Pub. 2 2012-2013 Issue 1

16 O V E R A C E N T U R Y : B U I L D I N G B E T T E R B A N K S - H E L P I N G C O L O R A D A N S R E A L I Z E D R E A M S A Snapshot of Retirement Confidence The real measure of the confidence of the retired or soon-to-be-retired taxpayer is not to be made over a one- year span but over an extended time. Over several five-year periods ending with 2012, there is a marked decline in both workers and retirees identify- ing themselves as “very confident” of “having enough money to live comfort- ably throughout…retirement,” and a corresponding increase in those “not at all confident.” (There are also inter- mediate levels in the survey, including “somewhat,” and “not too” confident, but these are less definitive.) For workers in 2007, before the current economic downturn, 27 per- cent of survey respondents identified themselves as “very confident” of a comfortable retirement. Only 10 per- cent responded “not-at-all confident.” A reversal occurred in 2012; only 14 percent responded “very confident” and 23 percent “not at all confident.” Figures from 2002 are similar to 2007, indicating relative stability in confi- dence before 2007. For retirees, the numbers describe a similar trend in lost confidence. The “very confident” dropped from 41 percent in 2007 to 21 percent in 2012. The segment “not-at-all confident” rose from 11 percent in 2007, to 19 percent in 2012. Here, too, 2002 and 2007 numbers were comparable, indicating stable levels of confidence before the last five years. Retiring on Schedule? Because confidence in a secure retire- ment is a matter of accumulated savings, availability of other reliable sources of retirement income, or both, has the drop in confidence described in this survey led to a change in actual or anticipated retirement? EBRI’s RCS has measured actual versus expected retirement age for most of the years that the survey has been conducted. The 2012 survey reflects significant changes in “actual retirement” behavior. Two important realities are ref lect- ed in this portion of the 2012 survey. While only five percent of workers retired later than planned in 2007, nine percent—almost double—retired later than planned in 2012. This group was able to maintain employment, and chose to remain employed longer than had been expected. This was of- ten attributable to a desire to be more financially ready to retire. Fifty percent of 2012 retirees retired earlier than planned, while only 37 percent of 2007 retirees were ahead of their schedules for retirement. While this finding may at first seem contradictory to the many retiring later than planned, it is not. Survey respondents citing rea- sons for earlier-than-planned retirement cited such factors as “health…disability… [employer] downsizing or closure….” The upshot appears to be that many workers remained in the workforce longer than they might have wanted to if they had had the option to retire. Others, in these challenging economic times or for varied reasons, perhaps could not. And Worker Expectations? Those still in the workforce are adjusting their expectations, as the 2012 RCS clearly shows. In 2008 (this item was not reported for 2007), 14 percent of those surveyed indicated that they would probably be retiring later than planned. By 2012, four years into the present challenging economic climate, this number had risen to 22 percent. Unfortunately, some factors in the retirement decision—as noted previously—may be beyond the worker’s control, including health and employ- ment factors.  RETIREMENT STORM – continued