Having a retirement savings plan is a key factor in the confidence a worker has about whether they will be able to afford retirement.
This insight was one of the highlights from the 2015 Retirement Confidence Survey just released by the Employee Benefits Research Institute. The survey reported confidence in the ability to retire has continued to improve since it reached a record low in 2009. This year, two out of five workers are very confident they will be able to live comfortably in retirement, compared to one out of five in 2011.
The improved confidence could be partially due to the rising stock market. The stock market has not shown a calendar year loss since 2008. It could be the improving economy or stable housing values. However, the survey indicates confidence is strongly tied to participation in a retirement plan. Twenty-eight percent of workers with a plan are confident about their retirement, while only 12% of those without a plan are confident.
The Affordable Care Act also may have helped improve confidence. Thirty-nine percent of retirees are very confident they’ll be able to pay their medical expenses, compared to only 24% in 2013. A similar improvement in optimism about being able to afford nursing home costs was reported in the survey.
Improving confidence is a step in the right direction but the numbers are still too low. Overall, only 22% of workers are highly confident they will be able to live comfortably when they stop working.
How confident do you feel about your retirement?
If you don’t have a plan for retirement, create one now.
Start by determining the required annual savings to reach your retirement goals. This year’s survey revealed only about half the families have tried to calculate how much they need to live comfortably in retirement. Benjamin Franklin said “If you fail to plan, you are planning to fail!” His quote definitely applies to retirement planning today.