EBRI: Workers Severely Lacking in Preparedness for Retirement

Wednesday, 20 Mar 2013 08:25 AM

By Dan Weil

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As aging baby boomers prepare to expand the retirement ranks, many workers are ill-prepared financially for their golden years.

According to a study from the Employee Benefit Research Institute (EBRI), 57 percent of U.S. workers have less than $25,000 in total household savings and investments apart from their homes.

That portion is quite a step up from the 49 percent who were in that predicament in the 2008 survey.

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And perhaps most ominously, the poll gleaned that 28 percent of Americans have no confidence they will garner enough wealthy to retire comfortably. That represents the highest figure in the survey’s 23-year history. In 2012, 23 percent of the respondents felt that way.

Half of those polled expressed some level of confidence they will have enough money for a comfortable retirement, with 13 percent very confident and 38 percent somewhat confident.

Only about half of the workers and retirees surveyed said they could definitely drudge up $2,000 if an emergency expense were to come in the next month.

All this comes while increased lifespans necessitate more retirement savings to guarantee people will have enough money to last them through their lives. The Society of Actuaries recently estimated a male who reaches age 65 in 2013 is expected to live an additional 20.5 years, according to The Wall Street Journal. Women turning 65 in 2013 are now expected to live an additional 22.7 years.

“One reason that retirement confidence has remained low despite a brightening economic outlook may be that some workers may be waking up to a realization of just how much they may need to save,” the survey concluded.

The EBRI indicated many Americans might be uninformed on the matter. Only 46 percent reported they or their spouse have tried to calculate how much money they will need to have saved by the time they retire.

“Workers are recognizing there is a crisis," Alicia Munnell, director of the Boston College Center for Retirement Research, tells The Journal.

One issue that arises is how dire a picture must be painted for workers to induce them to save.

“We have to be very careful not to scare people off,” Nevin Adams, director of education for EBRI, tells Pensions & Investments.

“We are looking at a situation where people are beginning to open their eyes, but most haven't made that commitment yet. Maybe it's time for a real talk. Maybe they can handle the truth.”

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