Confidence in a secure retirement is increasing, survey shows

A new survey finds American workers feeling increasingly optimistic about their retirement prospects, but financial advisors warn that this confidence may be masking financial vulnerabilities and knowledge gaps that threaten security in later life.

According to the fifth annual Protected Retirement Survey from the Nationwide Retirement Institute, 79% of U.S. workers report a positive outlook on their retirement savings, a striking 14-point rise over 2024. More employees also feel they are “on track” with their retirement preparation, up to 71% from 65% last year.

However, this hopeful sentiment comes in the face of ongoing market uncertainty. The survey reveals that 44% of workers are now monitoring their retirement accounts more closely due to recent market fluctuations. For nearly half of respondents, this environment has triggered more conservative investing: 48% shifted their savings to safer assets, potentially sacrificing long-term growth for a sense of security. Among younger workers ages 22 to 34 – those with the longest time horizons for investing – the urge to play it safe is even stronger, with 54% reporting recent moves into conservative allocations.

A paradox

Yet, analysis shows that the most confident workers may be at the highest risk of undermining their own futures. Those with the greatest confidence in their retirement planning were 12 points more likely to have moved investments to safety in volatile periods and 10 points more likely to act on emotion, selling at market lows or concentrating too much in a single asset class, halting contributions, or missing market rebounds. Such behaviors run contrary to sound, long-term investment principles and often lead to regret.

Compounding the problem is a lack of fundamental financial understanding. Fewer than half of U.S. workers (46%) could correctly explain compound interest, an essential pillar of retirement planning. Among those aged 50-75, high self-assurance does not translate to knowledge: they averaged just 31% on a retirement literacy quiz, according to research from The American College of Financial Services.

Confidence vs preparation

“These findings show that feeling confident isn’t the same as being prepared. Even confident investors make decisions that undermine their long-term financial security,” said Cathy Marasco, vice president of Protected Retirement at Nationwide. 

She urged employees to seek professional financial advice or, at a minimum, make use of educational resources available through workplace plans. Innovative plan features, like in-plan lifetime income investment options, can help secure retirements, providing growth and downside protection in turbulent markets, she added.

Eric Ludwig, of The American College of Financial Services, points out that retirement plan design must contend with human psychology.

“Even financially knowledgeable investors often make emotional decisions during market volatility,” he said. “Features like lifetime income options can help workers avoid the temptation to make reactive decisions in the first place, regardless of their knowledge level.”

Workers want security

The desire for greater retirement predictability is clear. Most workers say they want features such as auto-enrollment (73%) and automatic contribution increases (64%), but access lags, with only 66% of private-sector employers offering auto-enrollment and just over half offering auto-increase options. 

When it comes to lifetime income guarantees, demand far exceeds supply: nine out of ten workers desire in-plan guarantees, but fewer than two in five private-sector employers provide such solutions.

Despite employer concerns about cost, 85% of workers say they would pay more today for investment options that protect their retirement income.