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Most have savings less than $25,000

Pessimism about retirement rising

– About 60 percent of U.S. workers said they have less than $25,000 in savings and investments, according to an Employee Benefit Research Institute survey.

Workers’ confidence in their ability to retire remains historically low, with about 14 percent saying they were very certain they’d have enough to live on comfortably, according to the report released Tuesday by EBRI, a non-profit group in Washington that studies employee benefits. That compares with a high of 27 percent in 2007.

“People get the fact they shouldn’t be optimistic, but instead of saying I’m going to save more today, they just say I’m going to defer my retirement age once I get to 65,” said Jack VanDerhei, EBRI’s research director and a co-author of the study.

About half of all U.S. workers don’t have access to a retirement savings plan through their employer, and many younger people haven’t been saving long enough to build a large balance, VanDerhei said of the findings.

“If you’re working for an employer who doesn’t sponsor one for the majority of your working career, employees just don’t save on their own,” he said. “So much of our retirement hopes for people depends on what they do in their defined contribution plans now.”

Regulators and legislators have been looking at Americans’ retirement security because life expectancies are increasing. Also, savings have shifted from traditional pension plans, where employers generally provided retired employees with lifetime payments, to 401(k) accounts that individuals largely are responsible for funding.

About 1,000 workers and 259 retirees age 25 and older were interviewed by telephone in January for the survey, which EBRI has conducted for 22 years.

The low levels of confidence will hopefully lead people to take action, VanDerhei said. Yet betting on working longer than age 65 rather than saving more is very risky; half of the retirees surveyed said they were forced to retire earlier than they planned, he said.

A separate study released this month by T. Rowe Price Group, a mutual fund firm in Baltimore, and research firm Harris Interactive found that about 60 percent of investors between ages 21 and 50 aren’t confident they’ll have enough money for retirement.

The T. Rowe survey was conducted online in December and questioned 860 adults with at least one investment account. Investors said they expected to live an average of 22 years in retirement, the study found.

The government has focused on the risks of people outliving their savings in hearings and studies of its own as Americans live longer and are more responsible for managing their retirement money.

The U.S. Treasury Department proposed two regulations last month to make it easier for workers to fund an annuity through their company-sponsored pensions or 401(k) accounts. Annuities are insurance contracts that guarantee a lifetime stream of income in exchange for upfront payments.

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