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Afford to Retire? More are Confident, But Few Save Enough

More Americans believe they can retire comfortably, but one-third of workers have saved less than $1,000 for their golden years.
Image: An Individual Retirement Account application form
A new study says although wealthier Americans are confident they can retire comfortably, many poorer workers have not saved enough and some do not even now how to.Joe Raedle / Getty Images file
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While more Americans believe they will be able to retire comfortably, because stock market returns and property values have climbed, lower wage-earners do not have the same confidence and one-third of workers have saved less than $1,000 for their golden years, a new survey shows.

Workers' retirement confidence has recovered from record lows of the past five years, showing a slight increase in 2014, according to the Employee Benefits Research Institute's 24th annual Retirement Confidence Survey release on Tuesday. But that improvement in confidence is largely limited to higher earners and those with Individual Retirement Accounts (IRAs) and private 401(k) retirement funds.

Eighteen percent of workers are now "very confident" that they'll have enough money to have a comfortable retirement—up from 13 percent in 2013—and 37 percent are "somewhat confident." But almost a quarter—24 percent—are "not at all confident."

Not surprising, confidence was highest among top earners, nearly doubling among those with household income of $75,000 or above. Of those households, 36 percent said they were "very confident" about their ability to retire comfortably, compared with just 11 percent of those with incomes of $35,000 to $74,000. Only 7 percent of those with incomes below $35,000 were very confident in their ability to retire.

Yet, most Americans haven't saved nearly enough money and have no idea how much they'll need for retirement.

More than one-third of workers and retirees - 36 percent -- have less than $1,000 in savings and investments in their nest egg. Even worse, most are not taking action. Less than half of workers - 44 percent -- have done a calculation to find out how much they should be saving.

"People feel better if they're participating in a 401k or other plan," said Greg Burrows, senior vice president for Retirement and Investor Services at the Principal Financial Group, one of the sponsors of the EBRI study.

"The key message is that people who are taking action are the ones that are feeling more confidence."

A recent survey by financial services provider TIAA-CREF found Americans spend more time choosing a restaurant, flat screen TV or tablet than planning for an IRA investment. More than one-third of those surveyed said they do not understand what an IRA is or the difference between an IRA and an employer-sponsored plan.