Research suggests that Americans are currently more optimistic as compared to what they have been throughout the past few years about retirement life. However, the only question is whether or not the Americans will have enough money to fall back on during their retirement. As per a new study by Employee Benefit Research Institute, there has been too much of confidence among the American workers and it has seemed to rebound to the pre-recession time where more than 68% say that they’re somewhat confident about the fact that they can live comfortably during retirement.
Among the people who are already retired, 84% are confident that they will enough dollars to fall back on and to live comfortably during their golden years. This level has gone up from 74% one year back. As the present financial situation for retirees and workers improve, their confidence also increase at the same time.
Is the confidence of the American workers unrealistic?
There are many who feel that this confidence among the workers of the US is rather unrealistic, keeping in mind the few people who have actually calculated the numbers on the exact amount of money that they will need in their retirement years. The EBRI report revealed that just 40% have actually done the retirement calculations which means 1 among 4 workers has tried to calculate the amount of money that he may need for paying his medical expenses during retirement. Did you know that a couple aged 65 years could spend $2, 85,000 out of pocket in the form of medical expenses throughout their lifetime?
The Retirement Confidence Survey has been the longest running survey and in 2019, it is in its 29th year and still now they feel that the discrepancy between preparing for retirement and the pseudo-confidence isn’t new and this is probably not going to end. There has always been a ‘disconnect’ and there will also be. The reason behind this disconnection is partly because of the workers aren’t able to decide what they’re going to do with their dollars. There is immense lack of financial planning especially with regards to their future finances.
Are the workers getting emotional?
A certified financial planner said that for several American workers, this entire concept is getting too emotional. People tend to purchase things in accordance with their present lifestyle. They have decided to give more priority to their present lifestyle over the lifestyle that they had post retirement. Fidelity Investments finds out that while 63% are confident regarding their present financial health, majority lack the required confidence about their future.
Just 19% of the Americans have created a comprehensive financial plan regarding their retirement. Those who never had a financial plan said that they never ever contemplated having a financial plan in place. They are totally confused about where to start off from and how their efforts can make a difference. People are actually going through a state of denial. Despite having so many retirement calculators in place, whether offline or online, there are very few who use them. People are of the opinion that they’re left so far behind that they are no solutions within their reach. They are scared to face the challenges. Ideally, a person needs to start off with retirement planning way before the actual time comes. Regardless of whether they work with an employer or are self-employed, they should seek the help of the workplace retirement accounts like the 401(k) or Roth IRA so that they have something to rely on during their golden years.
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