So much in the finance and retirement world has changed since the 2008 recession. What has this change done for workers feelings and confidence in their ability to have enough money for a comfortable life while in retirement? Here are some great findings according to the 2014 Retirement Confidence Survey (RCS) that answers that exact question
According to the below figure we are seeing a great trend for 2014. While we are nowhere near the confidence levels of 2007 we have finally seen a somewhat significant up tick in workers confidence levels. In fact we are up 18% compared to 13% in 2013.
What is the sentiment amongst retirees about their ability to have enough money to live comfortably throughout their retirement? Retirees follow a similar patter to workers and their confidence has jumped for 2013. 28% of retirees report that they are very confident in having enough money throughout their retirement for a comfortable life. In 2013 confidence was only at 18%. One important finding to note is that confidence amongst retirees is strongly tied to participation among retirements plans (IRAs, 401ks). Those with a retirement plan have a confidence of 24% while those without a plan have a confidence of only 9%. In 2013 those with a plan had a confidence of 14% and those without a plan had a confidence of only 10%. It is hard to feel confident that you'll have enough money for retirement without a retirement plan.
Workers that do and don't have a retirement plan feel very similar to retirees. Workers that do not have a retirement plan are four times more likely to say they are not at all confident about their financial security in retirement. 11% of workers with a plan don't feel confident at all about their financial security in retirement while 46% without a plan don't feel confident at all about their financial security in retirement.
There are so many things that go into why someone is confident in their retirement the findings from the RCS have found some other interesting and consist relationships that point as to why someone is or isn't confident in their financial retirement. First, debt has a huge affect on your retirement confidence. In fact, only 3% of those with debt being a major problem are very confident in their ability to live comfortably throughout retirement.
What are some other correlations? Confidence increases with the increase of household income, level of savings and investments, educatino and inproved health status. Those that are working full time have a higher confidence than those that are employed part time, self-employed or unemployed.
I am strongly encouraged by these findings. With the many different correlations it can be any number of reasons why confidence is up, but let's be happy because it is up! In my opinion confidence is up because 2013 was a great year for our economy. While it makes sense that our ecnomy plays a vital role in how great our retirement can be it shouldn't be the only factor. One of the biggest factors to a successful retirement should depend on us. Do you have a retirement plan (IRA and/or 401k)? Does your work provide a 401k and are you making sure you contribut enough for the full match if there is a company match? If not, have you set up an IRA? If you don't know these simple quesitons you need to figure them out and take some time to really plan out your retirement.
For some help creating your own retirement plan check out our retirement guide. We are also here to help you invest your retirement accounts the way you want. This means investing in things other than the stocks and bonds because while they are great to have in a retirement portfolio they shouldn't be the only thing you have in your retirement portfolio. Diversify your retirmement portfolio with things like real gold and silver, rental properties and so much more.
Author: Nick Barker