That’s a central observation of this year’s Retirement Confidence Survey, conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Associates. While three in four retirees continue to believe they’ll have enough for a comfortable retirement, less than a third are “very confident” – down from 39% in 2016 – of this rosy outcome. Confidence around meeting medical expenses is also down significantly. Here are some of the notable findings, with our observations.
• Confidence in Medicare and Social Security has declined. Since the 2017 survey, retirees’ confidence that Medicare and Social Security will continue to pay as much as they are paying today has dropped by more than 10%. This is no doubt partly due to the steady stream of forecasts of when their funds could be depleted, but it’s exacerbated by the steady influx of new retirees – 10,000 Boomers are turning 65 every day – with ever increasing lifespans.
• Confidence in covering medical expenses has declined. While a reasonably healthy 80% of retirees think they’ll be able to meet basic expenses, only 70% think they’ll have enough for medical expenses in retirement, down 10% from a year ago. In addition, 44% of current retirees report health care expenses are higher than they had expected. For many, the reality of faltering health seems to be overtaking their earlier assumptions of sustained health. Much of this appears to be attributable to lack of knowledge and planning, as 60% of retirees say that workplace education on health care planning for retirement would have been helpful.
• The desire or need to work in retirement greatly exceeds the reality. While nearly 70% of workers who were surveyed report that they expect work to be a source of income in retirement, more than 70% of current retirees report that it hasn’t been and won’t be.
Even against a backdrop of favorable investment returns, retirees’ confidence is eroding. Why does this matter? Because as more and more people move from accumulating assets to living off them, more and more people will need the planning that wealth managers are uniquely qualified to provide.