EBRI Issue Brief
The 2008 Retirement Confidence Survey: Americans Much More Worried About Retirement, Health Costs a Big Concern
• Retirement worries growing—Americans’ confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values, according to the 18th annual Retirement Confidence Survey® (RCS). Decreases in confidence occurred across all age groups and income levels but were particularly acute among younger workers and those with lower income.
• Overall retirement confidence drops sharply—The percentage of workers very confident about having enough money for a comfortable retirement decreased sharply, from 27 percent in 2007 to 18 percent in 2008, a decline of 9 percentage points and the biggest one-year drop in the 18-year history of the survey. Retiree confidence in having a financially secure retirement has also decreased sharply, from 41 percent very confident to 29 percent, down 12 percentage points.
• Health care costs have become a big issue 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).
• Workers may be waking up to the lack of health insurance in retirement—The RCS finds that 34 percent of all workers now expect to have access to employer-paid health insurance in retirement, down 8 percentage points from last year (42 percent in 2007). 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.
• Retirement planning up, but still not high—Less than 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 from the 42 percent measured in 2004–2006 and considerably higher than the low point of 29 percent recorded in 1996. As before, the 2008 RCS 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.
• Most savings levels are modest—The percentage of workers (72 percent) saying they have saved for retirement has returned to 2001–2006 levels after a slight dip in 2007 (66 percent). Forty-nine percent of workers report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $50,000. Twenty-two percent of workers and 28 percent of retirees say they have no savings of any kind.