More Americans Confident Of A Secure Retirement, EBRI Says

Despite a global pandemic that created uncertainty in the employment and financial markets, the 2021 Retirement Confidence Survey found 80% of retirees are confident in their ability to live comfortably throughout retirement.

That’s slightly up from the 76% of retirees who were confident when the survey was last taken in March 2020. Workers also remain optimistic, with 72% of workers expressing confidence in their ability to retire comfortably, up three percentage points from last year.

The Retirement Confidence Survey is conducted by the Employee Benefit Research Institute and Greenwald Research. The RCS was fielded in January. Last year, the RCS was fielded twice – once in January prior to the COVID-19 outbreak and then re-fielded through a supplemental survey of key questions from March 20-30, 2020, allowing for comparisons before and during the pandemic.

“2020 was a trying time, for workers and retirees alike. Even with changes in the labor market, workers’ confidence in their ability to live comfortably in retirement remains high overall,” said Craig Copeland, EBRI senior research associate and co-author of the report. “However, while resilience may be the watchword for 2021, three in 10 workers say the pandemic has negatively impacted their ability to save for retirement, due to reduced hours, income or job changes. The group that was most likely to have their ability to save impacted were those that were more likely to have low confidence historically, such as low income, not married and having a problem with debt.”

Nearly two in 10 (18%) workers said their hours or pay were reduced since Feb. 1, 2020. One in 10 workers said they were furloughed or temporarily laid off. In total, 39% of workers reported their household experienced some type of negative job or income change since Feb. 1, 2020. However, 21% of workers did report having some type of positive change in work in the same timeframe.

Workers who had a negative change in work were more likely to say that the COVID-19 pandemic reduced their confidence in having enough money to live comfortably throughout their retirement years. Half of workers who had a negative change in work said that they were either somewhat or significantly less confident as a result of the COVID-19 impact, compared with just 24% of those who did not have a negative change.

Retiree Lifestyle And Expenses Largely Unchanged

Despite the challenges of 2020, retirees continue to report their lifestyle and expenses are as expected or better. Eight in 10 retirees report that their overall lifestyle – including traveling, spending time with family or volunteering – is as expected or better, including nearly three in 10 saying their retirement lifestyle is better than they expected. Despite a challenging and unprecedented year, these results are virtually identical to those measured pre-pandemic, in January 2020. About six in 10 retirees indicate their overall expenses and spending in retirement are as expected and just 26% say spending and expenses are higher than expected – a decrease from last year.

“About seven in 10 retirees report that their confidence in living comfortably throughout retirement was unchanged by the pandemic; 23% feel less confident and 5% feel more confident,” said Lisa Greenwald, CEO of Greenwald Research, and co-author of the report. “Retirees’ top priorities for discretionary spending in retirement continue to be travel and spending on leisure or entertainment. Many of these activities were curtailed during the pandemic, perhaps leading to lower spending. That’s one reason why we may be seeing these results. Another is the adaptability and resilience of retirees demonstrated throughout the RCS’ history. The survey shows retirees prioritize asset preservation and do not like the idea of spending down.”

Pandemic Increases Retiree Confidence In Medicare And Social Security

“Also, Social Security – a ‘major’ source of income for more than six in 10 retirees – continued uninterrupted during the pandemic,” added Greenwald. Confidence in Social Security continuing to provide benefits of at least equal value to those received today reached an all-time high among both retirees (72%) and workers (53%). Three in four retirees and nearly six in 10 workers are confident that Medicare will continue to offer benefits of at least equal value to those received today, an all-time high since the RCS was first fielded and remarkable in a year marked by mass health concerns, especially among older populations.

Workers Staying The Course And Satisfied With Workplace Retirement Plans

Only 22% of workers adjusted the age at which they plan to retire because of the pandemic and its economic impact, including 17% who plan to retire later. The RCS continues to demonstrate that workers expect to work in retirement, which is drastically different than the experience retirees report. Three-quarters of workers expect to work in retirement compared to just three in 10 retirees who report doing so.

More than four in five workers who are offered a workplace retirement savings plan are satisfied with the benefit. Just three in 10 report having made changes to their plan in the past year. Among those that did, six in 10 say they increased the amount they contribute, while one in four say they reduced or stopped contributions.

“Showing further resilience, just one in 10 workers who have saved for retirement say they have taken a loan, hardship distribution or early withdrawal from their workplace retirement plan in the past 12 months,” said Copeland. “The most likely reasons for taking this money out were for paying off credit card debt, or for a COVID-related need.”

About four in five plan participants were satisfied with the investment options available, although three in 10 say they would like more options available, an increase from 22% in 2020. A quarter of workers with a workplace retirement plan say adding more investment options designed for post-retirement would be valuable, and about three-quarters expressed some interest in putting a portion of their plan savings into an investment option that would provide guaranteed monthly income for life.

Those With A Retirement Plan Save More

Among workers who provided the value of their savings and investments outside of the value of their home and any defined benefit plan assets, 33% report that they have $250,000 or more in assets and 21% have less than $10,000.

However, the savings and investments between those with and without a retirement plan (defined contribution plan, individual retirement account or defined benefit plan) are starkly different. For those with a retirement plan, only 12% report less than $10,000 in savings and investments and 39% have $250,000 or more. In contrast, 65% of those without a retirement plan have less than $10,000 in savings and investments, and only 2% have $250,000 or more.

Diverse Communities Face Different Challenges

To better understand differences in retirement-related behaviors and attitudes among workers and retirees, this year’s RCS included oversamples of Hispanic and Black workers and retirees. The survey included 731 responses from those who identified as being of Hispanic, Spanish or Latino origin (404 workers, 327 retirees) and 741 completed surveys from those who identified as non-Hispanic Black or African American (380 workers, 361 retirees). EBRI and Greenwald researchers will conduct a fuller analysis of differences by race and ethnicity and will issue a separate report on those findings in June.

About the Survey:

The survey report, The 2021 Retirement Confidence Survey, is available at ebri.org. The survey was underwritten by AARP, Aon, Ariel Investments, Ayco, Bank of America, BlackRock, Capital Group, Columbia Threadneedle, Empower Retirement, Fidelity Investments, FINRA Foundation, J.P. Morgan, LGIMA (Legal & General Investment Management America), Mercer, Mutual of America, Nationwide Financial, New York Life, PIMCO, Principal Financial Group, Prudential, PGIM, Retirement Clearinghouse, T. Rowe Price, Segal, U.S. Chamber of Commerce, and Wells Fargo.

The 2021 survey of 3,017 Americans was conducted online January 5 through January 25, 2021. All respondents were age 25 or older. The survey included 1,507 workers and 1,510 retirees – this year included an oversample of Black Americans and Hispanic Americans.

Data were weighted by age, sex, education, household income and race. Unweighted sample sizes are noted on charts to provide information for margin of error estimates. The margin of error would be ± 2.5 percentage points for both workers and retirees in a similarly-sized random sample.