Employee Benefit Research Institute - A Recent Survey

A recent survey by the Employee Benefit Research Institute (EBRI), '2016 Retirement Confidence Survey' shows a fairly disturbing level of complacency amongst today's workforce. It was published to coincide with the annual Aging in America Conference with respondents being 1,000 workers and 500 retirees. Consumer confidence in the USA has been rising since the end of the recession but there seems to be little justification in the increase in the number of workers who are more confident about having sufficient for a comfortable retirement, especially because the Social Security System is certainly not geared to be more than support.

In 2013, 13% anticipated a comfortable retirement. It has risen to 21% today. During the later years of the recession the percentages were at an all-time low. There is an additional 42% that describe themselves as somewhat confident so in total there is over 60% that appear to be fairly happy. The figures simply fail to back up their confidence.

Here are a few of the figures to illustrate the point:

  • Amongst the age group under 35 years of age, 60% have less than $10,000 saved and a further 15% less than $25,000. Obviously the bulk of this age group believes it still has plenty of time.
  • Those between 35 and 44 are a little better off but 50% still have less than $25,000.
  • With retirement not that far away, those between 45 and 54 don't fare much better47% still have less than $25,000 though 35% have more than £100,000.
  • In the age group within 10 years of retirement 45% have more than $100,000 yet 33% have less than $25,000 and 17% of them have virtually nothing.

Plenty of people have no retirement plans which begs the question whether it should be compulsory of employees to offer their workforce some form of retirement scheme. Years ago many employers offered guaranteed plans but the 401k is a plan where the responsibility for its performance is entirely down to the individual. Employers have little responsibility these days as guaranteed plans are no longer popular; surprisingly.

Needs

Those who begin to save for retirement in the 20s just need to save a small amount regularly. The longer they wait to start the higher percentage of their monthly income will need to go into the plan. While 15% is a good figure for those who have started young, the percentage should be 20% or more for those that haven't. It seems that 25% of respondents have little idea about what they will need in retirement or any real plan about how they will fund themselves beyond the Social Security System.

It appears that a fair number think they can work part-time after they effectively retire but surely this is a gamble? While life expectancy has improved there is a sizeable number of people who retire early due to ill-health.

Misplaced Confidence?

All in all it does beg the question as to why there is relative confidence within the USA. The problems relating to the Social Security System merely compound the problem. It was never intended to be more than support to other retirement provisions. The System is in trouble and in desperate need of extra funds. It is thought that by 2030 benefits will have to fall by 25% in order for them to be maintained.,

The next issue has been the relative poor performance of 401ks which inevitably were hit by the recession meaning that few grew through those years and it is impossible to get those years back. Unemployment grew through these years as well so the number of plans in existence fell.

Manage your Finances

Perhaps by now you will have realized that you need to act and that begins by looking at your current financial position. A budget, listing income and expenditure will reveal whether you are in control of your finances:

  • If you are paying high interest of credit card balances then you should look for a cheaper personal loan to pay such balances off completely and never build up a balance again you must look quickest money & top lending services.
  • You should check periodically whether you are getting the best possible deal on utilities, insurance and telephone network. Comparative websites will do much of the preliminary work for you.
  • Are you spending too much on eating out, coffee and sandwich shops? Your daily spending adds up over a month.
  • You may have scope to increase your income as well but often it is expenditure that needs to be controlled. Anything you are able to save should be put aside for retirement. It may start at a low level but if you are setting out on a career then you find your income rising and your potential to save likewise.

    Do nothing and you are taking a serious risk!

    Read more Comments