Americans Face an Even Bleaker Retirement
Most Americans need more help saving for retirement -- and a new survey suggests they're increasingly unlikely to get it.
In a survey of 1,003 workers released Tuesday, the Washington-based Employee Benefit Research Institute found that the state of Americans' retirement savings remains pretty bad. Just 61 percent of workers surveyed said they or their spouse were currently saving for retirement. That's a few points higher than the years immediately after the recession, but down from 2008 and 2009.
Those low numbers aren't just the result of a slow economic recovery causing people to temporarily stop 401(k) contributions. Only 67 percent of workers told EBRI that they or their spouse had ever saved for retirement -- lower than any year before the recession for which EBRI reports data.
Even those who do save for life after work generally aren't saving much. Fifty-seven percent of workers surveyed told EBRI they had saved less than $25,000 for retirement. That includes 45 percent who have savings of less than $10,000.
But here's the surprising part of the survey: Despite all this, public anxiety about retirement, which peaked in 2011, continues to recede. The share of workers who say they're very or somewhat confident about living comfortably in retirement is now close to 60 percent, the most since 2008 and just shy of prerecession levels. (The rule of thumb is that you need 80 percent of your preretirement income to maintain your standard of living. And Social Security doesn't cut it -- the average payment for retired workers in February was $1,331.)
Another way of looking at the chart above is this: It tracks the closing window of opportunity for overhauling U.S. policy, which has yet to respond to the near-disappearance of defined-benefit pensions. As the share of Americans who say they're worried about retirement falls further below 50 percent, the political payoff for pushing new initiatives falls, too -- something that can't be lost on presidential candidate Hillary Clinton and her advisers, as they decide how to translate her concern for "everyday Americans" into actual proposals.
If Americans' growing confidence in their retirement reflected improving circumstances that were widely shared, then the declining odds of reform wouldn’t be much of a problem -- just the opposite. But that's not what's happening.
Jack VanDerhei, EBRI's research director and one of the authors of the survey, said that confidence probably reflects a booming stock market for people who have employer-based retirement plans, which is just less than half of all private-sector workers.
"This could happen without any increase in the percentage saving," VanDerhei told me by email. The numbers back him up: The group that's expanded the most since 2010 is those with savings of $250,000 or more. But at 14 percent of workers, that group still reflects a particularly unrepresentative minority.
So the good news in these numbers is that more American workers feel confident about their retirement. The bad news is, that confidence could reduce pressure for reforms that the rest of the country still badly needs.
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