend to have higher levels of savings and confidence than those who have not.
- Best laid plans: Sixty-five percent of workers expect to work for pay in retirement but only 27 percent of retirees report they actually do work for pay in retirement. Nearly half say they retired earlier than planned due to health reasons.
Download the infographic and view the full results at www.principal.com/banners/landing/2014-retirement-confidence-survey.htm or www.ebri.org.
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About the Retirement Confidence Survey
This is the 24th annual Retirement Confidence Survey, making it the longest-running annual survey of its kind in the nation. The Retirement Confidence Survey is conducted by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates. The Principal Financial Group is among about two dozen organizations that provided funding for the survey.
About the Principal Financial Group
The Principal Financial Group (The Principal®)1 is a global investment management leader offering retirement services, insurance solutions, and asset management. The Principal offers businesses, individuals, and institutional clients a wide range of financial products and services, including retirement, asset management, and insurance through its diverse family of financial services companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal Financial Group has $483.2 billion in assets under management 2 and serves some 19.4 million customers worldwide from offices in Asia, Australia, Europe, Latin America, and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit principal.com.
1 “The Principal Financial Group” and “The Principal” are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2 As of December 31, 2013.