The Employee Benefit Research Institute, EBRI, recently released its 2023 Retirement Confidence Survey. This survey gives us a good feeling about what American workers and retirees are grappling with. There were a couple of key findings in this year‘s survey.
Not surprisingly, retirement confidence took a double-digit drop this year. A decline of this magnitude had not been seen since the 2007–2008 Global Financial Crisis. The stock market, as measured by the S&P 500, dropped 26% from early January to mid-October last year.
What was even more disconcerting for those looking toward retirement, or those in the early days of retirement, was that the bond market dropped 13% at the same time. This was the worst performance in the bond market in over 100 years. This combination caused many employees to see their 401(k) and IRA balances drop enough to make retirement dreams and goals seem less attainable.
This comes on the heels of the COVID-19, pandemic-inspired shutdowns, stimulus, inflation, and global supply chain issues that already caused many workers to feel like their plans for retirement had been knocked off track.
A second finding from the survey was that only 1/2 of US workers believe they will have enough money to last throughout their retirement lives. And nearly 2/3 of workers feel confident about how much money they can withdraw from their savings once they do retire.
Worker confidence in how much to withdraw in retirement.
Inflation growing at levels that we have not seen in four decades is causing significant concerns as well. Higher interest rates on mortgages, cars, and other large ticket items that people generally finance, are also putting a dent in household cash flow. This is impacting how much money is left over for people to save for the future.
All of this has led to a significant drop over the last three years in the number of retirees who feel that their retirement lifestyle will be better than expected. There has been a corresponding rise in the number of people who think their retirement lifestyle will be worse than expected.
Retiree sentiment on overall lifestyle in retirement.
If you or someone you care about is struggling with these questions, and the uncertainties of life today, the CFPs of Impel Wealth Management are here to help. Please feel free to give us a call to discuss your unique questions and concerns or refer to the second opinion service tab on our website.
We are here to help you build a plan for future success and monitor it on a regular basis. We want to make sure you are still on course to reach your ideal future. It is part of the mission that drives us as we continue “Moving Life Forward” together.
© 2023 Jesse Hurst
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