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The purpose of this study is to examine factors contributing to individual's retirement confidence using the 2004 Retirement Confidence Survey. Retirement confidence includes the views and attitudes of Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The results suggest that those who calculated their retirement fund needs, had more savings, higher levels of confidence in government programs such as Social Security and Medicare, higher household income, better health, and who received workplace financial education and advice had higher levels of retirement confidence than others. The findings provide implications for financial professionals, employers, and policymakers.
Key words: retirement confidence, retirement preparation, workplace financial education
Wealth and health are two of the most important factors contributing to a successful retirement. Believing that one will have adequate postretirement income is positively related to retirement adjustment (Beehr, 1986; Taylor & Doverspike, 2003). There is a great concern that many aging baby boomers may retire without adequate financial resources for retirement in the near future (Gist, Wu, & Verman, 2004; Yuh, Montalto, & Hanna, 1998). With decreasing numbers of defined benefit pension plans (Turner, Muller & Verma, 2003) and uncertainty regarding Social Security and Medicare payments (Social Security Administration, 2004), individuals increasingly need to save more to prepare for their own retirement. Generally, those who are better prepared for their retirement have more positive attitudes toward retirement. However, some people might feel optimistic about their retirement despite inadequate retirement savings. Therefore, it seems to be important to explore factors that lead to retirement confidence, such as retirement planning.
Different studies have indicated that many individuals may not have sufficient resources to maintain their financial independence during their retirement (Gist, et al., 2004; Gokhale, Kotlikoff, & Sabelhous, 1996; Yuh, et al., 1998). A recent study (Gist, et al., 2004) using the 2001 Survey of Consumer Finances showed that the median net worth among boomers was about $107,000 including home equity and defined contributions. Many suggest that this amount alone would not be sufficient for retirement security without the contribution of defined benefit pensions and Social Security as well (Gist, et al., 2004; Yuh, et al., 1998).
However, fewer workers among boomers will have pension benefits when they retire if...