The confidence Americans have in their ability to save enough money to live comfortably during retirement remains at historic lows, new research finds.
A study from the Employee Benefit Research Institute, co-sponsored by the Principal Financial Group, discovered that overall retirement confidence levels are essentially unchanged since record lows set in 2011.
Just 13 percent of those surveyed are very confident they will have enough money for a comfortable retirement, while 28 percent — the highest number recorded during the 23 years of the study — are not at all confident.
This lack of confidence may be explained by another finding: workers seem to be coming to grips with just how much money they need to save. Nearly 70 percent of those surveyed believe they need to set aside 10 percent or more of total household income to fund a financially secure retirement, while 40 percent put the target at 20 percent or more.
Despite those projections, less than half of the surveyed workers are taking financial steps to prepare for retirement. The study found that rather than save for retirement, employees are spending their money on more immediate worries, such as daily expenses and debt.
Many workers have no clue how much money they will need for retirement. Forty-five percent of the employees surveyed said they guess at how much they need to accumulate, rather than doing a systematic calculation.
"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, a senior vice president of the Principal Financial Group.
The research revealed that businesses can help get employees to save for retirement by automatically enrolling them in employer-sponsored plans. Among those individuals not currently participating in a retirement plan, 88 percent would continue to contribute if automatically enrolled at a 3 percent deferral rate, while 83 percent would continue to contribute if enrolled at 6 percent.
The study is based on surveys of 1,000 U.S. residents over the age of 25.