CDs and Savings Accounts for Retirement
June 03, 2010
Declining home values and stock prices are changing working Americans' expectations in how they will make ends meet in retirement, according to a recent Gallup poll.
A greater share of Americans who are not yet retired expect they will rely more heavily on Social Security and less on 401(k)s, IRAs, home equity and pension plans than three years ago before the economy tanked.
About 45% of those surveyed, versus 52% three years ago, say 401(k)s, IRAs, Keogh or other retirement savings plans will be a major source of income. Only 20%, compared to 30% in 2007, say the same for home equity, and just 23%, compared to 31% in 2007, expect work-sponsored pension plans to provide major retirement income.
Clearly the troubled economy is changing people's perceptions about government-funded retirement income: the 34% of non-retirees who think they will rely heavily on Social Security is the highest measured by Gallup since it began conducting the poll in 2001. (However, that percentage is still far less than the 54% of currently retired Americans who say Social Security is a major source of funding.)
Low Savings Rates Don't Deter Pre-Retirees
Meanwhile, the recent low interest rates on CDs, money market accounts, and savings accounts appear to have had little effect on Americans' projections. The percentage of those who expect to rely heavily on these savings vehicles dropped only slightly, to 22% from 23% in 2007.
