A survey by the Employee Benefit Research Institute survey also found that prospective retirees' worries about affordable medical care are increasing
(Bloomberg) — U.S. workers are more confident about having enough savings for retirement even after the percentage of savers declined, according to the Employee Benefit Research Institute.
The percentage of U.S. workers who said they were "very confident" about having enough money for retirement was 16 percent, up from 13 percent in 2009, which was a 20-year low, according to the survey released today by Washington-based EBRI. Sixty percent of workers said they're currently saving for retirement, down from 65 percent in 2009, the study said.
Some employers last year temporarily suspended company matches to 401(k) retirement plans, which lowers a worker's incentive to save, said Jack VanDerhei, research director for EBRI and one of the report's authors. Once the matches are restored people will start saving at a higher level again, he said.
Some workers have stopped saving but their confidence hasn't decreased, said VanDerhei. "You have a real non-sequitur going on."
The nonprofit EBRI, which studies employee benefits, surveyed 1,153 individuals by telephone age 25 and older in January. The study was co-sponsored by EBRI and Mathew Greenwald & Associates, also based in Washington.
Worries about affordable medical care are increasing, according to the survey. Fifty-one percent of workers said they're not confident about being able to pay for medical expenses, compared with 44 percent in 2009. In addition, 61 percent are not confident about paying for long-term-care expenses, compared with 56 percent in 2009.
"We shouldn't be surprised that confidence seems to be tracking the S&P pretty closely," said Dan Houston, president of retirement insurance and financial services for Des Moines, Iowa-based Principal Financial Group Inc., one of the study's underwriters. "We've reached a bottom in terms of lost confidence." The Standard & Poor's 500 Index has increased 68 percent in the last year.
A record low percentage of U.S. workers were very confident about their retirement security in April 2009, according to EBRI. At that time, a 45 percent drop in the S&P 500 since October 2007 had erased more than $2 trillion in retirement assets.
More employees expect to work past age 65, according to this year's study. Twenty-eight percent of workers said they plan to retire before age 65 in 2010, compared with 50 percent in 1991.
"It's very risky to assume you'll have a job at 65, 66 or 67," said EBRI's VanDerhei, who said many workers are forced into early retirement because of medical conditions or lost employment.
"If you have a job, it's much better to bite the bullet and save more for retirement now."
Fidelity Investments, in a separate survey released Feb. 17, said the average 401(k) retirement account balance was $64,200 at the end of 2009, up 28 percent from a year earlier, according to Michael Doshier, vice president of the workplace investing group. Accounts are still down from 2007 when the average balance was $69,200, Doshier said. The data is based on 11 million workers' retirement accounts held by the Boston-based firm.
"If you stay the course, the system can work," Doshier said of 401(k) participants who continue to contribute to their plans over their working careers.