EBRI: Americans’ Retirement Confidence Shows Slight Improvements

While workers’ and retirees’ confidence in achieving a financially comfortable retirement has not fully recovered from a significant drop seen in 2023, the Employee Benefits Research Institute found positive signs that confidence is recovering. 

According to EBRI’s recent study, 2024 Retirement Confidence Survey, 68% of workers and 74% of retirees are confident they will have enough money to live comfortably throughout retirement. However, this is not a significant increase from last year, when the figures were 64% for workers and 73% for retirees. 

A possible explanation for the upward trend is that workers and retirees showed increased confidence in their income. According to the U.S. Census Bureau, wage growth is outpacing inflation growth in 2024. EBRI noted that Americans are starting to feel this shift, as 28% of workers and 32% of retirees who are confident said they feel that way due to having stable assets and steady income.  

Inflation is still a major concern though, as 31% of workers and 40% of retirees cite it as the reason why they lack retirement confidence.  

In terms of retirement income, the vast majority of workers (88%) expect Social Security to be a source of income in retirement. However, EBRI found that only two-thirds of workers and three-quarters of retirees understand how Social Security works or the various work and benefits claiming decisions that will impact their retirement benefits. 

But many workers are taking steps to understand Social Security. For example, almost 60% of workers and 80% of retirees are aware that the age at which they claim Social Security can impact the amount they receive, according to EBRI. 

Similar to last year’s findings, half of retirees said they retired earlier than expected—many before the age of 65. While two in five retirees who retired early said they did so because they could afford to, nearly seven in 10 retirees indicated the reason was “out of their control.” 

Nearly 75% of workers predicted that they will continue to work for pay in retirement, however, only three in 10 retirees said they actually have worked for pay since retiring.  

Additionally, after calculating how much money they will need in retirement, many workers and retirees expressed a desire to save more, as their estimations differ drastically from what they currently have accumulated. 

For example, a third of workers who tried to calculate how much they will need in retirement estimated they will need $1.5 million or more. While EBRI found that a third of workers currently have less than $50,000 in savings and investments, and 14% of workers have less than $1,000 in savings and investments. 

Emergency Savings 

Workers in the EBRI survey also reported that they would like help saving for emergencies through their retirement plan.  

While two-thirds of workers believe they have enough savings to handle an emergency expense, the ability to save for emergencies is still at the top of workers’ list of valuable improvements they would like made to their retirement savings plan. 

Around 80% of workers expressed that the SECURE 2.0 Act of 2022’s provision that allows employers to set up an emergency savings account as part of their retirement plan offerings would be a helpful benefit. 

Additional guidance from the Department of Labor and IRS this year clarifies how plan sponsors could implement the addition of pension-linked emergency savings accounts to their plans. However, some plan sponsors have expressed disinterest in creating a such so-called sidecar accounts, arguing that a retirement account should not be a place participants go to for money in emergencies. 

But EBRI found that some Americans are already using their retirement plans to pay for emergencies, as nearly one in five have taken a loan or withdrawal from their retirement plan. Many of those who took money from their plan did so to pay for unforeseen occurrences, such as the need to make ends meet, pay for a home or car repair or cover a medical expense. 

Guaranteed Retirement Income 

Lastly, EBRI found that among workers with access to a workplace retirement plan, a third said having investment options that provide guaranteed lifetime income would be the most valuable improvement to their plan. 

More of the workers responding to this year’s survey who are contributing to their workplace retirement plans said they expect to use the savings to purchase a product that guarantees monthly income for life once they retire.  

While half of workers expect a guaranteed product to be a source of income in retirement, a significantly smaller share of retirees—a little over a quarter—reported having an investment that provides them guaranteed income. 

The survey of 2,521 Americans aged 25 and older was conducted between January 2 and January 31, 2024.