Retirees Less Confident Amid Booming Economy
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What is the main topic discussed in this episode?
I'm J.R. Whalen in New York. The booming economy hasn't made retirees any more confident about having enough to live on. We'll explain why in a moment. First, these money headlines. The Wall Street Journal Daily Shot column points out that amid the shortage of skilled labor in the U.S., job hopping is becoming increasingly lucrative. Since 2016, the median wage growth of workers who switched jobs has outpaced those who punched in at the same job every day. In the latest 2018 figures, those who switched jobs have seen an average median wage growth above 4%, while growth for those who stayed in jobs was below 3%.
What headlines set the stage for retirees' confidence concerns?
U.S. new home sales surged in March, capping off a strong first quarter in a segment of the housing market characterized by solid buyer demand. The Commerce Department says purchases of newly built single-family homes increased 4% from the prior month to a seasonally adjusted annual rate, of 694,000 in March. March's rise comes on the back of a 3.6 percent increase in February and upward revisions for both January and February sales rates. And the conference board says its index of consumer confidence rose 1.7 points from a month ago. Confidence had dipped in March after hitting the highest level since 2000 in February. But in perhaps the most significant development, the share of Americans expecting their incomes to decline over the next six months fell to its lowest level since December of 2000.
This is your Money Briefing from The Wall Street Journal. Welcome back, everybody. The economy is running on all cylinders and the stock market amid some bumps has turned in strong returns in the past 12 months. So you'd think that retirees would be confident that they have enough funds to live on. Wall Street Journal reporter Ann Tergesen joins us to explain that that's not exactly the case. So, Ann, we're getting the sentiment here from retirees from a survey that's just been released.
Right. So every year, the nonprofit Employee Benefit Research Institute does a survey, and this is the 28th year of the survey. So, you know, it's a long-running survey. It's done by a very reputable organization. So, you know, it's something that I typically pay attention to.
And it shows the retirees are very worried about the rising costs of health care, among other rising costs as well.
Right. So what it shows is that last year, about 85 percent of retirees who they polled said that they were pretty optimistic about being able to cover their basic expenses throughout the course of their whole retirement. You know, things like food, shelter. But this year, that number dipped to about 80 percent. You know, I mean, again, this is 80 percent of retirees are saying that they think they can cover those costs. That's a good thing. But it's down from 85 percent last year. And when you probe as to why, it looks like concerns about health care costs and long term care costs are causing the concern.
So why is it that retirees are so concerned about health costs?
Well, I think that some of the concern for retirees might trace to Medicare Part B premiums. For the past three years, if I'm remembering right, or the past few years, medical premiums for Part B, which covers doctors' visits, have been pretty stable for most people. Not for everybody, but for 70% of Medicare participants. But this year, just for a variety of technical reasons, the Part B premium actually jumped significantly for those 70% of people. I think it went from something like $109 a month to $134 a month. So that may actually, I mean, the speculation from the people who put together this survey is that that may have caused some of this concern about medical costs.
That's a big jump.
It is a big jump.
And as was the case in past years, retirees are more confident than workers about having enough comfortably to retire on.
Yeah, that's typically the case. Because when you think about people who are working, even if they're, you know, say 10, 15 years from retirement, there's a substantial amount of uncertainty that those people have as to what's going to happen over the next 10 to 15 years of the stock market.
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