Bad News: More American Workers Worry They Can't Afford to Retire

Americans are not feeling good about their financial standing when it comes to preparing for retirement. Workers and retirees are nearly as worried about making their retirement money last as they were during The Great Recession, according to a new survey released by the Employee Benefit Research Institute (EBRI) and Greenwald Research. We’ll discuss the findings and why Americans are losing their confidence.

If you want help planning for retirement, consider working with a financial advisor.

Americans Are Losing Confidence in Their Savings for Retirement

According to an online survey by EBRI and Greenwald Research, just 18% of the survey respondents said they felt “very confident” that they’ll have enough money to get through retirement. That’s a drop of 10 points from the 2022 survey when the ratio of very confident workers was 28%.

That trend also was seen in the number of respondents who said they were “very or somewhat confident” their money would last. While 73% of respondents felt good about their retirement prospects last year, the 2023 survey results fell to 64%.

Meanwhile, the percentage of workers who said they felt “not confident” about how much money to withdraw from their retirement jumped to 36%, up from the 2022 response rate of 28%.

The online survey received 2,537 responses from Americans who are either workers or retirees.

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Largest Decline in Confidence Since the Great Recession

The results overall were at their worst level since the end of the great recession in 2010. And it showed their biggest changes since the start of the recession in 2008.

“The last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis,” says Craig Copeland, director of wealth benefits research at EBRI. “This shows that the current economic climate, in particular inflation, is eroding the confidence that Americans had in their retirement preparations going into the pandemic.”

Beyond the sentiments and fears of both workers and retirees, the study also identifies the reasons for the increase in retirement anxiety – a lack of retirement savings, a higher cost of living, reduced returns from retirement accounts, increasing levels of debt, confusion over saving and investment strategies and fears about the reliability of Medicare to cover retirement health expenses.

Retirees’ Spending is Increasing

“Half of retirees report that their overall spending is higher than expected, an increase over last year’s one-third, and the share of retirees who feel their retirement lifestyle is worse than they expected is slowly growing,” says Lisa Greenwald, CEO of the Greenwald Research, the firm conducting the survey with EBRI.

Additional Survey Findings

• Of the workers and retirees who don’t feel confident, four in 10 workers and a quarter of retirees state it’s because they have little to no savings.

• 40% of workers and 58% of retirees report that their retirement account balances have decreased during the past 12 months.

• Investing remains a do-it-yourself struggle. Many workers aren’t using professional advisers and information sources that can help improve their investment know-how, with 40% of workers saying they get advice from family or friends while only two in 10 use their workplace retirement plan provider.

• Workers’ confidence in Medicare has significantly decreased. Just half in the survey said they feel somewhat confident it will continue to provide benefits equal to what they get today.

Bottom line

Many Americans are losing confidence in their savings for retirement. The increased concerns surround their inability to save, the cost of living and their decline in investment returns within their retirement accounts. Medicare is also a concern as some don’t feel they will get quality benefits down the road.

Tips for Planning for Retirement

• A financial advisor can help you figure out how Social Security fits with other income sources in your retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• Don’t forget to factor Social Security benefits into your savings total. Use SmartAsset’s Social Security calculator to determine how much you’ll receive.

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