NEW YORK--()--A new report released today shows that nearly half of American workers surveyed lack confidence in their ability to live comfortably in retirement and most are hungry for sound retirement planning advice.
“The EBRI survey chronicles a growing level of pessimism among Americans about their financial well-being in retirement”
The 23rd annual Retirement Confidence Survey shows that 49 percent of workers are “not at all” or “not too” confident in their ability to retire comfortably. The survey, the longest-running of its kind, was conducted by the nonpartisan Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates, Inc., and co-sponsored by The Guardian Life Insurance Company of America (Guardian).
Declining Confidence Surrounding Retirement
The survey data shows that workers continue to lose confidence in their ability to pay for basic expenses into retirement – 29 percent lack confidence today compared to 18 percent in 2007 – and medical expenses – 52 percent today compared to 32 percent in 2007.
“The EBRI survey chronicles a growing level of pessimism among Americans about their financial well-being in retirement,” said Michael B. Cefole, an EBRI Board Member and Senior Vice President of Guardian Retirement Solutions™. “We also know that workers are in need of professional advice and guidance, and the EBRI survey demonstrates the importance of preparing people to plan effectively for their retirement years.”
In fact, 52 percent of workers in the survey say it would be “very valuable” to receive recommendations about how to make savings last throughout retirement, and 36 percent think it would be “somewhat valuable.” Significantly, 45 percent of workers in the survey report they simply guessed in order to arrive at the level of savings necessary to live comfortably in retirement.
The continued decline in workers’ confidence about retirement might be due to the realization of what is necessary to prepare for retirement. According to the EBRI survey, 41 percent state that the cost of living prevents them from saving more. One of the survey’s key findings shows that roughly 60 percent of workers and 40 percent of retirees reported debt problems and were the least likely of all respondents to have confidence in their overall retirement outlook.
Financially Secure Retirement Requires Education, Self-Awareness
According to the survey, employees who have done a retirement-savings-needs calculation tend to have higher savings goals, and are more confident, than workers who have not. “Education and financial literacy are the keys to ensuring that people are planning properly for retirement,” said Doug Dubitsky, Vice President of Product Management & Development for Guardian Retirement Solutions™. “There is a huge need nationally for a deeper engagement with workers, plan sponsors and advisors about preparing for a financially secure retirement.”
As part of Guardian’s on-going efforts to educate future retirees and bring clarity and focus to the psychological aspects of retirement planning, Guardian launched a new website last fall called Retirement Style Matters (http://www.retirementstylematters.com/). This interactive tool teaches people that who they are can have a major impact on how they invest.
“There is more to retirement planning than just charts and graphs,” said Dubitsky. “We know personality also plays a large role in the way people prepare for retirement.”
The website’s unique approach helps financial advisors gain a better understanding of their clients’ financial behaviors and personality, and thus create a personality-compatible retirement plan. The site was created with the help of behavioral finance expert Dr. Daniel Crosby and identifies four different retirement styles, or personalities, that can give people insight into who they are and how they invest. Armed with this knowledge, the pre-retiree can work with his or her financial professional to develop a holistic retirement plan.
Bright Spot: Majority Participate in Employer-Sponsored Retirement Plans
According to the survey, 41 percent of survey respondents state that they are “not at all” confident about future Social Security benefits. However, 72 percent of employed workers participating in the survey have access to employer-sponsored retirement plans. Of these respondents, 8 in 10 currently contribute to the plan.
“Employer-sponsored retirement plans such as 401(k)s continue to gain favor with employees and their employers,” said Jason Frain, Vice President, 401(k) Product Management and Development, Guardian Retirement Solutions™. “As the survey results show, an overwhelming majority of employees will take advantage of an employer-sponsored plan if they have access to one. In recent years, plan advisors, sponsors and service providers such as Guardian have made great strides in educating employees on the benefits of such plans and in providing access to a broad range of investment options.”
A copy of the full report is available on the EBRI website at www.ebri.org.
The 23rd annual Retirement Confidence Survey was conducted using 1,254 20-minute phone interviews in January 2013 using random-digit dialing with cell phone supplement. The margins of error are ± 4 percentage points for all workers and ± 7 percentage points for all retirees.
A mutual insurer founded in 1860, The Guardian Life Insurance Company of America and its subsidiaries are committed to protecting individuals, business owners and their employees with life, disability income and dental insurance products, and offer funding vehicles for 401(k) plans, annuities and other financial products. Guardian operates one of the largest dental networks in the United States, and protects more than six million employees and their families at 115,000 companies. The company has approximately 5,000 employees in the United States and a network of over 3,000 financial representatives in more than 80 agencies nationwide. For more information about Guardian, please visit www.GuardianLife.com.
Individual annuities, group variable funding agreements and group variable annuity contracts are issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation whose principal place of business is 7 Hanover Square, New York, NY 10004. GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY. Guardian does not issue Individual annuities, group variable funding agreements and group variable annuity contracts and does not guarantee the benefits they provide. GIAC is a wholly owned subsidiary of The Guardian Life Insurance Company of America (Guardian), New York, NY.
Guardian Retirement Solutions™ refers to the administrative support services, including participant recordkeeping as well as marketing, enrollment and educational materials, provided by GIAC in conjunction with the individual and group retirement products issued by GIAC.