Workplace savers’ confidence to retire was shaken by the 2022 market declines—so much so that only 56% felt on-track in May 2023 for retirement, a full 12 percentage points less than the 68% level of 2021. That year, the Dow Jones Industrial Average was up nearly 19% and rode that high to its 11th year of positive returns since 2008.
That decline in confidence is the theme of a recent BlackRock study, which also found from a savers’ perspective:
- Overwhelming concerns that market volatility and inflation will compromise their savings.
- Fewer than 1 in 4 respondents felt “very confident” that their money will last through retirement.
- 29% of respondents anticipating a later-than-planned start for their retirement.
The study’s year-over-year findings echo the concerns of a 2023 Bankrate study finding a nearly 25% increase in the number of U.S. adults who stated that money worries have a negative impact on their mental health, potentially causing anxiety or sleeplessness.
Employers as plan sponsors share their workers’ concerns. While nearly all sponsors feel a responsibility to help their savers generate or manage their retirement income, only 37% in 2023 felt “extremely confident” that their plans allowed participants to know their annual retirement expenditures.
To achieve a higher level of confidence and certainty, the workplace savers are seeking more resources, either about their employer-sponsored plan or even enhanced employer involvement. According to the study:
- Compared to 2022, 21% more savers in 2023 would prefer the active involvement of an advisor vs. the primarily DIY methods that savers themselves employed earlier.
- 77% said they’d prefer to have more information about their specific investments.
Though not a part of the study, Social Security’s long-term viability and its dependency as a retirement income source likely complicates matters and further lowers retirees’ confidence. There are many variables that come into play with social security such as: Full Retirement Age of 66 or 67, depending on birth year; applicable spousal benefits; marital status; benefits of waiting to initiate payments vs life expectancy; and anticipated cost-of-living allowances, which will likely decline from the 8.7% for 2023 due to 2022’s high inflation.
To those ends, the MS Financial Resources team is here to work alongside our clients providing professional management and a holistic approach. Mitzi is passionate about ensuring that her clients can retire with confidence.
If you or someone you know is close to retirement and in need of a Certified Financial Planner, please call or refer to our team to help. Additionally, we are hosting a free educational workshop this Thursday, September 14th and there are a few spots left. We’ve partnered with the Social Security Administration to have a speaker present as well as a trusted Medicare advisor. For more information and to register, click here.
Note: The BlackRock Read on RetirementTM survey 2023 was conducted online March 21, 2023-May 24, 2023, among 1,339 workplace savers employed full-time and participating in their employer’s 401(k) or 403(b) plan with at least $5,000 in current account assets. Click here to view.