A new study from the Employee Benefit Research Institute® (EBRI) finds the majority of American workers neglect to use resources from their retirement plan for exploring investing options.
Many workers feel they understand the investment options their workplace retirement plan offers. Seven in ten workers are confident they can choose the right investment options for their situation.
Many workers aren’t using professional sources of information and advice that can help improve their investment knowledge. A large portion of workers (40%) turn to their family or friends when seeking information about retirement planning, while only 2 in 10 looks to their workplace retirement plan provider according to the 2023 Retirement Confidence Survey (RCS) conducted by the EBRI and Greenwald Research.
The 33rd annual RCS was conducted online between January 5 through February 2, 2023. Over 2,500 American workers and retirees, including caregivers, participated. The results are available at Retirement Confidence Survey (RCS).
Among the concerns in this year’s survey were retirees’ and workers’ confidence has “significantly” dropped. They are worried about whether they will have enough money to live the way they want throughout retirement.
“The last time a decline in confidence of this magnitude occurred was in 2008 during the global financial crisis,” Director of EBRI’s Wealth Benefits Research, Craig Copeland, said in a press release. “This shows that the current economic climate, in particular inflation, is eroding the confidence that Americans had in their retirement preparations going into the pandemic.”
Inflation has resulted in 84% of workers and 67% of retirees being concerned that the increasing cost of living will make it harder for them to save money. Four in 10 workers and 3 in 10 retirees are not confident their money will be able to keep up with inflation in retirement.
Additionally, the survey found that Americans’ abilities to finance their expenses is in jeopardy as 73% of workers and 58% of retirees are worried that they will have to make substantial cuts to their spending due to inflation.
Inflation Survival Tips for Federal Employees
If you are worried about inflation, there are several things you can do:
- Contribute more to your Thrift Savings Plan (TSP). Increase your contributions to the Traditional TSP to lower your taxes this year and build up your future retirement reservoir. Remember, the elective deferral limit is now $22,500, and you can add another $7,500 during the year you celebrate your 50th birthday because of the employee catch-up election.
- Start an Emergency Fund and use tax refunds and other windfalls to enhance it.
- Create (and follow) a budget while you are working. This will be invaluable especially during your first years of retirement because you will be dependent upon your FERS and Social Security pensions augmented by your other savings.
- Start to learn about how Medicare can work with your Federal Employees Health Benefits (FEHB) Program. The Office of Personnel Management (OPM) is an invaluable resource for that issue.
- Pay off outstanding debt — especially credit cards. Roughly 60% of workers think their debt is an issue.
- Your new employee orientation explained your benefits at the time you first joined the Federal workforce. Your situation may have changed. Life insurance and spousal survivor benefits may not have initially been on your radar. Attend a retirement seminar sponsored by your agency. If your organization is looking for either virtual or face-to- face seminars, Federal Career Experts can help!
- Invest a few hours each month in visiting the TSP and OPM websites to learn more about your retirement. Both these websites offer a wealth of reliable information for you and your family.
If the EBRI survey sounds familiar, it may be because OPM, in conjunction with its American Savings Education Council® (ASEC®) program, developed The Federal Ballpark E$timate®. The TSP website also provides a link to the calculator from its website. You will then be automatically connected to OPM to access the calculator.
If you would like to explore using the calculator, consider my article, Important Links on the OPM Website for Federal Employees About to Retire. I include nine other links to assist you and your family in navigating the OPM website.