Even in the face of a global pandemic, findings from EBRI’s annual Retirement Confidence Survey (RCS) show little change in overall levels of retirement confidence, and that was especially true for those with a workplace retirement plan.
Now in its 31st year, EBRI’s 2021 RCS conducted with Greenwald Research found that 72% of workers express confidence in their ability to retire comfortably, which is actually up three percentage points from when the survey was last fielded in March 2020. Similarly, 8 in 10 retirees are confident in their ability to live comfortably throughout retirement, comparable to the 76% of retirees who were confident in last year’s survey.
The 2021 RCS was fielded in January, but last year it was fielded twice—once in January prior to the COVID-19 outbreak and then refielded through a supplemental survey in March 2020, allowing for comparisons before and during the pandemic.
Craig Copeland, EBRI senior research associate and co-author of the report, observes that the results are consistent with prior years, which, he says, is notable given what has happened during the past year. One possibility is that because the survey was conducted in January, there may have been more optimism for the future with the rollout of vaccines and loosing of restrictions.
Access Matters
Consistent with earlier years, the findings underscore the importance that workplace retirement plans play in helping retirement confidence stay high, as those with plans are far more likely to be confident in retirement prospects and have significantly higher balances.
Among workers who provided the value of their savings and investments outside of the value of their home and any DB plan assets, 33% report that they have $250,000 or more in assets and 21% have less than $10,000.
Consider, however, that the savings and investments between those with and without a retirement plan are starkly different. For those with a retirement plan, only 12% report less than $10,000 in savings and investments and 39% have $250,000 or more. In contrast, EBRI found that 65% of those without a retirement plan have less than $10,000 in savings and investments, and only 2% have $250,000 or more.
The findings were just as glaring for retirees. More than half (54%) of retirees with a retirement plan report having $250,000 or more in savings and investments, while only 11% have less than $10,000. By contrast, 62% of retirees without a retirement plan reported having less than $10,000 in savings and investments, while only 5% of retirees without a retirement plan have $250,000 or more.
COVID Impact
“Even with changes in the labor market, workers’ confidence in their ability to live comfortably in retirement remains high overall,” notes Copeland. “However, while resilience may be the watchword for 2021, 3 in 10 workers say the pandemic has negatively impacted their ability to save for retirement, due to reduced hours, income, or job changes.”
According to the findings, 4 in 10 workers report that their household experienced income or job loss in the past year, and half of those who had this negative experience report feeling less confident they will have enough money for a comfortable retirement. And while a majority still feel optimistic, workers who experienced income or job loss (68%) are less likely to describe themselves as confident, compared with 75% of those who did not experience this. Moreover, the group that was most likely to have their ability to save impacted were those that were more likely to have low confidence historically, such as low income, unmarried and having problems with debt.
Plan Satisfaction
Eight in 10 workers (84%) are satisfied with their workplace retirement savings plan. Moreover, a similar percentage (78%) of workers are satisfied with the investment options in their plan. The percentage of workers satisfied with the educational materials they receive for the plan (75%) and the online tools or calculators offered (77%) was comparable to that of the investment options.
And while just 3 in 10 reported making changes to their plan in the past year, among those who did, 6 in 10 say they increased the amount they contribute, while one in four respondents said they reduced or stopped contributions.
When workers who are offered a workplace retirement savings plans are asked what the most valuable improvements to their plan are, the most cited improvement is better explanations for how much income their savings will produce in retirement (33%). Similarly, 31% say more fund or investment options and 30% say better explanations for whether they are on track with their retirement savings.
Expected Retirement Age
Only 22% of workers adjusted the age at which they plan to retire because of the pandemic and its economic impact, including 17% who plan to retire later.
While younger workers are more likely to expect to retire at the youngest ages, EBRI notes that the RCS has also consistently found that a large percentage (46%) of retirees leave the work force earlier than planned. In the 2021 RCS, many (34%) who say they retired earlier than planned did so because of a hardship, such as a health problem or disability, not related to COVID-19. Another 25% say that they retired due to changes at their company, but a larger share say they could afford to retire earlier (41%).
The study notes that this tendency to retire earlier than planned may explain the considerable gap that exists between workers’ expectations and retirees’ experiences. And as one might expect, workers who are not confident about their financial security in retirement plan to retire later, on average, than those who express confidence.
Confidence in Medicare and Social Security
One area that was a change from prior years is increased confidence in Medicare and Social Security. EBRI found that confidence in Social Security reached an all-time high among both retirees (72%) and workers (53%). Additionally, three in four retirees and nearly 6 in 10 workers are confident that Medicare will continue to offer benefits of at least equal value to those received today, which is an all-time high since the RCS was first fielded and remarkable in a year marked by mass health concerns, the study notes.
The 2021 survey of 3,017 Americans age 25 or older (1,507 workers and 1,510 retirees) was conducted online Jan. 5–25, 2021. EBRI notes that this year’s survey included an oversample of Black and Hispanic Americans, and that it plans to conduct a fuller analysis of differences by race and ethnicity and will issue a separate report on those findings in June 2021.
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