Although it’s a tough sell in today’s economy, research shows once again that employees who plan ahead are typically more confident about their retirement prospects and have saved more capital than their non-planning counterparts.

The number one financial concern shared by 65.2% of the 751 consumers age 45 and older, who were polled in the 2009 Investments and Retirement Survey by The Hartford Financial Services Group Inc., was meeting everyday expenses for food, shelter and other basic needs. In 2008, 49.7% reported this worry, doubling from 24.5% in 2007.

Still, data suggest that the very act of getting a grip on their finances, through planning, can make employees more optimistic about the future.

Future uncertainty

The survey showed that the instability of financial markets, despite signs of recovery, has created uncertainty over the future. Nearly a third of all respondents (31.6%) said they haven’t the slightest notion as to when they will be able to retire and 19.3% indicated they will have to postpone retirement for up to two years or more in the aftermath of the market meltdown.

Delaying retirement is becoming a necessity for many individuals losing confidence they have enough money to retire on. Nearly four in five people (78.3%) are less than confident that all of their sources for retirement income, including employer-sponsored pension plans, government-sponsored pension plans, and personal savings and assets, will be adequate to maintain their standard of living. That contrasts with 74.6% in 2008, 78.5% in 2007 and 69.2% in 2006, Hartford reports.

Not only are individuals predicting lagging finances in retirement, many also expect to see the prospect of enjoying life fall by the wayside. The goal of enjoyment dropped to 14.4% in 2009 from 26.2% in 2008 and 43.2% in 2007.

These disturbing prognostications may derive, in part, from a crisis of confidence in employer-sponsored pension plans. More than one-third of all survey participants said they were “not at all confident” that the income from their employer-sponsored pension plan would be guaranteed for as long as they lived in retirement. In addition, 45.4% were either “not too confident” or “not at all confident.” In the previous three years, the highest response rate for “not at all confident” was 5% and the highest total for “not too confident” and “not at all confident” combined was 15.1% in 2008.

“The financial turmoil of the past few years has taken a huge toll on America’s confidence about the future and apparent readiness for retirement,” explains Jamie Ohl, senior vice president and director of The Hartford’s Retirement Plans Group. “Increasingly, people fear they may face serious financial issues in retirement and are therefore uncertain about when or even if they can retire.”

Planning ahead

“The Hartford’s research shows that people who have taken the time to plan their retirement are generally in a better place financially and are significantly more optimistic about the future than those who have not planned,” Ohl says. “Today, America’s vision of retirement is a house divided.”

Those who planned for retirement were three times more likely to be confident they will have sufficient income, as compared to non-planners (31.5% vs. 10%). Still, employee confidence in their planning abilities may have taken a slide along with the economy. In 2009, 82.7% of survey respondents said they were less confident in their financial planning knowledge and abilities, with 34.2% indicating they were “not too” or “not at all” confident. A total of  57.7% reported they were on track to retire as planned, compared to 38.7% of their non-planning counterparts. What’s more, 44% of non-planners said they had no ideas as to when they might retire and 17.3% said they would have to push back retirement up to two years or more.

Planning apparently has tangible benefits as well, according to the survey. Nearly one in five planners said their investment earnings had increased as compared to 4.8% of non-planners. Planners were also twice as likely as their non-planning colleagues to have increased their net worth (12.2% vs. 5.3%) and 32.7%% of planners said they save more while only 22.4% of non-planners could say the same.

Unfortunately, many individuals were unsure where to turn to obtain financial advice – a solid reason for employers to enhance their financial education benefits. Of those who had not formed a financial plan, 42.5% said they did not know who to turn to, compared to 9.6% for planners. Those who did plan were three times more likely to rely on an independent financial expert for credible financial advice than non-planners (39.9% vs. 13.4%).

They were more likely to rely on a bank representative (19% vs. 12.5%); or securities firm (16.5% vs. 5.7%) or insurance agent (10.2% vs. 4.4%) for planning advice. Apparently, consumers could use the help as half of all Americans view financial planning as too complex or too difficult.