The Upside Of Retirement Worries

Are you worried about retirement? If so, that may be a good thing.

Those concerned they may not have enough money to retire comfortably have plenty of company today. A recent survey by the Pew Research Center found that 38 percent of Americans are not confident that they will be able to afford retirement.

Why could that level of worry be a good thing? Because savings rates in the U.S. have been deficient for a very long time, an increased level of worry might indicate a heightened awareness of the problem. That awareness could be the first step toward addressing the obstacles that future retirees face.

The sad state of retirement confidence

Certainly, the trends indicated by the survey show there is plenty of cause for concern. Here are some major points:

1. Retirement confidence has taken a hit. The 38 percent who are not confident about being able to afford retirement is an increase from the 25 percent who responded that way in 2009. While the economy has ostensibly been in a recovery over those three years, many Americans continue to struggle, and perhaps they've just had more time to assess the damage that the financial crisis and the Great Recession did to their wealth.
2. Asset declines are shocking. The Pew Research Center found that the median wealth of American households declined by 28 percent between 2001 and 2010. The damage was worst for people between ages 35 and 44: Median wealth in that age group declined by 56 percent.
3. People in their late 30s are most worried. The severity of losses in that 35 to 44 age group may help explain why retirement worries are most prevalent among people of that age. The Pew Research Center found that 49 percent of those between 35 and 44 are not confident about being able to afford retirement, which is the highest level of doubt for any age group. What suggests there has been a growth in awareness of the problem is that just three years ago, this group was one of the most unconcerned about retirement funding, with just 20 percent expressing a lack of confidence at that time.
4. Average incomes make retirement challenging. According to the Bureau of Labor Statistics, the average wage in the U.S. is $45,230. The Pew study found that in the $30,000 to $49,999 income bracket, lack of confidence in retirement funding jumps from the overall average of 38 percent up to 70 percent. In other words, Americans of average means are finding it extremely difficult to save enough for retirement.
5. Too many people seem to be giving up. The stock market has been shaky over the past dozen years. Savings account interest rates are down near zero. In short, Americans aren't getting much return on their investments, but the other problem is that people seem to be abandoning their investment programs. The Pew study found that the proportion of households owning stocks fell by 6 percent between 2001 and 2010, and ownership of retirement accounts declined by 2 percent over the same time period.

While it's not enough just to worry about retirement, if it's the first step toward making a plan and improving savings rates, a little anxiety might prove to be constructive. Ultimately, you will likely find that the more action you take to secure your retirement, the less you'll have to worry.

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