More than a quarter of U.S. workers said they're "not at all confident" about their ability to afford a comfortable retirement, the highest percentage in two decades, according to an Employee Benefit Research Institute report.
"We're getting the most pessimistic results we've ever seen," said Jack VanDerhei, EBRI's research director and co-author of the study released Tuesday.
"Those that are not well prepared are finally starting to get it. The bad news is they're not really reacting to it yet," VanDerhei said in an interview Monday. "Hopefully this will be something that in the future will generate more savings."
About 27% of workers lacked confidence about their retirement savings, up from 22% last year. The increase was driven by those with less than $100,000 in savings, according to the report. The percentage of those with less than $25,000 in savings who are not at all confident about having enough in retirement rose to 43% in 2011, up from 19% in 2007. For savers with more than $100,000 it was 5%, about the same as 2007.
EBRI worked on the study with the research firm Mathew Greenwald & Associates Inc. About 1,000 workers and 250 retirees age 25 and older were interviewed by telephone in January for the survey, which EBRI has conducted for 21 years.
About 39% of workers think they'll need at least $500,000 by the time they retire to live comfortably, while 31% think they can get by with less than $250,000, according to the report.
More than half, or 56%, of workers surveyed had less than $25,000 in savings and investments, excluding their primary residence and any defined-benefit pension plan, the study said. About 42% estimated their retirement savings needs "by guessing," said EBRI, which researches employee benefits. The Washington nonprofit has a database of more than 20 million participants in 401(k) retirement plans.
"People were shell-shocked to some extent by what was going on in 2008 and 2009," VanDerhei said. "Many people wouldn't even open their 401(k) statements when they came every quarter because they were too afraid to look." Now individuals are trying to figure out if they have enough money saved and are getting informed about whether they're on target, he said.
Workers should use online tools such as EBRI's "Choose to Save" calculator, make a savings plan and implement it through contributions to a 401(k) retirement plan with their employer or by opening an individual retirement account, Greg Burrows, senior vice president of retirement and investor services at Principal Financial Group, one of the report's underwriters, said in an interview.
Sixty-eight percent of savers said they could save $25 more a week for retirement, which was a positive finding in the study, Burrows said. Principal, of Des Moines, Iowa, has 3.4 million participants in retirement plans.
Average balances of 401(k) accounts rose to $71,500 at the end of last year, up about 11% from the end of 2009, according to Fidelity Investments. Fidelity is the largest provider of the accounts, with about 11 million participants in defined-contribution plans.
High unemployment, government budget woes, rising health care costs, lower investment returns and questions about funding for retirement progams are forcing Americans to redefine retirement, VanDerhei said.
