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Retirement

The Retirement Confidence and Preparation Gap

FINRA Staff
The Retirement Confidence and Preparation Gap

Americans are the most confident about their future in retirement since the 2008 financial crisis, according to a new study by the Employee Benefit Research Institute (EBRI) and independent research firm Greenwald & Associates. But the majority of Americans haven’t actually tried to calculate how much money they will need—a key facet of retirement preparation.

"It is risky for workers
to assume they will be able
to work into retirement when,
for so many retirees,
this has not been the case."

About 82 percent of retirees are confident in their ability to live comfortably throughout retirement, according to the 2019 Retirement Confidence Survey, up from 75 percent last year. That’s comparable to highs measured in 2005 and 2017, according to the report.

Meanwhile, the number of workers not yet retired who said they are "very confident" that they’ll be able to live comfortably throughout retirement jumped to 23 percent. That’s a jump from last year’s 17 percent and in line with levels last measured more consistently in the late 1990s and early 2000s.

While confidence has improved, the data also show that most Americans don’t know how much they will need to save, which begs the question of whether this confidence might be a bit misplaced. Only 42 percent of Americans have tried to calculate how much money they will need in retirement, according to the 2019 Retirement Confidence Survey. The FINRA Foundation’s 2018 National Financial Capability Study similarly found only 41 percent of respondents had attempted to do that math.

Do you know how much you’ll need? Try FINRA’s Retirement Calculator.

Reality Versus Expectation

The study also showed gaps in retiree experience and worker expectation, with the widest gaps related to earning income during retirement and expected retirement age, according to the report.

About 80 percent of workers think they will work for pay in retirement, according to the report. But in reality, only 28 percent of retirees actually do.

"It is risky for workers to assume they will be able to work into retirement when, for so many retirees, this has not been the case," said Lisa Greenwald, executive vice president of Greenwald & Associates. "I understand there’s a strong desire for income stability, but for many, continuing to receive a regular paycheck from work may not be the solution."

In fact, many retirees found themselves retiring earlier than expected. About 43 percent of retirees leave the workforce earlier than planned, according to the survey, many due to illness or disability or to changes at their company.

Wherever you are in your retirement journey, we have resources to help you plan for your future.

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