WASHINGTON, April 23 /PRNewswire/ -- Reflecting the growing concern
over health care costs and economic issues, American workers' confidence in
being able to afford a comfortable retirement decreased over the past year
by a rate unmatched in the 18 years of the Retirement Confidence Survey(R)
(RCS), according to just-released survey results.
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The percentage of workers who are very confident about having enough money for a comfortable retirement decreased sharply, from 27 percent in 2007 to 18 percent in 2008, the biggest one-year drop in the 18-year history of the RCS. Retiree confidence in having a financially secure retirement also decreased, from 41 percent to 29 percent, a drop of 12 percentage points.
Decreases in confidence occurred across all age groups and income levels but was particularly acute among younger workers and those with lower income. The RCS was conducted by the nonpartisan Employee Benefit Research Institute (EBRI), and full results are online at http://www.ebri.org/surveys/rcs/2008.
According to Dan Houston, president, Retirement & Investor Services at the Principal Financial Group(R), while the survey shows retirement confidence is at a record low, it's critical for Americans to show financial resolve and prudence. "Despite economic fears, market volatility is cyclical and relatively short-term. Americans should take a deep breath, be wise consumers, stay out of debt and most important, stick to their long-term financial plans," Houston said. The Principal Financial Group, one of the nation's 401(k) leaders, is a long-time underwriter of the annual EBRI RCS.
RCS results indicate that health costs in particular have become a big concern for retirees: Among retirees who left the work force earlier than planned, more than half (54 percent) say they did so because of health problems or disability. Almost half of retirees (44 percent) say they have spent more than expected on health care expenses. More than half of retirees (54 percent) say they are now more concerned about their financial future than they were right after they retired, a 14 percentage-point increase from a year ago (40 percent in 2007).
On a positive note, the survey found that about half of workers (47 percent) say they and/or their spouse have tried to calculate how much money they will need for a comfortable retirement, up considerably from the low point of 29 percent measured in 1996. As before, the 2008 survey finds that doing a retirement savings calculation is particularly effective at changing worker behavior: 44 percent who calculated a goal changed their retirement planning, and of those almost two-thirds (59 percent) started saving or investing more.
The survey picked up several other signs of public unease about
-- Overall concerns about basic expenses: Confidence in specific financial
aspects related to retirement decreased. In particular, the percentage
saying they are very confident in having enough money to take care of
basic expenses decreased from 40 percent in 2007 to 34 percent in 2008
for workers and from 48 percent to 34 percent for retirees.
-- Worker health concerns: Measured another way, workers said they are
increasingly not confident about having enough money for medical
expenses (43 percent in 2008, up from 32 percent in 2007) and for
long-term care expenses (54 percent in 2008, up from 44 percent last
-- Retiree concerns: Retirees' loss of confidence is reflected in several
attitudes they hold about their retirement finances. Retirees are less
likely than in 2007 to believe they can always cut back on their
lifestyle if it looks like they might use up all of their savings
(61 percent, down from 70 percent). At the same time, 39 percent of
retirees now think they are likely to live long enough to use up all of
their savings (up 10 percentage points from 29 percent in 2007).
-- Retiree health coverage: Barely one-third of all workers now expect to
have access to employment-based health insurance in retirement, down
8 percentage points (from 42 percent in 2007 to 34 percent in 2008).
Although 41 percent of retirees say they currently have access to
health insurance through a former employer, many employers are
eliminating health care coverage for future retirees.
-- Confidence by age and income: The percentage saying they are very
confident about having enough money for a comfortable retirement
decreased from 31 percent in 2007 to 18 percent in 2008 among workers
ages 25-34, and from 28 percent to 16 percent among workers ages 35-44.
Similarly, it decreased from 14 percent to 5 percent among workers with
household income under $35,000 and from 25 percent to 13 percent among
those with income of $35,000-$74,999.
The 2008 Retirement Confidence Survey(R) was conducted in January 2008 through 20-minute random telephone interviews with 1,322 individuals (1,057 workers and 265 retirees) age 25 and older in the United States. The survey has a margin of error of plus or minus 3 percentage points. Details of the methodology appear in the April 2008 EBRI Issue Brief, online at http://www.ebri.org
About the Principal Financial Group
The Principal Financial Group(R) (The Principal (R)) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $311.1 billion in assets under management and serves some 18.6 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit http://www.principal.com.
|SOURCE Principal Financial Group|
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