How to Feel More Confident About Retirement

Many people are worried about their ability to pay for a comfortable retirement. But the proportion of workers who feel confident they will have enough money for retirement is growing. After dropping to record lows during the recession, 22 percent of workers now say they are very confident and 36 percent feel somewhat confident about their retirement prospects, according to an Employee Benefit Research Institute survey. People who are upbeat about their retirement preparations tend to engage in specific behaviors that are making them better prepared. Here's how people who feel confident about their retirement finances are getting ready for retirement.

Save in a retirement account. People who contribute to retirement savings and investment accounts feel better prepared for retirement than those who don't. Some 71 percent of workers who participate in a 401(k), IRA or traditional pension plan say they are very or somewhat confident about their retirement finances, compared to 33 percent of people who don't. Only 14 percent of people who use retirement accounts or pensions say they are not at all confident about their financial security in retirement, versus 44 percent of those without a plan. "Workers with a plan are simply more likely to save for retirement," says Craig Copeland, a senior research associate at EBRI. "For most of those who do not have a retirement plan -- a defined benefit plan, a defined contribution plan or an IRA -- the prospects of achieving a financially secure retirement are dim."

Get out of debt. Making payments on past debt can make it especially difficult to prepare for retirement. Workers with no debt problems (73 percent) are more likely to feel confident about retirement than people with major debt (25 percent). More than half of people with major debt (56 percent) are not at all confident about having enough money to fund retirement, compared with 14 percent of workers without large debts. The most common types of debt are mortgages, car loans and credit card debt.

Eliminate unnecessary purchases. There are certainly some people who can't afford to save because everyday expenses consume their entire paychecks. But many workers admit that they could save more than they currently do. Some 69 percent of workers say it would be possible for them to save $25 more per week. To save this amount, many workers report they would need to cut back on other purchases such as eating out or take-out food (46 percent), soft drinks or snacks from vending machines (13 percent), movies or DVDs (12 percent), specialty coffee drinks (11 percent) or lottery tickets (8 percent). Additionally, 24 percent of the survey respondents say they would not need to give up anything to save more. "The things that they would have to give up don't cut very much," says Mathew Greenwald, president and CEO of the market research firm Greenwald and Associates, which conducted the EBRI survey. "If people save more for retirement, the only thing they would lose is cholesterol."

Calculate how much you will need for retirement. Less than half (48 percent) of workers say they have calculated how much they need to save for a comfortable retirement. People who have done a retirement needs calculation tend to set higher retirement saving goals than those who have not. Despite the higher savings target, workers who have done the calculation (33 percent) are more than twice as likely to report feeling very confident about their retirement prospects as those who haven't done the math (12 percent). "Those who are doing retirement calculations are more likely to give a number that makes sense for how much they need to save," Copeland says. "They know what they are trying to achieve."

Take stock of your retirement income sources. It's important to know where your retirement income is going to come from. While workers often get most of their income from a single job, retirees typically have several sources of income. Almost all retirees report receiving payments from Social Security (90 percent). Many retirees also receive income from traditional pensions (50 percent), 401(k)s or similar workplace retirement accounts (40 percent), IRAs (42 percent) and other personal savings or investments (44 percent). Some retirees even receive paychecks from continued employment (25 percent). You will feel more confident if you know that income from these sources will cover your monthly bills in retirement.

Emily Brandon is the senior editor for Retirement at U.S. News. You can contact her on Twitter @aiming2retire, circle her on Google+ or email her at ebrandon@usnews.com.