The retirement prospects for Americans are bleak.
gallup poll Workers’ expectations for a comfortable retirement are their lowest in a decade, according to this week’s survey. Nearly 6 in 10 (57%) of her who have not yet retired anticipate a shortage.
This is up from 52% who were pessimistic last year, 47% in 2021 and 43% before the pandemic. Meanwhile, 77% of his retirees say they have enough money to live comfortably, a similar sentiment last year.
Differences in outlook between working Americans and retirees also extend to expectations about when people will retire, whether they will work, and their primary source of retirement income, although the latter workers are is increasing revenues to make up for the bleak outlook for
“Among U.S. non-retirees, expectations for a financially comfortable retirement are at their lowest levels in more than a decade,” Gallup senior editor Megan Brennan told Yahoo Finance. Told. “Over the past two years, high inflation and recession fears have made less than half of non-retirees optimistic about retirement.”
According to the latest poll, more than 42% of working Americans are currently very concerned about their ability to prepare for retirement, and more than 7 in 10 say they I’m at least somewhat uneasy.”
The results of this year’s poll are based on telephone interviews conducted April 3-25 with 1,013 adults as part of the annual Economic and Personal Financial Survey.
Gallup survey results line up recent investigation A study by the Employee Benefits Research Institute (EBRI) and Greenwald Research found that the confidence Americans feel they have enough money for a comfortable retirement has seen the biggest drop in 15 years. It is reported that
“The most important finding is the decline in confidence in retirees, something that hasn’t happened since 2007-2008 and 2008-2009, when the economy was in recession,” said EBRI’s HNWI Benefits. Research director Craig Copeland previously told Yahoo Finance.
“Americans are reacting the same way they did during a recession,” he added. “Current economic conditions are not the best, but we are not in recession.”
Gallup research shows that Americans’ bleak retirement prospects also vary widely by demographics.
“The majority of some demographic groups, such as high-income earners, college graduates, and young people under 30, have a positive outlook on retirement,” Brennan said.
About a third of women (36%) said they thought they had enough money to retire comfortably, compared to half of the men surveyed. And while more than half of Americans between the ages of 18 and 29 are confident they’ll be okay, more than half of workers nearing retirement (ages 59 to 64) believe they’ll be okay financially. Fewer than 4 in 10 (39%) said yes.
High-income and college-educated Americans were also fairly optimistic about their chances of avoiding the savings shortfall. More than half of college graduates believe they have enough money to live comfortably, as do nearly two-thirds of the highest earners surveyed.
Workers’ expectations for the rest of retirement are also significantly different from the experience of current retirees.
For example, there is a huge gap between when people retire and when they actually do. The average age at which non-retirees expect to retire is 66, while the actual average age at which retirees report they have retired is 62.
One in four workers (39%) is expected to retire at age 65 or older, according to Gallup data. Just under one in three (32%) said they would retire before age 65.
There is also a false expectation among workers that they will be paid for their work after retirement.Gallup data shows that 20% of workers plan to get paid after retirement, while retirees who do Only a minority (3%).
There are many reasons why that desire is dashed, from health problems that prevent people from continuing to work, to caregiving obligations, and biased attitudes towards the elderly. employer Recruitment becomes difficult.
Finally, workers have different ideas about where their retirement income will come from.
Only 34% of workers expect social security to be their main source of income after retirement, and 59% of retirees say it will. This disparity may reflect concerns about the future of social security.
recent annual report Social Security reserves are projected to dry up in 2033, at which point the program showed that only 77% of benefits could be paid to older people.of influence For many workers who plan to rely on Social Security for a large portion of their retirement income, this will be a serious concern.
Meanwhile, 48% of those still working expect to rely on a retirement savings account such as a 401(k) or IRA in their golden years, compared to 27% of retirees who think so. .
That may be why working Americans seem to be saving more.
This week, Fidelity announced its retirement trends for 2023. analysis We found that the total 401(k) savings rate was on the rise.
The gross savings rate, which reflects combined employer and employee 401(k) contributions, improved to 14% in the first quarter (compared to 13.7% in the fourth quarter of last year, down from what was seen at the market’s opening). savings rate) early 2022 volatility.
Baby boomers, who are still in the labor force, are spending the highest levels of savings of any age group (16.7% vs. 16.5% last quarter), and Generation Z savings levels have likewise edged up. (10.5% vs. 10.2% last quarter). The average 401(k) balance for Boomers is now $215,000. $145,000 for Gen X.$44,900 for millennials, according to Fidelity break down.
“This quarter’s data shows that baby boomers are saving at a very healthy pace,” Michael Shamrel, vice president of workplace thought leadership at Fidelity, told Yahoo Finance. “Additionally, boomers are taking advantage of IRS ‘catch-up’ contributions that allow them to save additional money in their 401(k) beyond their normal limits, helping them reach their retirement savings goals. will help.”
One reason for the rising savings rate is that many employers’ retirement plans now offer a feature that allows savers to automatically increase their contributions each year.
Automatic escalation is designed to periodically increase your contribution rate to your 401(k) plan. For example, if you set the automatic escalation rate to 1% annually, your contribution rate will increase by 1% each year.
“Account contributions are increasing because more participants are taking advantage of the auto-increase feature of their 401(k) plans,” Shamrel said. “As of the first quarter of 2023, 70% of employer plans offered an automatic increase feature and 17.4% of workers increased their contribution rate. one-third of” employees are actively engaged. ”
Kelly Hannon is a senior reporter and columnist at Yahoo Finance. She is a workplace futurist and career and retirement strategist, author of 14 books including In Control at 50+: How to Succeed in The New Work of Work and Never Too Old To Get Rich. is also the author of the book follow her on her twitter @Kelly Hannon.
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