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Retirement Plan Savers More Confident, EBRI Finds

Some rays of sun appear to be dispelling the gloom that has long engulfed employees’ confidence in their ability to fund a comfortable retirement. The Employee Benefit Research Institute in its 2014 Retirement Confidence Survey (RCS) reports that more than half of employees are at least somewhat confident of that.

While confidence in the ability to save is up, EBRI found it primarily among retirement plan participants. “Retirement confidence is strongly related to retirement plan participation,” EBRI Research Director Jack VanDerhei said in a press release. “In fact, workers reporting they or their spouse have money in a DC plan or IRA or have a DB plan from a current or previous employer are more than twice as likely as those without any of these plans to be very confident.” EBRI also found the rebound especially pronounced among those with higher household income. 

The findings of the 24th annual RCS suggest the recovery is one of perception more than one based on hard figures. EBRI reports that worker savings remain low and a minority are taking basic steps to save. And according to VanDerhei, the higher confidence may be attributable to rising real estate values and a strengthening stock market. 

Savings levels also are tied to retirement plan participation. According to the RCS, 90 percent of retirement plan participants told EBRI they have saved for retirement, versus 20 percent of non-participants. 

And those who consider debt to be a major problem are not confident. Matt Greenwald of Greenwald & Associates, which was a co-sponsor of the survey and conducted it, reported that 3 percent of those workers are very confident that they will be able to retire comfortably. That’s not an insignificant segment: 58 percent of workers said their debt was a problem. 

The RCS shows that there is more to do to educate workers and encourage them to save for retirement. Its findings also show:

  • most workers have not estimated their retirement savings needs;
  • few workers seek financial advice;
  • few workers who obtain financial advice follow it; and
  • a majority of workers expect to work during their retirement. 

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John Iekel is Senior Writer at ASPPA, as well as Editor of the ASPPA Net and NTSA Net web portals.