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How Confident Do Americans Feel About Retirement?

 Retirement Confidence

There was a slight increase in confidence from the significant drop experienced in 2023 with 68% of workers and 74% of retirees feeling confident that they will have enough money to live comfortably in retirement. A potential contributor to this positive momentum could be wage growth. In fact, wage growth is now outpacing inflation growth.

Despite this upward trend of wage growth, Americans are still worried about inflation. Over 30% of workers and 40% of retirees cite inflation as a reason why they do not feel confident. With more workers (78%) and retirees (72%) concerned inflation will impact their retirement.

Social Security

In 2024, an average of almost 68 million Americans per month will receive a Social Security benefit, totaling about $1.5 trillion in benefits paid during the year. The majority of workers (88%) and almost all retirees (91%) expect Social Security to be a source of income in retirement. When asked if Social Security will be a major source of income, 35% of workers and nearly twice as many retirees (62%) expect that it will be.

According to the Social Security Administration, Americans know the basic aspects of Social Security such as the existence of the retirement and disability programs, but they know little about the future benefits they can expect to receive from those programs. This sentiment can be seen in the survey results with 66% of workers and 78% of retirees understanding the basics. However, only 2 in 10 workers and a quarter of retirees understand it very well.

Early Retirement

Many Americans are retiring sooner than they had planned. For most retirees (7 in 10) the median age for retirement is 62, which is earlier than the historical median age of 65.

Many anticipate the transition into retirement to be gradual whereby workers move from a traditional full-time role to a less stressful part-time position. Unfortunately, a gradual downshift isn’t always a reality with 52% of workers expressing a desire to gradually retire over time contrasting with most retirees’ (74%) experience of an abrupt sudden stop.

Calculating Needs in Retirement

How much someone needs to save for retirement will vary depending upon factors such as income, savings and their lifestyle in retirement. Over half of the workers and retirees have calculated how much money they will need in retirement. What is noteworthy is that the reaction to their calculations has driven workers (52%) and retirees (44%) to save more.

These calculations unfortunately differ drastically from what they currently have saved. A third of workers who have tried to calculate how much they will need in retirement estimate they will need $1.5 million or more. However, 22% of workers have less than $50,000 in savings and investments. In addition, 14% of workers have less than $1,000 in savings and investments.

Takeaways

Overall, the survey reveals that while confidence in a secure retirement declined in 2023, it seems Americans’ confidence is improving and trending in the right direction. It shows that most workers and retirees understand the basics when it comes to Social Security but could certainly benefit from more education. Those still in the workforce want and need more information on how to calculate their own personal needs in retirement so that they can prepare accordingly. Please contact your local Spectrum representative with any questions you may have regarding the results of this survey.