Fewer are Confident About Their Retirement

Below is a short article from the WSJ discussing the retirement plans of Americans. As you might expect fewer are confident they will be able to retire in the near future. The scary statistic is that 2/3s of potential retirees plan to work after retirement, but only about 35% have held down jobs in retirement. Text in bold is my emphasis.

A long-running survey about Americans' plans for their later years shows that workers' and retirees' confidence about their retirement security has deteriorated sharply during the past two years, to record lows.

In a sign of just how bleak the retirement landscape has become, the survey of 1,257 Americans found that the percentage of workers who say they are very confident about having enough money to retire comfortably has dropped to 13% this year. That's down from 18% in 2008 and from an all-time high of 27% in 2007. And it marks a record low for the 19-year survey, which the Washington, D.C., nonpartisan and nonprofit Employee Benefit Research Institute conducts with Washington public opinion and market research company Mathew Greenwald & Associates Inc.

Amid plummeting retirement-account balances and a poor economy, the results aren't surprising, says Jack VanDerhei, a survey co-author and research director at EBRI, which conducted this year's poll in January.

Retirees, Mr. VanDerhei says, are slowly waking up to what amounts to "a huge gap between what people think it's going to take to retire comfortably and what it actually takes." With 49% of people 55 and older having saved less than $50,000, many people will be forced to settle for a "much lower standard of living in retirement than what they had hoped for," he says.

More troubling, the survey found that 25% of today's workers are highly optimistic about covering such basic expenses as food and housing costs in retirement, down from 34% in 2008. Just 13% say they are very likely to have enough to defray medical expenses, down from 18% in 2008. Those figures are down from 40% and 20%, respectively, in 2007.

The deterioration in confidence was especially pronounced among workers ages 44 to 54, whose retirement-account balances will have less time than those of younger workers to recover from the recent stock-market meltdown. Confidence also was especially shaken among households with annual incomes of $75,000 or more, in large part because they had more money at risk in the stock market, Mr. VanDerhei says.

The survey paints a gloomy picture of the outlook for today's retirees. Among current retirees, only 20% -- versus 41% in 2007 -- are very confident of being able to afford a financially secure retirement. Just 25% say they expect to have enough to pay for medical expenses, down from 41% in 2007. And only 34% are optimistic about covering their basic expenses, compared with 48% two years ago.

The survey contained a few glimmers of hope. It notes that workers are taking steps to shore up their retirement savings. Among those who have lost confidence in their ability to retire comfortably, 81% say they have cut spending, 38% say they are working more hours or have secured a second job, 25% say they have sought advice from a financial professional, and 25% report saving more.

Just as important, few report cutting back on contributions to workplace retirement-savings plans. Among those participating, some 72% say they haven't changed the percentage of their salary they are funneling into these plans. Sixteen percent say they have increased their contribution rates, with just 11% cutting back.

Nonetheless, survey sponsors say, some of the steps workers are taking to bail themselves out may prove unrealistic. For example, some 25% of workers say they plan to postpone retirement. (The age at which workers say they plan to retire has crept up from a median of 62 in 1991 to 65 since 2004.) However, the survey notes that almost half of current retirees say they left the work force sooner than expected, frequently due to health problems, downsizings or obsolete skills. Moreover, while the survey has consistently found that about two-thirds of workers plan to work after retiring, fewer than 35% of current retirees say they have actually held down jobs at some point during retirement.