Spring has sprung in most parts of the country and with it has come not only the return of nice weather but hopes of the resumption of normality in our lives.

One surprising aspect of these times has been how well the household finances of many American households have held up since the initial onset of Covid-19 in March of 2020. More evidence supporting this idea came forth with last week’s publication of the 31st Annual Retirement Confidence Survey conducted by the Employee Benefit Research Institute, a non-partisan research think tank.

As a wealth manager focused on serving mid-life professionals, I always want to see the findings from this important and long-running survey as soon as they become available. Retirement planning is such an important financial consideration during this life stage and this survey reveals insights into how well people in this age group think they are doing.

Americans Feel Financially Ready for Retirement

On the surface, the 2021 survey findings are surprisingly positive after a year that brought financial distress to many Americans. Workers’ confidence in their ability to live comfortably in retirement remains high overall, according to the survey.

Over 7 in 10 are at least somewhat confident, including 3 in 10 who are very confident. These results are almost unchanged from the pre-pandemic January 2020 survey results.

Retirees also remain confident they have enough money for a comfortable retirement, with 8 in 10 feeling they will have enough money to live comfortably throughout retirement, including 1 in 3 who are very confident.

In fact, retirement confidence appears resilient in spite of the fact that the past year has taken a toll. Half of workers and 7 in 10 retirees say the pandemic has not changed their confidence in achieving a secure retirement.

The Implications for Mid Life Professionals in Career Transition

Below these high-level statistics about retirement confidence are some important nuggets of useful information relevant to the clients I often serve: mid-life professionals in career transition.

Retirement planning is important, and especially so, during this life stage. Even if you choose for non-financial reasons to continue working during your retirement years, there are important investment, tax planning, healthcare and other critical planning considerations to prepare for at this life stage. This might even be more true for those who have set aside more than enough money for retirement and who are already financially independent.

Financial Complacency May Not Be Your Friend

In spite of the importance of being financially prepared for a new life chapter, just 6 in 10 workers ages 55 or older have tried to calculate how much money they need to have saved so that they can live comfortably in retirement.

Though this was much better than the workers younger than age 55, there may be missed planning opportunities even for those workers who already have adequate savings for their retirement years.

On the good news front: 51% of the survey respondents over the age of 55 have $250,000 or more in retirement savings, not including the value of a primary residence. The survey showed that another 15% of respondents had savings of $100,000 to $250,000.

It is true that these figures may not be adequate for retirement in many urban areas across the country, especially in the SF Bay Area. However, they do show that a significant percentage of those in mid-life may be on track to meet their long-term needs and/or may have adequate time to bolster their savings for their retirement and/or other needs later in life.

Some Households Have Struggled

This good news is not to diminish the difficulties of the lower percentage of households who have not built up adequate savings. A third of workers and a quarter of retirees say Covid-19 has made them somewhat or significantly less confident they will have enough to live comfortably throughout retirement. About 1 in 10 workers and 1 in 20 retirees feel significantly less confident.

Comparable to the share who say their confidence has lessened, 3 in 10 workers say the pandemic negatively impacted their ability to save for retirement due to reduced hours, income, or job changes.

Plan Your Next Steps

Regardless of your financial situation, this long-running EBRI study might inspire you to check in with your finances. Depending on your situation, this could help you proactively evaluate your long-term finances in a number of ways.

If you are unsure about your retirement savings, the financial planning process could help you evaluate your investment strategy and establish clear savings and investment targets for your goals.

Alternatively, if you are confident about your readiness to leave the workforce now or later, the planning process can help clarify important tax planning considerations, while clarifying the appropriate withdrawal strategies. Proactively understanding these issues has the potential to optimize your long-term financial strategy.

Here is a link to several published fact sheets regarding the EBRI study.

As always, please contact me if you have any questions or comments, or wish to obtain a complimentary, no obligation review of your finances.

Source: Employee Benefit Research Institute 2021 Retirement Confidence Survey