Retirement Outlook Hopeful -- If You Have a Plan
NEW YORK ( MainStreet) Retirement confidence is up from the record lows of the last five years especially for those with actual retirement plans.
The Employee Benefit Research Institute's 24th annual Retirement Confidence Survey released earlier this month finds the percentage of workers confident about having enough money for their golden years increased in 2014 after record lows between 2009 and 2013. The survey finds 18% of respondents are now very confident in their ability to afford a comfortable retirement up from 13% in 2013. More than twice that amount, 37%, are somewhat confident.
Only about a quarter of those surveyed say they don't feel at all confident about their retirement prospects.
However, there is a caveat. While confidence is going up, it only may be limited to those with retirement plans as workers' savings remain low, and few appear to be taking even the very basic steps of planning for their later years.
"Retirement confidence is strongly related to retirement plan participation," said Jack VanDerhei, EBRI research director and co-author of the report. "In fact, workers reporting they or their spouse have money in a defined contribution plan or IRA or have a defined benefit plan from a current or previous employer are more than twice as likely as those without any of these plans to be very confident."
The increase in confidence between 2013 and 2014 is primarily among those with a plan. Some 24% of those respondents with a retirement plan were very confident, while only 9% without a plan felt that way.
VanDerhei said a possible explanation for improved confidence is a stock market and increasing property values.
The confidence among those with actual retirement plans may make sense. According to Towers Watson's recently released annual Global Pension Assets Study, values of pension funds increased 12% in 2013 and in sharp contrast to a 22% decline during 2008.
"During 2013, equities enjoyed their best calendar year of risk-adjusted returns since the financial crisis, and as a result, U.S. pension funds are in their best shape in many years," said Chris DeMeo, head of investment for the Americas for Towers Watson.
According to the EBRI study, the most common reason listed as to why people do not start savings or a retirement plan is the cost of living and general day-to-day expenses . More than half cited the reason as to why they are not planning for their retirement or save more.
Matt Greenwald, of Greenwald & Associates, which conducted and co-sponsored the survey, said existing debt is clearly an issue for many trying to make headway in their retirement planning.