Retirement confidence varies across demographic segments, but overall, just 24% of U.S. workers are “very confident” that they will be able to maintain a comfortable lifestyle in retirement, according to a study released Tuesday by nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute.
Still, almost half of the respondents (49%) said they are “somewhat confident” they will be able to retire comfortably. Full-time workers were more likely than part-time workers to be confident in their ability to retire comfortably, at 75% and 62%, respectively.
“Demographic influences can profoundly affect a worker’s ability to save, plan and prepare for a financially secure retirement. A greater understanding of these influences can help identify opportunities, envision solutions and inform public policy priorities for strengthening our retirement system,” Catherine Collinson, CEO and president of Transamerica Institute and TCRS, said in a statement.
The pandemic negatively affected the financial situation in some way for 49% of the workers surveyed. Emergency savings were hard hit for many during the pandemic. According to the study, 43% of those surveyed experienced one or more negative effects to their employment, including job loss, furlough, reduced hours, reduced pay and/or early retirement.
“Despite the immediacy of the pandemic and its challenges, it is remarkable that workers are maintaining a focus on their future retirement. Nevertheless, many are still at risk of not achieving long-term financial security,” Collinson said.
Eighty-two percent of respondents said they are saving for retirement through their current employers’ 401(k) or similar plan and/or outside of work. The flip side is that 34% of workers have taken a loan, early withdrawal and/or hardship withdrawal from a 401(k) or similar plan or IRA. Almost half of the workers surveyed indicated that debt interferes with their ability to save for retirement.
The study identified four policy actions that, according to the authors, could help bolster America’s retirement system: address Social Security shortfalls; expand retirement plan coverage among all workers, including part-time workers; promote and expand the Saver’s Credit, a tax credit for eligible taxpayers who save for retirement in a 401(k), 403(b) or similar plan or IRA; and support caregivers through Social Security credits, tax credits and paid family leave.