2013 Retirement Confidence Survey: Retirement Confidence Remains at Historic Lows as Americans Grasp Reality of Savings Need

Tue Mar 19, 2013 9:30am EDT

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WASHINGTON--(Business Wire)--
Despite signs of economic recovery, a new survey says Americans` confidence in
their ability to afford a comfortable retirement remains at historic lows as
workers appear to be grasping the realities of what they need to save. 

The 2013 annual Retirement Confidence Survey, released today by the nonpartisan
Employee Benefit Research Institute (EBRI) in Washington, and co-sponsored by
the Principal Financial Group®, finds overall confidence levels are essentially
unchanged since the record lows set in 2011. Only 13 percent are very confident
they will have enough money for a comfortable retirement. A full 28 percent1-
the highest number recorded during the 23 years of the survey-are not at all
confident. 

Workers have growing doubts about their ability to pay for basic expenses in
retirement and are least confident about being able to afford medical costs and
long-term care. 

The lack of confidence may also stem from a finding that workers seem to be
realizing just how much they may need to save. Nearly 70 percent say they need
to set aside 10 percent or more of total household income to fund a financially
secure retirement. Four in 10 put the target at 20 percent or more. 

Despite those projections, the survey finds less than half are taking steps to
prepare and total savings remain modest. Saving and planning for retirement are
overshadowed by immediate worries about job certainty, daily expenses and debt. 

"Especially in the face of current financial challenges, Americans need a plan
for saving and spending so they can manage short-term needs and better prepare
for the long-term," said Greg Burrows, senior vice president of The Principal®,
a long-time underwriter of the Retirement Confidence Survey. "Using an online
calculator or working with a financial professional to assess savings needs
helps with setting realistic goals and getting on track toward a more secure
future." 

The survey shows overall retirement confidence is 20 - 40 percent higher among
workers who take positive financial actions including calculating retirement
savings needs, saving in an employer-sponsored plan and getting advice from a
financial professional. 

Among other key findings available on the EBRI website at www.ebri.org:

* Workers open to automatic enrollment. Among those not participating in a
retirement plan, 88 percent of those responding would continue to contribute if
automatically enrolled at a three percent deferral rate and 83 percent would
continue to contribute if enrolled at six percent. 
* Tax incentives matter. Nearly half (45 percent) of workers would stop or
reduce the amount they contribute to their employer-sponsored plan if they could
no longer do so on a pre-tax basis. Lower income workers ($35,000 or less) would
be much more likely to stop contributing if the tax incentive was removed. 
* Savings preparations decline despite growing concerns. The percentage of
workers reporting they or their spouses had saved for retirement had increased
briefly in 2009 to 75 percent but has slowly declined and now stands at 66
percent. 
* Many still guess at savings needs. Forty-five percent of workers guess at how
much they need to accumulate for retirement rather doing a systematic
calculation. 
* Low overall savings. More than half of workers report less than $25,000 in
total household savings and investments, excluding the value of the primary home
or any defined benefit plans.

About the Retirement Confidence Survey

This is the 23rd annual Retirement Confidence Survey, making it the
longest-running annual survey of its kind in the nation. 

The annual Retirement Confidence Survey is conducted by the nonpartisan Employee
Benefit Research Institute (EBRI) and Mathew Greenwald and Associates. The
Principal Financial Group is among about two dozen organizations that provided
funding for the survey. Full results are on the EBRI Website at www.ebri.org

More information on savings tools and resources are online at www.principal.com
and for more news and insights from The Principal, connect with us on Twitter at
http://twitter.com/ThePrincipal. 

About the Principal Financial Group

The Principal Financial Group® (The Principal ®)2 is a global investment
management leader offering retirement services, insurance solutions and asset
management. The Principal offers businesses, individuals and institutional
clients a wide range of financial products and services, including retirement,
asset management and insurance through its diverse family of financial services
companies. Founded in 1879 and a member of the FORTUNE 500®, the Principal
Financial Group has $403.0 billion in assets under management3 and serves some
18.3 million customers worldwide from offices in Asia, Australia, Europe, Latin
America and the United States. Principal Financial Group, Inc. is traded on the
New York Stock Exchange under the ticker symbol PFG. For more information, visit
www.principal.com. 

1 Statistically equivalent to the record low recorded in 2011. 

2 "The Principal Financial Group" and "The Principal" are registered service
marks of Principal Financial Services, Inc., a member of the Principal Financial
Group. 

3 As of Dec.31, 2012

Principal Financial Group
Terri Hale, 515-283-8858
hale.terri@principal.com
or
EBRI
Stephen Blakely, 202-775-6341
blakely@ebri.org

Copyright Business Wire 2013

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