Confidence Drops About Financial Security in Retirement

Written by: Alison Pruitt

The ongoing economic uncertainty continues to erode Americans’ beliefs about their financial security in retirement.  Sun Life Financial recently released the results of its annual Unretirement Index survey, which shows that confidence in stability and financial security in retirement has dropped nearly 20% compared to a year before.  The Index was created based on a survey of 1,499 Americans between the ages of 18 and 66.

Loss of Confidence:  In 2010, 42% of Americans felt very confident they could meet basic living expenses in retirement, but in 2011, the number was only 23%, the lowest it has been since the survey started.  One in five Americans believe that they will never retire – primarily because of financial concerns.  The survey measured retirement confidence relative to: personal finance, faith in the economy, health, and government and job-related retirement benefits. The confidence level declined in every area, but the largest drop (-31.7%) occurred in confidence about the benefits needed to retire, including defined benefit plans and employee health benefits.

Confidence by Age Group:  Not all age groups experience the same degree of anxiety about their financial security in retirement. The survey grouped respondents into three categories: Boomers (47-66), Gen X’ers (25-46), and Millennials (18-24).  The oldest group, the Boomers, were most concerned with the ability to pay for medical expenses; 47% of Boomers said that they were “not at all confident” they could pay for medical expenses in retirement, compared to 31% for the other two groups.

The number of respondents who were “not at all confident” they could live the life they want in retirement was similar across all age groups, ranging from 42% for the Boomers to 48% for the Millennials.  The level of anxiety about the inability to meet basic living expenses was comparable between Boomers (30%) and Gen X-er’s (32%), but only 21% of Millennials voiced a similar lack of confidence.

Confidence Index:  Sun Life uses the results of the survey to create their Unretirement Index, which measures the level of confidence in financial security in retirement on a scale of 0 to 100 (with 100 reflecting the highest confidence).  The overall score dropped from 44 in September 2010 to 36 in September 2011, a decline of 18.2%.

There was not a huge difference in index scores by age group; however, the survey did reveal that Milennials felt more confidence in employee benefits and the economy, while Boomers were more certain about government retirement benefits.  Confidence in personal finances and employee benefits rises with the level of household income.


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