Got Retirement Money? It Might Not Be Enough

Retirement confidence ratings are dropping. Again.

Fewer Americans (retirees as well as those still saving for their eventual retirement) feel they’ll have enough money to live comfortably in their non-working years, according to the 2023 Retirement Confidence Survey from the Employee Benefits Research Institute.

Both workers’ and retirees’ confidence have significantly dropped back to levels last seen in 2018. The key culprit? Inflation. The high cost of living impacts people’s saving and spending, which plays out in how workers feel about post-career life:

• 64% of workers feel somewhat confident, down from 73% in 2022
• 18% feel very confident, down from 28% in 2022

Those who are actually retired are slightly more positive:

• 73% of retirees feel somewhat confident, down from 77% in 2022
• 27% feel very confident, down from 33% in 2022

Most surveyed are worried that the rising cost of living will make it harder to save money:

• 84% of workers expressed anxiety over inflation
• 67% of retirees said they’re worried about high costs

You know who is feeling confident about their ability to live well in retirement? Rich people. Before you think, Of course they feel OK — they’re RICH, rest assured, they’re probably wrong. For more on how households with a median income of $248,000 and above may be getting retirement planning all wrong, read Mary Ellen Cagnassola’s story.

— Jill Cornfield, deputy editor

Most of Vanguard’s 401(k) plans now offer a Roth component — 80%, up from 68% in 2017. This option lets employees save after-tax money in their retirement accounts, for tax-free withdrawals in retirement. At the end of last year, 17% of participants in these plans were using the Roth option, up from 11% in 2017, according to Vanguard’s annual How America Saves.

If you have a Roth option in your 401(k), consider trading some of the upfront tax advantages on contributions for tax-free withdrawals when you’re retired. Another advantage: Starting in 2024, required minimum distributions (RMDs) from a Roth 401(k) will end.

• One of the biggest retirement decisions is whether to buy or rent when you relocate.
• Baby boomers who need to boost their retirement savings can still build a nest egg with these strategies.
• Here’s how much younger millennials have in their 401(k)s.

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