Many American Workers Are Completely Unprepared for Retirement
The EBRI (Employee Benefit Research Institute) recently released their 2010 Retirement Confidence Survey, and the information contained in the report was alarming to say the least.
Given the current state of the economy (soaring unemployment rates, tightening credit markets, declining real estate values), it can hardly be surprising that many Americans are struggling just to make ends meet. Many households that traditionally have had two incomes are now relying on one, and many of these households have had to raid their retirement savings in order to make ends meet.
Many people are doing what they can to survive. However, this does nothing to change the sad state of affairs that many Americans are facing when it comes to their retirements.
The EBRI conducted a survey of 1,153 people (902 working Americans and 251 retirees) over the age of 25. Here were some of the pieces of data contained in the report that jumped out at me:
-46% of workers haven't sat down and figured out how much money they will need to retire
-24% of workers have indicated that they have had to push back their planned retirement age
-27% of workers have less than $1,000 in savings
-54% of workers have less than $25,000 in savings, excluding the value of their home and defined benefit plans
-69% of workers/spouses surveyed have saved for their retirements
-29% of workers feel "very" confident about eventually having enough money to pay for basic expenses during retirement
-33% of RETIREES feel "very" confident about continuing to have enough money to pay for their basic expenses during their retirements
-16% of workers feel "very" confident that they will have enough money for a "comfortable retirement"
-54% of workers feel that they need at least $500,000 for retirement
-77% of workers expect to receive money from Social Security, down from 88% in 1991
-11% of workers surveyed are likely to purchase a guaranteed income plan for their retirements
-19% of workers and 22% of retirees are confident in banks, while even less (12% and 13% respectively) maintain confidence in insurance companies
The bottom line - many American workers are thoroughly unprepared for retirement. With modern medicine extending the life span of the average American, many retirees will need to pay the bills for 25-30 years after hitting retirement age. Given the current state of many bank accounts and retirement savings accounts in the United States, many Americans will be forced to continue working well past retirement age.
This will obviously create a chain reaction that will result in less jobs being made available to younger generations, which will result in them having trouble saving for retirement as well.
The real estate and stock market declines over the past 2-3 years have delayed the retirement plans of many as well. There are many people out there who basically had their entire net worth tied up in their homes, and now a great number of these homes are down 20,30, 40 or even 50%.
It's ugly out there.
Source: EBRI.org - The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations Continue to Erode
Filed under: The Economic Meltdown