The percentage of workers who believe they will have enough money to retire comfortably rose for the first time this year after hovering at record lows for the past five years.
Eighteen percent now say they are very confident that they will have enough, up from 13 percent in 2013, according to the Employee Benefit Research Institute’s annual Retirement Confidence Survey.
For a decade and a half before the economic downturn, confidence levels had been rising, from 21 percent in 1993 to 27 percent in 2007. But by 2009, the level had plummeted to 13 percent, where it remained until 2013, the report said.
The increased confidence did not seem to correlate with better financial planning, although it was higher among people with incomes of $75,000 or more and among those who have a retirement plan. Around half of workers without a retirement plan were not confident about their financial security in retirement, compared with one in 10 who have a plan.
“The people who have done something about retirement, whether that means doing a calculation, meeting with an adviser or having a retirement account, seem to feel better about where they stand than people who haven’t done anything,” said Nevin Adams, co-director of EBRI’s Center for Research on Retirement Income. “We’re not seeing more people doing something, but the people who have done something are feeling better about where they stand.”
After the economic downturn, many workers and retirees saw a big drop in value in their retirement accounts, Adams noted, adding that an uptick in the market in late 2013 may have contributed to people’s confidence levels.
The survey is done each year in January, among workers 25 and older.
Among respondents, 71 percent of workers 55 or older said they are saving for retirement, while only 42 percent of those 25 to 34 said they were.
Confidence among those who have already retired, which tends to be higher than worker confidence levels, also increased, to 28 percent this year from 18 percent in 2013 after peaking at 41 percent in 2007. The percentage of workers and retirees who are not confident about their financial security in retirement remained statistically unchanged, at 24 and 17 percent respectively.
The upswing represents the biggest rise in retirement confidence since 1997, said Tim Kohn, head of defined contribution services at Dimensional Fund Advisors, an asset-management firm in Austin, Tex. Retirement confidence is a lagging indicator of economic health, he said, noting that the latest numbers follow stock market improvements and a drop in unemployment.
But the fact that confidence levels have remained flat among people making less than $75,000 reflects a division across American society, he said, adding, “I really see a bifurcated recovery in terms of confidence.”