Even with an economy that’s gradually moving out of a recession, worries over retirement are still mounting for employees.
New research shows that 28% of Americans are not confident about their efforts in saving money for retirement, according to the Employee Benefit Research Institute’s 2013 Retirement Confidence survey.
Those confident about retirement is mostly unchanged since 2011: 13% are very confident while 38% are somewhat confident. But the 28% who are not at all confident, coupled with the 21% who are not too confident, paint a grim picture for workers’ confidence.
EBRI says that part of the reason for the pessimism toward retirement could be due to the fact that employees are realizing they’ll need to save much more to retire comfortably. One-fifth of respondents said they’d need to save anywhere from 20%-29% of their current income, while 23% said they need to save over 30% of their income to retire comfortably.
Should they be this worried?
Interestingly enough, even though this is the highest amount of Americans concerned about retirement in over 20 years, it would appear that retirement saving and planning isn’t the most pressing issue facing employees. Only 2% of workers identified it the most pressing issue, while 30% said job uncertainty and 12% said making ends meet were the highest concerns.
More than half of workers (55%) cited debt as a problem with their own personal finances and only half of workers said they could come up with $2,000 in the event of an emergency.
Where they need help
The facts from this research brings up a strategy that we’ve mentioned before: Educating workers on financial wellness.
Though the economy may be getting better, the future is still uncertain as healthcare and tax changes are looming. There’s really no better time to get workers educated on the best practices for financial planning.
Here are some quick keys finance should emphasize:
- Set goals. Emphasize the importance of having a dollar amount in mind for when they retire. Use online resources like ChooseToSave.org’s Ballpark Estimate tool to help employees figure out how much they should be saivng now.
- Manage debt. The survey shows debt is a major concern for American workers, so educate workers on refinancing and eliminating it before their golden years. This includes credit cards, mortgages and student loans.
- Be prepared for emergencies. A $2,000 emergency fund is a safe starting point. Encourage all employees, especially younger workers, to open a savings account and keep contributing a percentage of their paycheck. A fully funded emergency fund is ideally three to six months of your personal expenses.