Americans fear pension changes could disrupt their plans

Last year, Americans’ confidence in their ability to have enough money to live comfortably in retirement saw its biggest decline since the global financial crisis.

New research shows that worker and retiree confidence has not recovered. But some signs of optimism have emerged, especially as wage growth now outpaces inflation, according to the Employees Benefit Research Institute and Greenwald Research.

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The more than 2,500 Americans surveyed said certain factors are most likely to set them off course — for example, rising costs of living that will make it harder to save and sweeping changes made by the U.S. government to the retirement system.

This latest concern comes as retirees and workers expect to rely on three sources of income during their golden years: Social Security, occupational retirement savings plans, and savings or investments from personal retirement, according to the study.

While 88% of workers expect Social Security to be a source of income in retirement, almost all of today’s retirees, 91%, say they depend on these benefit checks.

Changes to Social Security benefits could be on the horizon as the program’s trust funds face depletion dates over the next decade, making a reduction in benefits of at least 20% inevitable. if Congress does not act. Meanwhile, the Medicare trust fund that covers Part A hospital insurance is expected to run out even sooner.

Other factors, like changes in tax breaks favoring job-based retirement savings or individual retirement accounts, could also upend retirement planning if implemented, noted Craig Copeland, director of legacy benefits research at EBRI.

“It can really change the dynamic of what happens in retirement and how people plan for retirement,” Copeland said.

Social Security is always a top issue in surveys AARP conducts of its members, said Nancy LeaMond, executive vice president and chief advocacy and engagement officer for the interest group, during a briefing. press release Wednesday.

“In light of this and the importance of Social Security, we are asking every candidate for federal office this cycle what their position is on Social Security,” LeaMond said.

New survey results released by AARP this week paint a less optimistic picture of the outlook for Americans aged 50 and older, with 20% indicating they have no retirement savings. Additionally, 61% say they worry about not having enough money in retirement.

The nonprofit, which represents Americans 50 and older, is also pushing for lawmakers to take a stand on family caregiving, which tends to contribute to women’s economic insecurity in retirement, LeaMond said .

AARP also supports other legislative proposals aimed at improving retirement security by providing Americans who do not have access to employer-sponsored retirement plans with retirement savings accounts or automatic IRAs.

Although Congress has also taken steps to improve retirement security through recent legislation, the effects may be limited for people nearing retirement, Copeland noted. This includes changes that will allow savers in their 60s to make additional catch-up contributions and a match for low-income workers.

“There’s not much that’s really changed the dynamic for people nearing retirement,” Copeland said.