As Savings Go Up, Worries Go Down (A Little)
By: John O'Neil and Marjorie Connelly
The New York Times, March 21, 2001
THE number of Americans saving for retirement has jumped
sharply in the last few years, a recent New York Times poll has found. And
while a majority of those questioned worry about setting aside enough money,
anxiety on the subject appears to have eased, at least a bit.
The poll shows a significant change in savings habits and attitudes since
similar questions were last asked, in 1995. Back then, many Americans were
jittery over the new responsibilities that came with the widespread shift
from old-style pensions to new-style savings programs, like 401(k)'s, in
which employers contribute dollars but make no long- term promises.
The new poll showed that far more people had become active in shaping their
financial future. In interviews after the poll was completed, many indicated
they had come to terms with the idea that their nest egg would depend less
on an employer or Social Security than on themselves.
"These decades to come are going to be more about what you do for
yourself, as opposed to what you allow people to do for you," said José
Aguado, a 37-year-old self-employed audio engineer in Chicago. "It's
not pro-government, not anti-government just me, myself and I."
While people close to retirement age continue to be the biggest savers,
people of all ages and races and income levels reported putting more
away. Over all, the number of people who said they were saving for
retirement jumped to 73 percent from 47 percent in 1995. And the number who
say they expect their own nest egg to be their main source of support has
risen significantly as well, to 56 percent from 39 percent, the poll found.
The telephone survey was conducted Feb. 10 to 12 with 1,124 adults, of whom
823 have not yet retired. The poll has a margin of sampling error of plus or
minus three percentage points.
Economists and experts on retirement finance pointed to several factors
behind the changes, primarily the baby boom generation's approach to
retirement, its entrance into peak earning years, the shift from pensions to
401(k)-style plans and the strong performance of both the economy and the
stock market until recently.
Some experts did question how much of the money described by poll
respondents was actually new savings more money being set aside and
how much represented either a shift of money an employer used to put into an
old-fashioned pension, or the growth of an individual's existing
investments. "A lot of savings might be in the form of capital
gains," said John R. Gist, the associate director of the Public Policy
Institute at AARP. "That money might not be there forever."
In interviews, however, people almost invariably described themselves as
long-term investors not fazed by the market's recent turmoil. "My
husband is of the philosophy that whenever the market goes down, it will
eventually go up," said Laura Joseph of Rockaway, N.J., a former
teacher who left work to stay home with her children. Bob Roy, 44, of
Bridgewater, Mass., said: "People were looking for a quick buck and
they went into dot-coms. When people are more conservative, they do all
Over all, the string of good economic news over the last decade appears to
have had more of an effect on attitudes than this winter's slowdown. While
the percentage of Americans who described themselves as very worried about
finances in retirement was nearly unchanged between this year and 1995,
rising to 19 percent from 17 percent, the percentage of those who said they
were "not at all" worried rose by a far larger amount, to 39
percent from 27 percent. And the number of respondents who called themselves
"somewhat" worried dropped to 42 percent from 55 percent.
But that new confidence was not evenly distributed. Among those making less
than $30,000 a year, 32 percent described themselves as "very"
worried about their financial future; that figure dropped to 6 percent among
those making more than $75,000. David Laibson, an associate professor at
Harvard University who studies economic behavior, said that the bulk of
capital gains in recent years has gone to "a very small fraction of
"No wonder they feel secure," he said. "But it's hard to know
if the middle class is getting enough to make a difference in their
Robert J. Willis, an economist at the University of Michigan who is
overseeing a large study tracking household finances, said that question is
hotly debated and has no clear answer. On the other hand, he said, that
murkiness is a step forward from a consensus in the mid-90's among those who
tracked savings data that Americans were not putting enough aside.
Certainly plenty of Americans remain concerned about their personal
prospects. The number who said they were planning to retire later than age
65 rose to 20 percent this year from 15 percent in 1995, with more than half
of those who plan to keep working saying they will do so primarily for
"I think I'll just continue working," said Henry Kellerhals, a 44-
year-old truck driver from Ringgold, Ga., who described himself as
"very worried" about retirement, although he said he would switch
to "a more enjoyable job."
And the number of people who thought they had started saving too late also
rose to 46 percent from 40 percent in 1995.
This mix of confidence and concern was also reflected in responses involving
Social Security. Americans are less pessimistic about the program's future
than they were in the 80's and 90's: the number who thought it would fail to
meet its obligations peaked in 1996 at 60 percent and is now 48 percent.
But poll respondents also described Social Security in ways that made it
sound less important to their retirement planning. Currently, two- thirds of
retirees depend on Social Security for more than half their income, and
one-third get more than 90 percent from the program, according to government
data. By contrast, only 15 percent of people polled said they expected
Social Security to be their major source of income a figure that drops
to 9 percent among those under 30. Even among those over 45, the figure
dropped to 21 percent from 34 percent in 1995.
In interviews, even those who think Social Security will survive said they
expect changes in its requirements and benefits, and are not counting on it
as a future mainstay. "There will be some Social Security, but I'm not
losing sleep over it," said Mr. Roy of Bridgewater, Mass.
IF anything, the 401(k) is replacing Social Security and the traditional
pension as the center of the nation's retirement planning: in the latest
poll, 63 percent of people with retirement savings said that at least some
of that money is in 401(k)'s, and 41 percent said that the bulk of such
savings is in these accounts.
David Wise, an economist at Harvard University, said that he thought that
the switch from old-style pensions to 401(k)-style plans benefited workers
in two ways. One is that the new savings accounts are being offered to many
workers whose employers had never provided any kind of pension. The other is
that the combined employee-employer contributions to 401(k)'s are "much
higher" than the average per-worker contributions made by companies
alone to pension funds, he said.
William Gayle, a senior fellow at the Brookings Institution in Washington,
also said that the 401(k) plans were thought by many people to be a better
fit in a time of "increased job mobility and decreased job
tenure." The old plans, he said, "really penalized people who
On the other hand, he added, the decline of plans that promise a pension for
life has brought with it new risks, "because people may find themselves
outliving their resources."
In interviews, the poll respondents were aware of how new realities in the
workplace were changing the task of saving. Mr. Aguado, the audio engineer
in Chicago, said, "The days of working for one company for 30 years and
then retiring are pretty much done.
"Things are much more competitive these days," he added, and
saving for retirement on your own has become a matter "of
Faith Bornoff, a 30-year-old child- care provider in Sandston, Va., also
expects that she and her husband will depend primarily on the funds they
have already started, but finds the new world of do-it-yourself saving a
worrying one. "People usually want to help their kids, and I think that
by the time our kids have grown, we will be able to retire but we won't have
enough to help them," she said. "We've been able to save, but
we've also had to switch companies. That makes it harder to plan. That's how
it is these days. I can't imagine staying in one place for very long."
But even those who say they are worried often put such anxieties in some
Patrick Horgan, 53, a fund-raiser for a nonprofit theater organization who
lives in Middletown, N.J., thinks he and his wife started saving late. But
he said that he is not worried "about basic survival."
"I worry about being able to hang onto my house or having to downsize
to something else," he said. "We're not panicking, but we're
realizing that we should have found a way to do more earlier."