While retirement confidence is at an all-time low, savings remain modest and most workers underestimate
their retirement needs.
Retirement Confidence
• The 2008 Retirement Confidence Survey® (RCS) finds that the percentage of workers who are
very confident about having enough money to live comfortably in retirement has dropped
significantly to 18 percent. This matches the low point observed in 1993 when 18 percent of
workers were very confident
• Thirty-three percent of workers who have not saved for retirement nonetheless feel very or
somewhat confident that they will have a comfortable retirement.
How Many Americans Are Saving?
• Seventy-two percent of workers report that they and/or their spouse have saved money for
retirement. The proportion of workers having saved for retirement has fallen since a high-mark in
2000 (78 percent) and has remained fairly constant since then at about 70 percent (Figure 2).
Reported Savings:
• As would be expected, older workers tend to have saved more than younger workers, but overall
savings levels tend to be modest. Forty-nine percent of workers report less than $25,000 in total
savings and investments (excluding their home and defined benefit plans).
Reported Total Savings and Investments
Among Those Providing a Response
(not including value of primary residence or defined benefit plans)
| All Workers | Ages 25–34 | Ages 35–44 | Ages 45–54 | Ages 55+ | ||
| Less than $10,000 | 36% | 49% | 33% | 29% | 28% | |
| $10,000–$24,999 | 13 | 18 | 13 | 11 | 8 | |
| $25,000–$49,999 | 12 | 14 | 12 | 13 | 7 | |
| $50,000–$99,999 | 12 | 13 | 12 | 10 | 16 | |
| $100,000–$249,999 | 15 | 4 | 21 | 18 | 18 | |
| $250,000 or more | 12 | 2 | 8 | 20 | 23 |
Amount of Savings Needed:
• Forty-two percent of workers think they need to accumulate at least $500,000 by the time they
retire to live comfortably in retirement. Sixteen percent feel they need between $250,000 and
$499,999, while 25 percent think they need to save less than $250,000 for a comfortable
retirement.
• Workers who have performed a retirement needs calculation (27 percent) are over two times more
likely than those who have not (11 percent) to expect they will need to accumulate at least $1
million before retirement.
Savings Drawdown Rate
According to Selena Maranjian of the Motley Fool: In order to make your nest egg last, you should conservatively plan to withdraw about 4% of it per year in retirement, to live on. Will that be enough? The 4% withdrawal rate should include inflation-indexed increases, so if you're taking out $14,000 in the first year and inflation that year is 3%, the next withdrawal will be 1.03 times $14,000, or $14,420. You can see how quickly your money will get depleted this way.
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