Nearly three-quarters of workers who don't have access to a retirement plan at work have only about $1,000 in savings, according to the Employee Benefit Research Institute's 2014 Retirement Confidence Survey.
The 24th annual survey, conducted with Mathew Greenwald & Associates, found that 73 percent of people who say they don't save in either an IRA or a defined contribution plan have assets totaling less than $1,000, compared with 11 percent of those who have a plan.
Many Americans are more confident in their ability to afford a comfortable retirement, but that confidence doesn't seem to be based in actual knowledge about how much of their annual income they need to save for retirement.
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The survey found that only a minority of people are taking basic steps to prepare for retirement. More than half of those surveyed put more stock in cost of living and day-to-day expenses than in saving for retirement. Debt continues to be a problem, according to Matt Greenwald of Greenwald & Associates.
"Just 3 percent of workers who describe their debt as a major problem say they are very confident about having enough money to live comfortably through retirement, compared with 29 percent of workers who indicate debt is not a problem," Greenwald said.
He pointed out that 58 percent of workers and 44 percent of retirees say they have debt problems.
EBRI found that workers know they need to boost their savings rate but disagree about how much is enough. Twenty-two percent of respondents said they need to save between 20 and 29 percent of their income and 22 percent thought they would need 30 percent or more.
Those who don't have a retirement plan are more likely than those with a plan to think they need to save at least 50 percent of their income or to say they don't know how much they need to save.
Most people haven't even tried to estimate their retirement savings needs. Only 44 percent said they or their spouse has calculated how much money they will need. Those who have done a calculation are more likely to set aside more money for retirement.
In his 2015 budget, President Barack Obama recommended changes to the way workplace retirement plans are set up, namely ending the ability to defer retirement savings pretax.
The EBRI survey asked how they would respond if they could no longer contribute to an employer-sponsored retirement plan on a pretax basis, but were allowed to contribute to a Roth 401(k) instead. Sixty-five percent of plan participants said they would continue contributing at their current rate. Only 5 percent of respondents said they would stop contributing altogether, said Jack VanDerhei, EBRI's research director during a teleconference on the survey results.
So why aren't workers saving more for retirement?
"We have less of a culture of thrift than we used to. That is the key issue to address when talking about a financially secure retirement," Greenwald said. Most workers would have to give up major items to save more for retirement. Eating out less is one way to bulk up savings, he said.
Despite low levels of retirement saving, the survey found that most people expect their savings to be the key source of their retirement income. Younger people, especially, believe Social Security will only make up about one-third of their retirement savings.
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