Americans Are Feeling a Little Better About Their Retirement Crisis
Whether the U.S. is or isn't facing a retirement crisis isn't a matter of debate for the majority of Americans. A new poll shows that 86 percent of people agree that it's a crisis. And it's hardly just those approaching retirement who see it that way. When the generation just starting to plan for retirement—them millennials—are singled out in the data, 92 percent agreed.
At the same time, the results from a report released Tuesday by the National Institute on Retirement Security (NIRI) show fewer Americans are worried they won't have enough money to be self-sufficient in old age. Every two years, NIRI polls to see how Americans feel about (oxymoron alert) financial security in retirement, as well as their views on government policies that could make the retirement picture less bleak. This year, overall results showed the percent of those concerned about their retirement outlook falling to 74 percent, from 85 percent in 2013. As well, more of those lucky people with pension plans now expect the money to be there when they retire—84 percent, up from 79 percent in 2013.
While defined benefit pensions are fast disappearing, the poll makes it very clear that they're viewed as the holy grail of retirement security. The loss of pensions makes it harder to achieve the American dream, according to 78 percent of those surveyed. That belief seems to be getting more intense: More than half of those polled now strongly agreed that "those with pensions are more likely to have a secure retirement than those who do not." Two out of three respondents also said they'd willingly accept smaller pay increases in exchange for that secure stream of income. For the youngest generation polled, the millennials, that number rose to 72 percent.
Healthcare costs loom large in retirement security worries. When asked what made preparing for retirement harder, 86 percent of Baby Boomers cited the rising cost of long-term care as a major factor. The next greatest obstacle cited were salaries not keeping up with wages, at about 80 percent. Fewer pensions also play a big part, according to 74 percent of Boomers, and 70 percent said greater longevity is a major factor. That view didn't hold for the other major demographic age wave, the millennials, who obviously haven't been poring over mortality tables like their elders. Longevity was cited by 44 percent of the younger generation as a major factor.
Americans don't hold out much hope that policymakers will help. The nation's political leadership doesn't understand how hard it is to prepare for retirement, according to 87 percent of those polled. A slightly smaller proportion felt that Washington needs to do more to help Americans achieve secure retirements. But the people taking the survey were open to other ideas, like state-sponsored low-risk automatic enrollment retirement plans for those without retirement plans at work. That was judged a good idea by 71 percent of respondents, and 75 percent said they'd consider joining such a plan.
The poll did reveal one area where some retirees-to-be could help improve their financial security in old age. When asked whether they agreed that it was a good idea to delay taking Social Security, even if it meant tapping savings, in order to get greater benefits from the program, only 42 percent said yes. Waiting as long as possible to take Social Security can make a huge difference in one's cash flow in retirement. And it doesn't require Washington to do a thing.
For more, read this QuickTake: America’s Retirement Gap