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Retirement dreams wither, survey finds

A few years ago, school librarian Sherrie Williams was confident a comfortable retirement was in her future.

"I used to think that my state employee pension and Social Security would be enough to live on," said Williams, 38, who lives in Largo. She said she changed her mind after "seeing my retired parents struggling to stretch their retirement funds to cover insurance and other medical costs. & I don't see how anyone middle class will be able to afford to retire before they are Medicare-eligible."

Like Williams, many U.S. workers have lost their once-rosy optimism about retirement.

The annual Retirement Confidence Survey, released today, shows the most dramatic one-year drop ever in the percentage of workers who describe themselves as very confident about having enough money for a comfortable retirement.

That may not be a bad thing, researchers say.

In the past, "people were relatively confident they'd have enough money, but if you looked at what assets they had, it was just pathetically low," said Jack VanDerhei, researcher for the Employee Benefit Research Institute, which conducted the survey with Mathew Greenwald & Associates. "The good news is that false optimism has started to evaporate. The bad news is that it hasn't translated into a lot of increased retirement savings."

In fact, the savings reported in the survey this year weren't a lot different than last year. About 49 percent of workers said they have less than $25,000 in savings, not including the value of their homes. Just 12 percent have more than $250,000.

Despite those low savings, a year ago, 27 percent of workers were "very confident" of a comfortable retirement; now only 18 percent feel that way, the biggest drop in the 18-year history of the survey. Last year, 29 percent said they were either "not too confident" or "not at all confident." This year, 37 percent were in negative categories.

The retirees surveyed also have become less certain about the future. More than half (54 percent) said they are more concerned about their financial future than they were right after they retired, up from 40 percent last year.

Confidence levels have been affected by the downturn in the economy, particularly the decline in home values and stock prices and the rise in unemployment.

"Securities markets are becoming even more volatile and risky, while safe investments scarcely keep pace with inflation," said Charles Lehnert, 57, of Riverview. "My retirement plans depend on being able to double my investments every eight years, a goal that is becoming less realistic as the recession deepens."

In addition, workers have become more aware of problems in their traditional safety nets. Ever fewer numbers expect Social Security and Medicare to provide them with the same level of benefits current retirees receive. Only about a third expect employer-provided health insurance to cover them in retirement.

One heartening statistic from the Retirement Confidence Survey is that nearly half (47 percent) of workers report having tried to calculate how much money they need for retirement, which often becomes a catalyst for increased saving.

VanDerhei said heightened insecurity about retirement combined with the automatic enrollment programs companies are starting to offer for their 401(k) plans may lead to increased saving. Employees who realize the need to save should be less likely to opt out of the programs, he said.

Total savings and investments

Workers Retirees
Less than $10,000 36 percent 51 percent
$10,000-$24,999 13 percent 9 percent
$25,000-$49,999 12 percent 9 percent
$50,000-$99,999 12 percent 6 percent
$100,000-$249,999 15 percent 13 percent
$250,000+ 12 percent 12 percent

Not including value of primary residence or defined benefit pension plan

Source: 2008 Retirement Confidence Survey

Total savings and investments














Workers



Retirees




Less than $10,000



36 percent



51 percent




$10,000-$24,999



13 percent



9 percent




$25,000-$49,999



12 percent



9 percent




$50,000-$99,999



12 percent



6 percent




$100,000-$249,999



15 percent



13 percent




$250,000+



12 percent



12 percent





*Not including value of primary residence or defined benefit pension plan

Source: 2008 Retirement Confidence Survey

Retirement dreams wither, survey finds 04/09/08 [Last modified: Sunday, April 13, 2008 10:10am]
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