WASHINGTON (Reuters) - Workers are saving less, worrying more and may be unrealistic about their ability to work as long as they think necessary to afford retirement, according to a major national survey released on Tuesday.
The 2012 Retirement Confidence Survey, published by Employee Benefits Research Institute, found workers in January as gloomy as they have ever been about their retirement prospects. The survey, which measures workers' and retirees' views of the future rather than actual savings data, has been conducted annually for 22 years and is largely underwritten by financial services firms.
Some 60 percent of workers surveyed said they had less than $25,000 in household savings (excluding their homes and traditional pensions); 34 percent said they had pulled money out of savings to pay for basic expenses; and only 52 percent said they felt even somewhat confident that they would have enough money to live comfortably through their retirement years.
The nation's confidence has plateaued "at the lowest levels we've seen in the two decades since we've done this survey," said Jack VanDerhei, the report's co-author and research director at EBRI.
VanDerhei said it was not clear how much the pessimism was warranted, since the survey did not track actual retirement readiness or spending. Some workers could be in better shape than they may think they are.
For example, workers who had calculated their retirement needs had significantly higher confidence levels than those who had not done the math, said Greg Burrows, senior vice president of the Principal Financial Group, a long-time underwriter of the Retirement Confidence Survey.
But "a significant percent of the population is deluding themselves," VanDerhei said. "If you're in your 50s and you don't have any money saved and you don't have a... (defined benefit)... plan, I have no problem saying that is delusional."
The survey revealed sharp differences in retirement readiness between respondents at upper versus lower income levels. Of that 60 percent who said they lacked significant savings: 57.35 percent have household income under $35,000, 50 percent are under age 40, and 21.6 percent have defined benefit plans.
But 93 percent of workers with household income over $75,000 said they have continued to save for retirement, and 21 percent of respondents said they had more than $100,000 in savings and investments (again, excluding the value of their homes and defined benefit plans).
The survey queried 1,003 workers and 259 retirees during the first two weeks of January.
Among the other significant findings:
-- Only 58 percent of workers said they were currently saving money for retirement, compared with a peak of 65 percent in 2009. The decline in the number of people saving was all in households earning less than $75,000. Furthermore, significant numbers of workers said they had to make unplanned withdrawals from their savings in order to meet ordinary expenses.
Retirement concerns in general have taken a back seat to concerns about job uncertainty and debt, EBRI said.
-- More workers now (than in previous surveys) are depending, perhaps unrealistically, on their ability to work longer: 37 percent say they expect to work after age 65, as compared to 24 percent in 2007 and 18 percent in 2002. The full retirement age is now 66, but workers appear to be looking further out than that. In the 2012 survey, 26 percent of workers said they expect to be 70 or older when they retire and another 7 percent said they would "never retire."
But EBRI cited "a considerable gap between workers' expectations and retirees' experience." In 2012, roughly half of the retirees surveyed said they left the workforce earlier than they had planned to, mainly because of health problems or disabilities, or because they were forced out of their jobs.
-- Healthcare in retirement remains the big worry. Only 13 percent of workers said they were very confident that they will be able to pay for medical expenses throughout retirement, and only 9 percent feel that same level of comfort about long-term care expenses.
-- Current retirees have options. In 2012, only 22 percent of actual retirees surveyed said they dipped into their savings to pay for basic expenses; that is down from the 33 percent of retirees who said they did that last year. That may be because current retirees typically have some flexibility in a bad economy to tighten their belts and spend less, said Mathew Greenwald, whose consulting firm, Mathew Greenwald & Associates Inc, conducted the survey with EBRI.
-- Not everyone has options. In 2012, only 74 percent of employed workers taking the survey said they were offered any kind of retirement plan at work, down from 77 percent in 2007. And Greenwald projected that current workers will face higher retirement pressures than the today's retirees: They will have fewer defined benefit plans, more healthcare cost inflation and more pressure on their savings.
(Editing by Chelsea Emery and Andrea Evans)