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Americans Increasingly Concerned About Retirement Income

Expected reliance on 401(k) plans shows major drop from last year

PRINCETON, NJ -- For the first time this decade, a majority of non-retired Americans, 52%, doubt they will have enough money to live comfortably once they retire; only 41% say they will. In 2002, by contrast, 59% of non-retirees were confident that they would have enough retirement income to live comfortably.


This year's update, included as part of Gallup's annual Economy and Personal Finance survey conducted April 6-9, also shows an 18-point drop in this measure among non-retirees compared to just five years ago. This marks the first time since Gallup has been tracking the measure that a majority of those not retired say they will not have enough money to live comfortably in retirement.

The reasons for this rising concern about retirement income become clearer when one examines trends in how much non-retirees expect to rely on each of 10 income sources in retirement. The trends for these 10 items (401(k) or other retirement savings accounts, Social Security, home equity, pensions, part-time work, savings accounts or CDs, stocks or stock mutual fund investments, annuities or insurance plans, inheritances, and rent/royalties) as "major sources" of retirement income can be seen by clicking the appropriate tab in the accompanying graph.

One of the biggest changes concerns non-retirees' views of their 401(k) and other tax-exempt plans such as IRAs and Keogh plans. In Gallup's first reading of this measure in 2001, almost 6 out of 10 non-retirees said these would be a major source of income when they retired. That percentage has fluctuated since then, but this year's 42% reading is the lowest Gallup has measured. It also represents a drop of 12 points since last year. There is little doubt that this reflects the major drop in the stock market over the last year, and the resulting "statement shock" that has confronted many workers when they open up their 401(k) statements and see the major decline in their overall value.

There has been a more modest decline since 2001 in perceived reliance on individual stock or stock mutual fund investments. Never high to begin with (in 2001, 24% said these would be a major source of retirement income), this year's percentage is the same as last year's (17%) -- which is the low reading for the decade.

Perceived reliance on a work-sponsored pension plan is also the lowest Gallup has measured. Just 24% of non-retirees say this will be a major source of retirement income. That can be compared to 34% in 2001, and 31% as recently as two years ago.

Given the decline in the value of other investments, one might expect that more Americans would say they are going to rely on Social Security as a major source of retirement income. But that has not occurred. The 30% of Americans who say Social Security will be a major source of income is actually down one percentage point from last year, and not substantially different from what has been measured across the previous years of this decade.

Of interest is the slow but steady increase in the percentage of non-retired Americans who say they will rely on part-time work in their retirement. Only 10% said part-time work would be a major source of retirement income in 2001, but that number has more than doubled to 22% today.


It is probably not surprising that Americans have a more pessimistic attitude about funding their retirement now than they did a few years ago. Americans have been told repeatedly in recent years that Social Security alone will not provide enough to live on -- and even that the Social Security system will eventually run out of money. Fewer Americans today enjoy the potential benefit of a traditional pension plan. Thus, Americans have come to realize that more of their retirement income will need to come from their own resources.

And those resources, to the extent that they have been invested in stocks, are way down in value this year compared to years past. This is reflected in the finding that Americans' expected reliance on their 401(k) plans as a major income source has dropped significantly. Since there has been no concomitant increase in expected reliance on other income sources (other than perhaps part-time work), it is almost inevitable that there would be increased concern on the part of non-retirees that they will not have enough money to live comfortably in retirement.

It's worth noting that despite the sharp decline in expected reliance on 401(k) and other retirement savings plans, these remain at the top of the list when Americans are asked how much of a source each of the 10 different income streams will be in their retirement years. This signals that expected comfort in retirement could increase if the stock market continues to pull out of its current slump in the months ahead. Still, given the maxim "once burned, twice shy," many Americans may never again believe that their personal savings plans are going to grow inevitably and steadily in the years before they retire, leaving open the possibility that their worries will continue regardless of external circumstances.

Survey Methods

Results are based on telephone interviews with 676 non-retirees, aged 18 and older, conducted April 6-9, 2009. For results based on this sample, one can say with 95% confidence that the maximum margin of sampling error is ±4 percentage points.

Interviews are conducted with respondents on land-line telephones (for respondents with a land-line telephone) and cellular phones (for respondents who are cell-phone only).

In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.


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