It is a question that has puzzled philosophers and scientists for centuries: which came first – the chicken or the egg? Similarly, an updated version of a classic survey of retirement confidence finds some interesting attributes among those who are more confident about their prospects – but are those attributes a result of that confidence, or is it the confidence that preceded them?
The 28th annual Retirement Confidence Survey (RCS)
from the non-partisan Employee Benefit Research Institute (EBRI) and
Greenwald Associates found that Americans are feeling a bit better about
their retirement prospects.
However, the RCS also found –
as it has in previous years – that certain factors are tied to higher
confidence, specifically if they have access to a defined contribution
plan, are relatively free from debt, are already retired – or, in a new
finding from this year’s RCS – that they are healthy.
Now, the connection between access to a retirement plan and savings
is well established. An updated analysis by EBRI finds that even those
with modest incomes – those making between $30,000 and $50,000 – are
nonetheless a dozen times more likely to save if they have access to a
retirement plan at work.
More intuitive is the negative impact that debt, particularly heavy
debt, can have on retirement savings, not to mention the impact on
confidence about that savings, or more precisely, the lack thereof.
As for the new finding in this year’s RCS, 6 in 10 workers who are
confident about their retirement prospects say they are in excellent or
good health. As for those who are not confident about retirement, only
28% report such good health. The same is true for retirees: 46% of
confident retirees are in good health, compared to just 14% who are not
confident. What’s less clear is whether they are confident because they
are healthy, or healthy because they are confident (or have a reason to
In fact, those of us still looking ahead to retirement can draw some
comfort that those in retirement are – and have consistently been – more
confident about retirement. Indeed, in this year’s RCS, a full
three-quarters of retirees are very or somewhat confident they will have
enough money for retirement – and that’s as high as that metric has
been going all the way back to 1994 (except for last year, when 79% were
Of course, retirees were also more than twice as likely (39% versus
19%) as workers to have tried to calculate how much money they would
need to cover health care costs in retirement – and those who had were
less likely to have experienced higher-than-expected health costs and
are more likely to say that costs are in line with their expectations.
Ultimately, there’s nothing like actually living in retirement to
provide a solid sense of what it costs to live in retirement. When it
comes to retirement confidence, it may not always be obvious as to
whether the chicken or the (nest) egg came first.
But it seems to me that a "bird"
in the hand is nearly always worth two in the bush…