2014 retirement confidence survey: a secondary analysis of the finding...

This study presents the findings of a secondary analysis of the Employee Benefit Research Institute’s (EBRI) 2014 Retirement Confidence Survey (RCS). The goal of this study is to provide a

better understanding of the retirement expectations, preparations, experiences and needs of Americans age 50 and over. The key findings from this study are as follows: RETIREMENT

PREPARATIONS AND ESTIMATIONS * Half of 50+ workers have tried to calculate how much they will need to live comfortably in retirement; among these workers, the median amount calculated ranges

from $500,000 to $749,999. 50+ workers who have not tried to calculate how much they will need for a comfortable retirement tend to estimate a lower amount (i.e., a median of between

$250,000 and $499,999). * Just one in four 50+ workers and retirees sought investment advice from a professional financial advisor over the past year.  Among those who did consult a

financial advisor, about a quarter did not follow some or any of the advice they were given.  Not trusting the advice given (35%) and having other ideas, plans or goals (21%) were the

top-cited reasons for not following the advisor’s advice. SAVING FOR RETIREMENT * Three in four 50+ workers and two in three 50+ retirees have personally saved for retirement.  However,

nearly half of 50+ workers and nearly three in five retirees have less than $25,000 in savings and investments. Saving for retirement—as well as the amount saved—tends to increase as

household income increases. * Seven in 10 full- and part-time workers (age 50+) have access to an employer-sponsored retirement savings plan; and eight in 10 of those with access are

contributing to it. DEBT * Half of workers and two in five retirees age 50 and older have problems with debt; but just 1 in 6 50+ workers and retirees describe their level of debt as a major

problem. * Compared with 2005, the percentage of 50+ workers and retirees describing their level of debt as a major or minor problem increased to its highest levels in 2011—likely a result

of the Great Recession). Since 2011, however, the percentage of 50+ workers describing their level of debt as a major or minor problem has declined to near pre-Recession levels; but the

percentage of 50+ retirees describing their level of debt as a major or minor problem remains at its 2011 level. SOURCES OF INCOME IN RETIREMENT * Social Security is a major source of income

for nearly two in three 50+ retirees (64%).  It is also the most often-cited major source of income among 50+ retirees.  Additionally, employer-provided pensions or cash balance plans (37%)

are major sources of retirement income for a third or more 50+ retirees. * Among  50+ workers and retirees, women are less likely than men to cite employment, IRAs  and other personal

savings as sources—or expected sources—of income during retirement. RETIREMENT EXPERIENCES * Three in five 50+ retirees say their experiences in retirement, with respect to their finances,

did not match their expectations. Among them, half found their retirement to be better than expected and half found it to be worse than expected. * Among 50+ retirees with worse than

expected finances in retirement, unexpectedly high health care costs and other costs, and lower than expected income were the most-cited reasons. IMPLICATIONS The findings from this study

suggest that Americans age 50 and older may not have a realistic view of their financial future in retirement and, as a result, are not adequately preparing for it. The findings further

suggest that adults age 50 and older would benefit from increased communication about the importance of calculating the amount needed for a comfortable retirement as well as factors to

consider (e.g., annual cost of living increases as well as expected and unexpected big ticket expenses in retirement) that may impact their savings. This may not only help the 50+ challenge

the realities of their assumptions; but may also help move them toward a more secure financial future in retirement. The 2014 Retirement Confidence Survey (RCS) was conducted in January 2014

by the Employee Benefit Research Institute (EBRI), in Association with Matthew Greenwald, Inc.  This report focuses on the survey responses of 960 Americans age 50+ (467 workers; 493

retirees). Data are weighted by age, sex, and education.  For more information, contact Alicia Williams at [email protected].