Retirees’ confidence in their ability to live comfortably in retirement remains higher than employees’ confidence, with 32% of retirees very confident and 44% somewhat confident, according the Employee Benefit Research Institute’s (EBRI) 28th annual Retirement Confidence Survey (RCS).

However, retirees are less likely than last year to feel confident in their ability to handle basic expenses and feel less confident in their ability to handle medical expenses. More than four in 10 retirees report that their health care expenses in retirement are higher than they expected and one-quarter say long-term care costs have been higher.

The RCS found that being healthy increases retirement confidence: 46% of retirees who are confident are in good health, compared to 14% who are not confident. The same is true for employees: six in 10 employees who are in good health are confident, compared to 28% of those not confident. The survey report says retirees in fair or poor health are more likely to have difficulty managing their money in retirement, including maintaining their pre-retirement lifestyle, managing day-to-day finances and managing health care costs.

Only 39% of retirees and 19% of employees have tried to calculate how much money they will need to cover health care costs in retirement. The survey finds that retirees who made this calculation are less likely to have experienced higher-than-expected health care costs are and more likely to say costs are as they expected. Seven in 10 employed workers and six in 10 employed retirees say workplace education on health care planning for retirement would be helpful.

The survey also found two-thirds of retirees report that converting their assets into income is a relatively easy task for them. Asked about their withdrawal strategies from defined contribution (DC) plans and individual retirement accounts (IRAs), many retirees aren’t withdrawing much from them. Four in 10 draw only the legally required minimum, and among those who withdraw more than the minimum, many withdraw only as needed.

This confidence in retirement income could be because more than four in 10 retirees report that a defined benefit (DB) plan is a major source of income, and two-thirds report Social Security is a major source of income. Comparatively, only about one-third of employees believe Social Security will be a major source of retirement income, and only 32% expect a DB plan to be a major source of income.

EBRI’s 2018 RCS report is here.