Mortgage News May 10, 2023
According to the 2023 Retirement Confidence Survey (RCS) by the Employee Benefit Research Institute (EBRI), there has been a significant decline in the confidence levels of both older and younger Americans in their ability to have a secure retirement compared to the previous year. This drop is only comparable to the one that occurred during the 2007-08 financial crisis, as per the survey.
The survey revealed a significant decline in confidence among both workers and retirees in their ability to finance their retirements, with figures dropping to levels seen only during the 2008 global financial crisis. The current economic climate, especially inflation, has eroded Americans’ confidence in their retirement preparations before the pandemic. The survey revealed a decline in confidence among workers and retirees, as only 18% of workers expressed strong confidence in their retirement stability, and 27% of retirees felt the same.
According to the EBRI, four out of ten workers and a quarter of retirees who lack confidence in their retirement finances attribute it to insufficient savings. Inflation is another major factor causing uncertainty among Americans, with 29% of workers and 42% of retirees stating it as a reason. Furthermore, a large number of respondents across all groups express fears of inflation affecting their retirement savings negatively. The survey also revealed a rise in workers’ debt levels, despite over 80% feeling confident in their financial literacy.
The survey notes that over 60% of workers report their debt as a problem, which is a significant increase from the previous year, while the same remains true for 34% of retirees. Retirement savings levels have also suffered in the last 12 months, with 40% of workers and 58% of retirees reporting a drop in their retirement account balances.
Lisa Greenwald, CEO of Greenwald Research, which collaborated with EBRI for the survey, stated that workers are concerned that their salaries may not keep up with inflation and have reported an increase in their debt levels, while retirees are worried about the cost of living and expenses. The survey found that half of retirees reported their overall spending to be higher than expected, compared to one-third last year. Additionally, there is a gradual increase in the number of retirees who feel that their retirement lifestyle is worse than what they expected.
Between January 5 and February 3, an online survey was conducted, consisting of 2,537 respondents aged 25 and above, including 1,320 workers and 1,217 retirees.
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