NEW YORK (MainStreet) — Americans' retirement confidence continues to rebound from record lows experienced between 2009 and 2013, according to findings from the Employee Benefit Research Institute's (EBRI) 25th annual 2015 Retirement Confidence Survey. That confidence boost is strongly related to an uptick in retirement plan participation.
Among those with a plan, those who self-identified in the survey as "very confident" increased from 14% in 2013 to 28% in 2015. For those without a plan, only 12% self-identified as "very confident" in 2015, up from 10% in 2013.
Whether or not Americans have an in-tact savings plan is a key factor in their outlook about having an sustainable retirement.
"A plan comprised of an actionable, calculated savings strategy adds an element of control over future unknowns," said Kathleen Hastings, a certified financial planner and portfolio manager with FBB Capital Partners. "It helps to give a positive sense of security and something to look forward to rather than fear because you have quantified and addressed some of the uncertainties."
More Americans are participating in retirement plans, because they are concerned enough about the future of Social Security and their own increased longevity. Some 67% of workers report that they or their spouses are saving for retirement, up from 60% in 2010 according to EBRI.
"It is becoming very clear to Americans that they need to be responsible for saving enough on their own to be able to afford the lifestyle of their choice and for perhaps many more years of retirement than earlier generations," Hastings said.
Take Badrul Alom, for example, who works as a management consultant in Manhattan.
The 32-year-old earns a good living but decided to move to Williamsburg, Brooklyn so that he could lower his rent and pocket 50% more of his paycheck per month to allocate some of the money toward his retirement fund. "I have a roommate but it's a small price to pay for awhile so that I can save money," Alom told MainStreet.
“Developing a new habit is hard,” said Mani Maran, author of The Magic of Attracting Money (CreateSpace, March 2015). “That is why starting the habit of saving $25 a week is an excellent way to get started on this journey. The next step is finding ways to compound the return on retirement savings.”
“If you start a disciplined approach sooner and let the time and value of money work for you with compound interest and growth over time, you may be able to reach your goal sooner and with less of your hard-earned dollars invested,” Hastings said.
At the very least, a retirement plan can include desired age of retirement, spending needs in retirement, an investment plan and available funding methods, such as mutual funds, a 401(k) plan, an IRA and Social Security benefits.
“This is where having a retirement savings plan and monitoring it helps significantly,” Hastings said. “It reinforces where you are relative to your goals and real life experience and allows you to fine-tune your plan as time passes and you get closer to retirement.”
Until then, cutting back in the way that Alom has is key.
“Change your paradigm from instant gratification to delayed gratification,” Maran told MainStreet. “As you accumulate a sizable amount in your savings or investment account, you’ll feel safe and secure. This positive feeling is more important to attract bigger and better things in life.”
—Written by Juliette Fairley for MainStreet