Nearly a decade after the Great Recession officially ended it still is having an impact on retirement security, according to the TransAmerica Center for Retirement Research.
“American workers encountered a myriad of challenges over the past decade, including high rates of unemployment, dramatic shifts in home values, volatility in the financial markets, and the double-edged sword of a low interest rate environment that provides for favorable lending rates, but nominal investment returns on savings accounts and other conservative investments,” it said.
A report comparing data from the 10 years up to 2017 found for example that while retirement confidence has risen from its lows, it has stalled since 2014 at just 61 percent confident or very confident that they will be able to fully retire with a comfortable lifestyle.
About the same percentages of workers invested in retirement savings plans in both surveys, while the median amount of pay that participants invest increased slightly over that time. However, as of 2017, 30 percent of investors had taken loans or early withdrawals from their retirement savings. Such so-called leakage “can severely inhibit the growth of participants’ long-term retirement savings,” it said.
One other response to the downturn was that more workers now say they have a retirement strategy, 61 versus 53 percent before, although only 15 percent say that strategy is written down. Meanwhile, the median amount that workers believe they need to have saved for retirement has moderated, from $650,000 to $500,000, perhaps reflecting lowered expectations of how much they will be able to save.
Further, half said their estimate was basically a guess; only a tenth had used a retirement calculator or completed a worksheet. However, there has been a slight increase in the use of outside experts and professional financial advisers.