This Issue Brief reports on the findings from the 14th annual Retirement Confidence Survey (RCS), a comprehensive study of the attitudes and behaviors of American workers and retirees toward saving, retirement planning, and long-term financial security. The 2004 RCS interviewed 1,002 individuals (783 workers and 219 retirees) age 25 and older in the United States and found that key attitudes and behavior patterns about retirement have barely changed over the past few years. The RCS was first released in 1991 and is unique in its long-term ability to track public attitudes about saving and retirement.
Many American workers have saved some money for retirement, but the proportion of Americans saying they have saved money for retirement has not increased since 2001. Moreover, 4 in 10 workers say they are not currently saving for retirement. Many of those with savings cite low levels of savings and investments.
Some workers may have expectations about their retirement that cannot be achieved. They expect to be able to work until they reach the age they want to retire, and a majority expect to be able to work for pay in retirement. Some will find that ill health or job loss ruins these plans. Workers also tend to expect their financial standard of living in retirement to be at least as good as before retirement and to remain at least at that level throughout the length of their retirement. For some, this is unlikely, due to increasing medical costs, declining savings, and inflation.
Some workers may be counting on employer-provided retirement benefits that they might never receive. Workers are as likely to expect to receive benefits from a defined benefit plan pension and retiree medical insurance as current retirees are to have actually received them. At the same time, employers are cutting back on the provision of these benefits, making it less likely that future retirees will receive them. In some cases, workers who do receive these types of benefits will find that they are not as rich as those received by retirees in the past.
Few workers appear to have an idea of how much it takes to live comfortably in retirement. Only about 4 in 10 have taken steps to calculate how much they need to save by the time they retire in order live comfortably in retirement, and one-third of those say they don't know or can't remember the result of the calculation.
Almost half of workers who have not saved for retirement feel at least some confidence about their ability to have a comfortable retirement. Some of these workers expect an employer to fund their retirement. Others are planning to save later, to rely on Social Security, to obtain support from family or friends, to work in retirement, or to manage through some other arrangement.
Retirement education can lead to changes in savings behavior of a significant proportion of workers. More than 4 in 10 workers who tried to do a savings needs calculation report changing their retirement planning as a result. Similarly, almost 3 in 10 of those who received retirement education through the work place changed their retirement planning.
