Job Insecurity Drains Retirement Confidence

Every year, the Employee Benefits Research Institute (EBRI) delivers an insightful glimpse into how Americans are preparing for retirement – and how they feel about their future prospects. This year, American’s confidence in their ability to retire comfortably sits at a historically low level. Just 14 percent are very confident they will have enough money to live comfortably in retirement.

Significantly, employment security is a great worry. Forty-two percent identify job uncertainty as the most pressing financial issue facing most Americans today.

Why is the outlook so bleak? Many workers report they have virtually no savings and investments. Sixty percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

Moreover, 25 percent of workers say the age at which they expect to retire has changed in the past year. In 1991, 11 percent of workers said they expected to retire after age 65, and by 2012 that more than tripled to 37 percent.

Is there hope for this situation to turn around? The answer to that question can be found in what I see as the most disturbing part of this year’s study. More than half of workers (56 percent) report they and/or their spouse have not tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement. Study after study proves that investors who have a financial plan are better able to ride out tough times in the market and succeed in meeting their goals, and yet individuals and families continue to procrastinate and ignore the need to plan and save for their future. If you find yourself in this 56%, an excellent first step would be to meet with an advisor who operates under the fiduciary standard to review your situation and develop a plan.