Shocking survey on new confidence in retirement reveals retirees say: what pandemic?

From Richard Eisenberg, Next avenue


After a year with the Covid-19 pandemic, do Americans feel less confident about living comfortably during retirement? The new survey by the Employee Benefit Research Institute (EBRI) 2021 on old-age provision has the answer: no (by and large).

According to the bipartisan group’s survey, retirees and workers are overall more confident about their retirement prospects than a year ago – which does not necessarily reflect their reality – with the exception of one group of workers.

In the January 2021 EBRI survey of 3,017 Americans 25 and older (1,507 workers / 1,510 retirees), 80% of retirees said they were very or somewhat confident that they (and their spouse) had enough money will be able to live comfortably throughout their entire residency retirement years from 77% a year ago; 34% of them were very confident compared to 30% in 2020.

Retirement trust of pensioners and employees

“They wouldn’t be the ones who lost jobs,” said Craig Copeland, senior research associate and co-author of the report at EBRI. “Social security was still paying benefits. In many cases, they also received a stimulus check.”

In addition, retirees have proven to be resilient and adaptable. “They think they’re fine because they’re getting along. And they’re okay with it.” In the survey, 85% of retirees said they had enough money to cover the basic costs.

A full 72% of workers felt very or somewhat confident about retirement, up from 69% in 2020 and 29% of workers felt very confident, down from 27% a year ago.

“I thought there was going to be a bigger impact [of the pandemic] on confidence in retirement, “said Copeland.

I did it that way too.

Recently, one of our favorite stories on Next Avenue has been the 2019 play “Retiring on a Shoestring,” which suggests that many people are particularly focused on propping up their finances in retirement.

And the EBRI survey found that 27% of workers have less than $ 25,000 in savings and investments. 46% have less than $ 100,000, which suggests that many haven’t saved much.

7 in 10 workers are confident that they have enough money to live comfortably in retirement

Employee Benefits Research Institute

Who is unrealistic?

“There are people who are unrealistic,” said Copeland of their retirement prospects. “You’re not saving enough. You are not preparing for retirement. You don’t even know what to have for retirement. You have no idea if you are on the right track, but you think, ‘OK, me me do everything right now. ‘”

One counterintuitive pandemic reason for the high level of trust that EBRI has identified: Restrictions on traveling and visiting restaurants and shops have helped some people save money. In February 2021, the U.S. personal savings rate was an impressive 13.6%; from 2015 to 2019 it was around 7%.

But not everyone in the EBRI survey was so confident.

Only 68% of workers who lost a job or an income in 2020 were very or somewhat confident about their retirement prospects. In contrast, 75% who hadn’t compromised their jobs or income felt this way

8 in 10 retirees are confident that they will have enough to live comfortably in retirement, including 1 in 3 who are very confident

Employee Benefits Research Institute

“When you looked at people who said they had lost confidence in retirement, it was these people who had lost jobs,” said Copeland. “But those were also people who were less confident in the first place.”

Another story for some Americans

In the EBRI study, 39% of employees stated that their household had had a negative change in job or income since February 1, 2020: 18% stated that their working hours and / or their salary had been reduced and every tenth employee has been given leave of absence or has been temporarily dismissed.

The divide between those who were financially injured in the pandemic and those who didn’t show up when EBRI asked workers when they wanted to retire. Around 17% said they would retire later than expected due to financial circumstances. But 6% think they will retire earlier than expected because they are fine.

As Ken Stern, Chair of the Longevity Project, said during the “Post Covid-19 – Rethinking Retirement: What Should Congress Do?” His group and Next Avenue’s webinar was on April 21st: “If there’s a year when it’s clearer whether or not there is economic security, this is the year.”

“I think we are seeing some disproportionate impacts on people of color from an employment perspective,” said Lillian Singh, webinar panelist for the Longevity Project, vice president of programs and justice for racial wealth at the Prosperity Now think tank.

Another webinar panelist, Edelman Financial Engines founder Ric Edelman, said, “Those who were fine before the pandemic are better off. And those who have had problems are getting worse. The pandemic is special hit hard women and minorities because they tend to. ” be in jobs in the hardest hit industries. “

And he added, “Not everyone actually has the same ability to just save and even think about retirement.”

The Americans in the EBRI survey who have lost confidence in their retirement prospects were often those with incomes less than $ 35,000, savings or investments less than $ 10,000, and no 401 (k) company pension plan – many of them colored people.

Debt and Retirement Prospects

Also, people were more likely to say that debt was a “big problem” for them; This is how 47% of workers who feel less confident about their retirement prospects described their debt, while 23% of those who said they did not have a debt problem.

Overall, 54% of the employees surveyed said that their debt was a big or small problem. 34% of retirees said their debt was a problem.

“We tend to forget that with a hundred million Americans in credit card debt, we got caught in this pandemic,” Edelman said. “So not only were these people in a precarious position when they got caught in the pandemic, their situation just got worse.”

But Copeland said the EBRI study suggests that more and more retirees are okay with debt. Although a higher percentage of retirees are now in debt than they were 20 years ago, “there is a level of comfort for some of these people,” noted Copeland.

Here’s another finding from the new EBRI study that might surprise you: American workers and retirees’ trust in social security and medical care is at an all-time high in the 31 years of the survey.

Optimistic about social security and medical care

Around 72% of retirees and 53% of workers are confident that social security will continue to provide benefits of at least the same value as those received today. Three in four retirees and nearly six in ten workers are confident Medicare will do the same.

And yet, the pandemic has exacerbated solvency problems for Social Security and Medicare, and accelerated the year in which both programs are unlikely to be able to fully deliver.

The Bipartisan Policy Center estimates that unless Congress and President support Social Security, the program may not be able to pay 75% of benefits until 2029.

“The lower-income, low-wealth people are more reliant on social security in retirement,” said Colleen Manchester, professor of management at the University of Minnesota. “A 25 percent reduction in benefits is therefore very important to their well-being and their ability to survive in retirement.”

Copeland said Democrats’ control of the White House and Congress had strengthened optimistic public views on social security and health care. People generally believe that “seniors’ benefits will not be cut, contrary to what people under a Republican government may have been reluctant to believe,” he said.

Ideas for Improving Old Age Insurance in America

This is actually a time for Congress and the Biden administration to find ways to improve old-age pensions for all Americans, according to spokespeople for The Longevity Project webinar, including Senator Benjamin Cardin (D-Md.).

“We have to be brave,” said Cardin. “We have a wealth gap and an income gap in this country that we have to deal with.”

Among the ideas they suggested: employers must offer full-time and part-time workers 401 (k) retirement plans and automatically enroll employees in them; Offering tax incentives to small businesses to offer retirement plans; Creation of a national “Baby Bonds” program where the US government would give all Americans money at birth that would grow towards their future retirement and the saver’s tax credit ($ 1,000 maximum; $ 2,000 for co-submitted couples) ) would make refundable for those who owe little taxes, so the money can be paid directly into a retirement savings.

Whether or not either of them comes to fruition – a big unknown – can keep retirees and employees feeling more confident in retirement as the pandemic subsides.

“I think people will see us around the corner,” said Copeland. “We have the vaccinations. We are seeing the restrictions go away … And I think there is optimism that the government will give more support to retirees.”

Looking ahead, Copeland said, “I think as more people go back to work and their job prospects look better, they will be more optimistic.”

He added, however, “There will still be people in a situation where they will not be improved. Therefore, given the general inequalities in the economy, we can only go as far with our pension confidence number”. “”

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