George Sanchez, 64, is looking to retire at the end of August. The college director of library services says even after retirement he expects to be working part time and looks forward to it. "My retirement won't be bad," he says. "But it won't be as good as what people had 30 years ago. When my parents retired, they just retired." He says it's been a "real struggle" to make sure he'll have enough money. Inflation worries him. "The maintenance fees on my apartment keep going up."
He's moved a chunk of his savings into an annuity but has left 50 percent in blue chip stocks, which he considers a safe investment. "If General Mills goes out of business," he says, "we all go out of business." Despite continuing to work in retirement, he expects he'll have to cut back on his spending. He's been used to taking four or five nice vacations a year, some to Europe and the Caribbean. He'll have to cut back to just one, he thinks, after he retires.
VanDerhei sees evidence that persons who up until now have successfully put off thinking about retirement are finally being forced to confront reality. That's one reason for the sudden rise in pessimism. Previous EBRI surveys, he says, had revealed "a ton of false optimism. People in their 30s, 40s and even 50s with nothing saved still were saying they expected to have saved enough to reitre. Now those individuals are finally calculating that they need greatly more than what they have. Cold harsh reality is starting to set in." Their shock hasn't yet translated into increased savings, but VanDerhei views shock itself as progress: "They now know enough to be afraid."
EBRI's findings match those of a 2010 survey by MFS Investment Management, which found 4 4percent of non-retired investors had no idea how much money they will need in order to retire comfortably.
VanHerhei cautions against people thinking they can solve their retirement ills just by working longer. "That's certainly feasible for some," he says. "But 40 percent of our respondents said they had to retire earlier than they'd planned—either for reasons of health (their own or their spouse's) or because they could not find the right job." Better that people "bite the bullet now and start saving more. If you start saving more today, you have complete certainty. To delay the pain is a very unwise decision."