Americans are growing more confident about their retirement, but that may be because they’re refusing to face bad news about how big a nest egg they need, says a survey whose sponsors include insurance companies, banks and mutual funds.
Most respondents said they haven’t calculated how much savings they’ll need to live comfortably, and many of today’s workers - even those in their 50s - have saved less than $10,000 or even nothing at all.
One bright spot: Workers age 25 to 33, worried about Social Security’s staying power, are starting to save for retirement at a younger age than their parents and older siblings.
The survey, financed by 22 organizations including the American Association of Retired Persons, was released Thursday.
Sixty-eight percent of workers questioned said they are very confident or somewhat confident of their retirement income prospects, up from 62 percent last year. And the proportion of those “not too” or “not at all” confident dropped from 37 percent to 30 percent.
“It’s generally accepted that this is false confidence,” said Jeffrey Love, senior research associate for the AARP. “There’s a lot of faith here that things will work out, that they’ll save later, that the stock market will steadily increase.”
Despite most workers’ confidence in their retirement prospects and even though a third would like to retire at age 55 or younger, only 36 percent said they have figured out how much they’ll need. And a quarter of those can’t give a figure when asked. That means nearly three-quarters of current workers don’t know how much money they should accumulate.
Meanwhile, the proportion of workers saving regularly for retirement was 69 percent, up from 61 percent three years ago. But Mathew Greenwald, president of the Washington-based market research firm that conducted the survey, said saving blindly often isn’t enough.
“It’s hard to hit a target if you don’t have one,” he said. “It’s hard to make decisions about how much to save and how much to spend if you don’t know what you’re shooting for.”
The survey of 772 workers and 229 retirees was conducted by telephone in July. Participants were selected randomly to represent a cross-section of the U.S. population.