While American workers and retirees are feeling more confident about their ability to retire, their savings behavior hasn’t changed, threatening their ability to afford retirement. This is according to the 2015 Retirement Confidence Survey released by the Employee Benefits Research Institute (EBRI) on April 21.
From its 25th annual retirement survey, EBRI found that retirement confidence is linked to participation in a retirement plan. But the percentage of workers who report that they or their spouse have actually saved for retirement (67 percent) is virtually unchanged from 2014 (64 percent, or statistically equivalent).
The survey also indicated that those who have a retirement plan – whether it’s an IRA, defined contribution or defined benefit – are far more likely to have saved at least $1,000 than those who do not have a retirement plan (9 percent vs. 64 percent) and much more likely to have saved at least $100,000 for retirement (35 percent vs. 3 percent).
Despite the rise in confidence of workers and retirees, only 48 percent of workers report that they or their spouse have tried to calculate how much money they need to save in order to live comfortably in retirement, a number that hasn’t changed much in the last decade.
Defined benefitAlso known as a pension, this is a type of pooled retirement plan in which the plan promises to pay a lifetime benefit to the employee at retirement. The plan manages investments on behalf of members, and the retirement benefit is based on factors such as age at retirement, years of employment and salary history.Defined contributionA type of individual retirement plan in which an employee saves a portion of each paycheck (along with a potential employer match) and invests that money. The employee’s retirement benefit is based on their account balance at retirement. A 401(k) is a type of defined contribution plan.
