This Issue Brief reports findings of the 15th annual Retirement Confidence Survey ® (RCS), which points to potential solutions to the American retirement savings problem, specifically ways that could help workers save more through their employment-based retirement plans.

Importance of Employer Match: More than 7 in 10 workers not currently contributing to their employer-sponsored retirement plan say an employer contribution of up to 5 percent of their salary would make them much more or somewhat more likely to participate (72 percent).

Simplified Options: Other retirement plan options that nonparticipants say would make them more likely to contribute are an investment option that automatically becomes more conservative as their retirement date approaches (66 percent) and a feature that automatically raises workers’ contributions by a fixed amount or percentage when they receive a pay raise (55 percent).

Automatic Enrollment: Two-thirds of nonparticipants indicate they would be very or somewhat likely to remain in their employer’s plan if they were automatically enrolled (66 percent).

Social Security: Nearly 7 in 10 of today’s workers are skeptical that Social Security will continue to provide benefits of at least equal value to those received by current retirees (68 percent). This proportion has remained relatively constant in recent years, but is below the 1995 level (79 percent). Workers continue to be unable to identify the age at which
they will be eligible for full Social Security benefits.

Most Behind Schedule in Saving: A majority of workers believe they are behind schedule when it comes to planning and saving for retirement (55 percent). Most of those behind schedule say that high expenses, particularly everyday expenses (49 percent), child-rearing expenses (39 percent), and medical costs (35 percent), are a major factor in keeping them from saving.

Less Than Half Have Tried to Calculate Needed Savings: Approximately 4 in 10 workers say they have tried to calculate how much they need to accumulate for retirement. More than one-third of these workers say they asked a financial advisor to calculate this number or used their own estimates; 10 percent say they simply guessed how much they will need in retirement.

Welcome to the Employee Benefit Research Institute On-Line Figure 7 EBRI Likelihood of Saving for Retirement Through Automatic E B R I Figure 23 (co Figure 20 ntinued) savings plans are effe without such this feature. Fifteen perce inheritance (3 percent), a lum The likelihood of finding a financial professional preparations, while unm work for pa use a Figure 9, M Workers who do not currently have access to prof Many ma wor naged account as part of their plan (where children). Am y o k st Useful Tools in Helping after they ers m ctive at sti Ba ay work until their planned retirem nk n retire. At the same ti t say ar ong homeowners, wo W r pied workers a -is m thdr the uulating fa m distr y a w wa ould libution from s, Among W m Save for Retirem re be ily m much more sav me, ore apt th Figure 14 Figure 25 Figure 11 Figure 27 men (com ings, enhancing these plans would be like ver m Figure 22 an e o o a professional y st helpful is hi r essional investm k confident workers are an married w e en m likely rpa s ploy t ent Not Cur age, and other survey red with men) are also ................................................................ er-provided cash balance or defined benefit to begin contributing to their workplace ------------ financial m gher am ro erkers to cite wanting a comfortable ntly ent advice through t Us ong m ing M ao nager m workers with household r s ha e likely m eve found that o thod re likely akes than those who are hly to enhance eir em in t vest o say the ploy the average ment er 12 se Total Savings Length of Retir Debts • More than ha ement lf of workers (55 percent) describe themselves as being behind schedule when it comes to Figure 2 ------------ What Works? Endnotes ------------ Very Somewhat Not Too Not at All income of at least $35,000 retirement plan if it inclu plan (2 percent), or support from expenses are personal savings. would be m age at retire lifesty decisions based on respons less confident to believe they le. Wo a major o m st likely to ta rkers with ho ent is slowly factor. Finally ded a managed account (co ke advantage of such advic usehold inco es to a questionnaire). If t m increasing. On the other pared wi will be well off duri family , wo me rkers th lower-i me less th mbm ers (1 o optio re likely to cite education expe ncome workers) an $35, percent). Workers’ ng r n, and 2 ha e h e at option were nd, the RCS if it were tirement, and alm 000 are 0 percent say and those who have som made available mohas consistently found that re apt than higher-inco expectations differ from ma the o de avail st none believe they will struggle y nses as a would be in-person rather than online able to those major som e college m e factor what more e workers to who do r approxim etirees’ not atelin y E MPLOYEE While indivi Many Most Am wor Workers Re ericans have little put away kers dual workers may Confidence That Medicare Will Continue to Provide Benefits may not recognize the extent to which porting Hav be signif e Saved or Currently Save Money for Retirem in s icantly avings under and investm estimating how long the debt is lim ents. Am iting their abilit ong RCS workers providing this y will spend in y to save for retirem ent retirement, it ent. Back Forward Home Reload Images Open Print F planning and saving for ret Worker Confidence in Having Enough Money irement. Twenty-three percent say they are to Live a little behind ind Stop schedule and Figure 10, Reasons for Retiremen Self-Estimate of Worker Progress in Planning and Saving for Retire LikelihoodPercentage of Preretirement Income in Retirement of Using Employ t Confidence, Among Nonsaving Workers and Retirees er-Provided Retirement Investment Advice, ment Amount of Savings Needed for Retirement, by Doing a Retirement Needs Calculation EBRI Issue Brief 1 a E MP LO YE E Issue Brief Confident Confident Confident Confident In the RCS, retiree refers to individuals who are retired or who are age 65 or older and not employed full time. include those experience in their higher e likel education or Automaticall or over the tel 4 in 10 retirees leave the w think j currently retirement. y to do s ob l hav o m o with dependent child . Finall ss or frequent j oy re enrolling workers in e e it, onl (co phone. Mor y, while onl mpared with thos y 15 Ha xpected levels of relia pob changes are a o e ercent indicate they rk force earlier than plan specifically y 13 ren (c to a p e having less). eom rcent of non workplace ret pared with those withou , 1 in ve major Sa nce 4 say the woved participants say on savings an fact uld On the otMone irem ned (40 percent in 2005). or. Am be y would e veryy nt savin her hand, worke likely ong those with household income of at least Cu d em be t t rre such children), college graduates gs plan is a way very h to use it and e ntly Sa ploy y woul likely me ve Mone d be nrt and lower levels of to us s with less than $35,000 Many much more 36 percent would of “defaulting” e in-person invest y retirees who retired likely t be om e in nt appears that workers, on average, have reasonable ex type of inf Nevertheles orsm , 2 in of at Least Equal Value to Benefits Received by Retirees Today ation, m 10 workers describe t ore than half report that the heir current debt level as a tota pl value of thei ectations about the leng major r savings and proble th of their retirement. The minvestm (20 percent), and another ents, excluding the 32 percent say they are a lot behind schedule. Those behind schedule most often (51 percent) cite Wo Overview Comfortably Throughout Their Retirement Years This Year rkers Last Year Retirees Am Confident of Having Enough Mone ong Workers Without Access................................................................................................. y to Live Comfortably Throughout Retirement 13 9% Did Retirement Needs Calculation? Retirement Savings Needs Calculation BENEFIT 4 Y our retirement savings will last Worker re Ve fers ry to all individuals who are not defined as retirees, regardless of employment status. 1994 57% NA (co begin contri household inc reliance on Social Security and em workers into the savings option, and m somewhat $35, advice if it were offered by their em early pared wi Nevertheless, 000, cite negative reasons th buting t workers in likely th those with ome (co there is considerable room t oo a wor m use it. goo par1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 kplace retirement plan if it e less educatio dd with highe , fair for leaving the work force , or ploy workers generall poor er-provided plo n), and wo r-income wor y health are er (2 for im 5 percent), and rke pensions. prove m y accept this strategy rk added a lifesty ® s under age 45 (com o ers) re likely before they expected, including ment in saving , those with less than $25,000 in assets (co 4 in than 1 le f 0t would hose in better health to assign a und, 36 for retirem . Tw pared be o-thirds of w percent say with workers age 55 and somewhat ent am health likely to do so they ong at least so orkers who do problem woulm d be major par s or m ee d of 4 in 10 sa average RCS value of their high expenses as play y it is a worker expects to retire at age 65 and sp primary minor home, is less than $25,000 ( problem ing a (39 percent). Half major role in keeping the 52 of workers report the percent). Approxim end 20 m f yro ears in retire m doing better, specif ya carr tely ment. More than one-quarter 1 in 10 each report total y credit card debt (51 ically everyday percent, B E N E F I T (Needed in Retirement) (Current Income) A lot ahead of schedule 3% 3% The Table of 15 wave of the Retire Contents Total ment Confidence Survey (RCS) points to potential solutions to the American Yes No 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 The majority Figure 11, throu W gho of Am orkers Reporting Have Saved or ut yoerican workers have not tried t ur retirement (multiple responses accepted) Current o calculate how m ly Save Money for Retirement uch they need to save for retire .......................... ment, 14 http://www.ebri.org 1995 58 NA 2 older); those somewhat more with higher-asset workers), not contribute W disabilit (39 percent). role to job los those who say the orkers y (41 m to their em o likely r Fewer worke s percent) or changes at their co e or frequent job cha likely y t are o t do so. pl over say and workers under age 35 oy er’ yrs are likely confident. car expenses keep th s retirement plan none nges. to take advant Twenty Finally mpany percent of , workers with less t em ,(c suc theless s behind include workers with household incom o age of investment advice if it is provi m hpared wi as downsizing or closure very ay confident workers are not currently saving for they would stay th older workers) are han $100,000 in savings and investm in such a plan if their (34 percent). more ded onli likel The y to n e less e (16 ents perhaps another indication expect to be retired for 20–24 savings and investments of $25, of people years (27 000–$4 ’s inability 9percent), 9 per ,999 (13 perc to curb ent), $50 cent think they their every No. 280 ,000 d–$99 ay will be reti expenses). Workers are less likely ,999 (11 percent), $10 red for 25–29 0,00 years, and 0– to expenses (49 percent), child-rearing expenses (39 percent), and medical costs (35 percent). Lower (don’t R It is lik ESEARCH A little ahead of sch ely th kno at th w pe is p rcent ercen age tage is slig ) edule htly higher than th 4 e actu NA al participation rate, sin 3 ce some work 6% ers who do not Under $250,000 32% 23% 38% retirement savings pr Very confident oblem21% 19% 24% 22% , specifically ways that coul 22% 25% 22% 23% 21% 24% 25% d help workers save more through their employment- 1995 R NA Figure 30 NA NA NA y et doing this E S calculation can positivel E A R CH y impact retirement planning and savings behavior. Only 42 percent Workers Retirees 1996 60 NA Figure 12, Very confid Wen ot rker Savings2% 3% 3% Goals................................................................................................ 4% 7% 6% 7% 5% 5% 6% ...........7% 14 28% than $7 em report findi ploy consequences retirement, 38 percent have less than $50,000 in savi percent are m 5,00 er aut ore likely than th ver ng 0 o (co advice from matically y likely, 29 m of an unplanned early pared with hig enrolled them percent ose with higher a familyh and fri somewhat er-income workers) i retire n one, with ends m m likel ounts meo nt c st help y)to say lack of finan 40 percent being or an be heavy and those wit bful in m ngs y telephone (8 , 52 percent do a . king their retirement savings and investm Retirees who retir h very dependent cpercent ial discipline pla likely to stay in the plan and not have an IRA opened with m ver ch y likely, 20 ildren (compared with e earlier than ys a major percent planned are role in somewhat 26 e oney nt attribute their lack of retirement saving progress to ot 17 percent thi $249,999 (12 percent), and $25 nk they will live in retirement for 30 0,000 or more (11 percent). yea he rs r expenses, or m This is slightl ore. At the sam yet about y lohalf of workers carry e wer than som time, 6 percent e o think ther estim mthe ortgage y ates will Less than 5 p articipate in an On tra 0% ck em ®ployer-sponsored retirement saving 37 s plan are no 18% t aware of their elig 36 ibility. 14 Somewhat Somewhat co$250,0nfident 00–$451 41 41 45 47 47 41 47 45 44 40 99,999 21 21 22 based retirement plans. The RCS again finds that a stFigure 5 rong majority of Americans are skeptical that Social 2000 NA NA NA NA What’s New? What’s Cool? Destinations Net Search People Software of workers report the EB Overview RI Employee 5 ....................................................................................................................... Benefit Res y and/or their spous earch Institute Issue Brief 1997 66 e have tried (ISSN 0 to calculate how 887 -137X) is published monthly much NA moneyby the Emplo they will need to have ................. yee Benefit 4 Will have/have money from Largest Expected and Actual Sources of Income in Retirement employer 19% 9% I Somewhat NSTITUTE I N S TI TU TE April 2005 percent being those without decisions. 50%–7 m saved outside of an em likel keeping them behind schedule. Am or0% 41 e y likely ). A little behind such children). somewhat than those who retire on time lik sch ployer’s retirem ely edul toe do so. ong those with less Only 22 ent plan, 3 or later than planned to say percent say 23 7 percent have not than $25,000 in savings a they would be done a retirement needs calculation, and they n23 are ot at not all nd invest confi like17 ly dent to m st about en ay ts, workers inhavi the ng a debt (56 Figure 13, live less than 10 of A Other finding meric percent) or a car loan (47 an household assets, perhaps Reported Total s fro years in retirem ® m the 20 Savings and I 05 RCS inclu ent, 22 percent think t percent). Two in because work nvestm de: ents 1 .............................................................................. ers wer 0 h report havi ey will e aske live ng college or d10–19 to quic ykly ears, and 19 recall and total their savings student loans percent say (19 percent) th 15 ey do 3$500,000–$999,999 18 21 16 Not too confident 19 23 19 18 21 18 18 19 17 18 17 Resea2003 rch Institute, 2121 K Street, NW, Suite 600, Washington, DNA C 20037-189NA NA NA 6, at $300 per year or is included as part of a Security will continue to provide benefits at least equal to those received by current retirees (although Many of these respondents are likely to be in a plan that bases contributions on a percentage of salary (and therefore saved by the ti What Works? mJob/b eLikelihood of Using Savings Plan Feature if Offered, Amo they .................................................................................................................... u retire so that siness/wo1998 59 rked ha theyrd/ can live co always wo mrk fortably in retirem 19 ent. This percentage is NA ng Workers 5 .............. statistically 6 confident 19 20 21 24 24 29 32 28 34 31 30 Figure 6 Workers Retirees 70%–8 plan if the Although workers assign everyda 35 percent say their level o under age 45 com5% 23 fortable r yA lot behind sche were auto are etirement or about m m ore likely than their atically dule f enr debt is a pro ohaving e y lled. expe When asked ol nses a b nough m der counterparts to adm lem. Althou major 32 oney for directly role in keepin gh obasic expenses in retirement. They n how they ly 18it this is a pe g them rcent feel they are feel about autom behind schedule in 34 major factor. abehind8 tic enrollm saving for s a cre also hedule in ent in a more and m not know how long the members and investm ore than 1 in hip sue bnts while on t scription. Periodic 10 hav y will live. eh hom a e telephone. ls poe improvem stage rate paid in In particular, ent loans (12 percent). Washington, DC, and some workers additional mailing offi may have om ce itted the vested value of s. POSTMASTER: Send Not at all conf $1 million–$1.49 million ident 8 16 15 13 8 9 10 17 10 16 13 17 11 6 27% Not only Figure 14, Self-Esti 2004 do savers who use professional advisors fi mate of Worker Progress in Planning and Sa NA nd them moNA NA NA st helpful in m ving for Retirement aking their retire ........................... ment 16 confidence of the A automatically increase meric s ta hn e public in Social Secur dol1999 73 lar amount of the cont ity has actually ribution with eac risen over the past decade), h pay raise),NA rather than in a pland helps an that raises the Retirem • While 7 in ent Savings Have othe 10 workers report that the Ne r m edone s Cay/prope lculationrty ........................................................................................... y and/or their spouse have save 9 d for retireme 12 nt (69 .......... percent), by 6 unchanged si Not too Notco T nce 2001. nfident oo 38 38 37 34 38 38 31 40 36 35 33 Participating in an Employer-Sponsored Retirement Savings Plan (Expected) (Actual) 85%–9 addre5% 3 ss changes to: EBRI Issue Brief, 2121 K Street, NW, Suite 600, Washington, DC 20037-1896. Copyright 2005 b2 y Employee Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement retire workplace ret planning likel ment, yChange in Likelihood of Participating in Savings Plan if Feature Were Offered, to many and have less than $25,000 i irem saving for ret could trim ent plan, half of nonpa at lea irem se t some of these c nt, the small level n savings and i rticipants descr nvest osts if they were of savings and significant pro ibe their fee ments and to describe their lings as positive (49 percent), com more disciplined in their spending current lifesty blem from debt indicates le as pared defined benefit plans from Workers planning t $1.5 million or more o retire at earlier ages tend to exp their calculation. Quantifia 7 ble data from ect they will spend longer in 11 the 2001 Surveyretirement than those of Consu 5 mer Finances 2005 23 38 17 22 savings and invest base contribution rate ment decisions, but w with each pay raise. orkers overall tend to believe that professional financial advisors pinpoi Source: Empl nt a num oyee Be bHa er of reaso ve faith nefit Rens why Amer searc2000 78 h Institute and Math icans mayew not Greenw be preparing ald & Associates, Inc., 1995 adequately 8 NA for retirement. 9 -2005 Retirement Auttheir own account m omatic Enrollment in Em ost workers have very ployer-Sponsored Plans little m .............................................................................. oney set aside. More than half (52 percent 7 ) report Benefit Resea Figure 15, Not at all conf Factors Keeping Workers Behind Schedule rch Institute. All right ident 38 37 34 36 30 27 26 26 25 26 28 s reserved, No. 280. in Planning and Saving for Retirement, Among 35% Wo Confid rkplace retirement savi ence Surveys. ngs pl an 21% 3% 95%–105% (about the same) 4 38 habits. Two-t with one-quarter who descr struggling rather than adequate. Don’t kno hirds of work w Cu /Don’t reme ibe their feelings as negativ ers report they spend m mber oney 10 e (25 percent); 26 percent rre on a mnt Status eal in a restaurant or takeout 8 say the Not Offere y feel indifferent 11 once a w d Feature eek or this figure m Expenses ay be too low. Ha who plan to (conducted by the U.S. Census Bureau) found ving enou r gh mon etire at older ages. Howev ey to take care of er, men and that m wo edian (m men provi idpoint) level of household assets of all de similar estim ates of the length of time Figure 19 would be the Confid Encouraging Workers to Save: ence Su Among Workers Offered Employer-Sponsored Plan But Not Partici rveys. most useful in helpin g them save for retirement (27 percent). Considerably fewe pating r indicate that 4 Other EnhaIn ncevemstents to Emments/sa2001 69 ving ployer- for emplos/st So ponsck 8 ored Play nsee benefits r ................................................................................. esear61% ch3 8 R In recent y etirees ears, considerable effort has been made to educate the American population about savings, that the total value of their savings and investments, excluding the value of their primary home, is less Workers Behind Schedule in Planning and Saving for Retirement ........................................... 16 105% or m Personal sa ovi re (hig ngs oher) r investments that are 6 6 14 Respondents were not informed of the relative cost differences between these options. Figure 10 Refused 2 Offered,4 Some- <0.5 Not Not m about autom ore often (67 percent). S N medi ot At All atic enrollment. cal expensesix in 1 0 spend money once a week or more often on a soft drink or snack from a they will spend in retirement as well as si Am The specific t ericans is $136 ype of expens ,010. If the value of the prim es most likely to keep pe milar expected ary home is ex ople from ages at retirement, despite the fact that women, on cluded, the m saving as m eu dia ch as n value of household assets they need are day-to-day Figure 1 Been planning/mone2002 72 y man W agem orker ent s Reporting Types of De 8 bt61 0 a budget to control spendi Becaus Saving O e wor Chec utsid keers, like retirees, ar of Work......................................................................................................... ng (15 percent), a book abou k Out EBRI’ The Emplo e likely to find th yee Benefit Research Institut t planni emselves vulnerable to an unplanned early ng a s W nd saving ( e (EBRI) was founded in 1978. Its eb Sit 11 percent), or a professional ................. e! m retire 10 ission is to ment Very confident 6 5 10 12 12 22 14 18 19 16 20 retirement planning Confidence in Entitlement Progra , and financial education in an ms attempt to boost prepara Much tion for retirem No ent. Despite this, not in a wo than $25,00 rk-relate 0. d retirement plan 18 10 Don’t kno w/Refused 4 2 While a few individuals may have pulled ahead or slipped behind in their preparation for retirement since 5 Figure 16, Expenses Keeping Workers Likelihood of Us Behind Schedule ing E Not mploy Offered, erin Saving -Provide Don’t d Re for Retirem tireme Very nt ent, Am what ong Workers Too At All The 2005 Retirement Confidence Survey 1995 17 37 26 15 vending machine or convenience store (59 percent). Workers are less likely to say they spend money this expenses. Ha average, live longer than m is onl Respo y $ nd Source: Empl 47, ent0 s 00. were no lf of workers who are behind schedule say t informed oyee Be en. Half of b nefit R contribute to of th ee rela searc, to encourag tive cost o h Institute and Ma th men and differences e, an wod to enhanc every m the ew bet n provi w Greenw dee ayn t e e the developmen ding t xpenses are a hese opt ald & A his info issociates, Inc., 2005 R ons. rm t of sound empl major ation expect to live unt factor that prevent o eytirem ee ben ent efit il at Information Sources Expenses fo will r Retirem be low/won’t need m 2003 71 Workers Havin ent Planning g .................................................................................... Tu ried ch mone to Calcu y late Ho 6 w 62 21 .... 11 Somewhat 56% calculation of how m for health, family, an uch they d othe will need t r reasons, the strategy o save (10 pe of rcent) would postponi More ng re be m tirem Somewhat ost helpful in hel ent to make up for ina More ping them dAlread equate save for y the latest RCS also finds that the proportions of Americans who say they are saving for retirement and taking Social Se The RCS also exa curity mined worker and retiree confiden 18 ce in Social Security and Medicare. Confidence in 45 last y Perhaps beca ear, there has been no overall change. Asked how use they are already living in retire Offered ment,they retirees ar Us would have described their retirement planning e e cUs onsider e ably Likel my o re likely Likely than workers to Likely Likely Source: Empl Behind Schedule in Planni oyee Benefit Researc Investment A h Institute and Math ng ad nd Saving vice, Aew mong W for Retirem Greenw oald & A rkers W entssociates, Inc., 2005 R .......................................................... ithout Access etirement Confidenc 17 e 2000 • The majority Confid 0% ence Su of workers continue to be at least rvey. 5% 10%24 42 15% somewhat 20% confiadent 25% about their fi19 13 30% nancial securi 35% ty in frequently on a movie, video, or DVD (24 percent), a lottery 60% programs and so 51% und public policy through objective ticket (12 percent), research and or coffee from education. EBR specialty I is the only Social Security will be/i2004 68 Established in 1978, the E s enough mplo 5 y58 ee Benefit R 31 esearch the least age 85, and one-quarter expect to live until at least 6 m from in saving for retirement (49 percent). Four in 10 report age 89 (men) or 90 (women). Accor child rearing expenses are d a ing to the 2004 major factor Worker Retirem confident ent Saving Progress 28 35 31 35 39 40 49 38 44 37 42 ............................................................................................13 retirement. retirement preparation may prove t Much Money They W o be untenable for ill Need t som Likel e. Eighteen percent of workers age yo Save More Likely Likely 45 and Offered over say Employer-provided pension 16 26 key retirement planning steps have remained stable. And paradoxically, at the same time that many both EBRI estim programs has actually ates from the 2001 increased over the past 10 Survey of Consumer Finances. years, the RCS has found, even though concern is high by Ruth Helman, Mathew Greenwald & Associat 47% es; Dallas Salisbury, Variny Paladino and and saving situation last Survey. An option tha t automaticall year, al ym rai os st one-quarter say es they were a little behind schedule (23 percent), one- be confident t2003 hat they will have enough private, nonprof money it, nonpar to live18 40 Ftisan i co gurmfortably , e 4 Washington, DC-b throughout ased organi their retirement 22 19 zation committed exclusivel years. Four i y to n W 60% ho we are retirement. One in four are very confident (25 percent) and 4 in 10 are somewhat confident (40 per- coffee shops (11 percent). Figure 17, Reported Freque Will save later 2005 69 ncy of Selected Purchases, Among Work3 ers .............................................. 62 0 18 (39 percent), OASDI Trust Not Saving f too confident or Reti while roughl ees R rem eport, a 65-y ent36 35 34 39 36 23 16 26 26 31 24 .......................................................................................................... y one-third report m ear-old man today edical e can exp xpenses (35 percent) or car ect to live until age 82, while a 65-y expenses (30 percent) are ................... ear-old wom 13 an www.ebri.org A matching contribu 50% tion of up to 5% of your salary 31% 41% 14% 13% Employment 14 that, in the past year, they have delayed the age at which the 53%y plan to retire. Most of those wh3 o make this Amfor the future ericans recognize that they of both progra are not doing enough t ms. Fe Institute (EBRI) is the only nonpr wer than 1 in 10 w o plan and save for retirement, orkers say they are ver ofit, nonpartisan y confident that the Social they also express some 7 your Res contrib pondent ution by a public certa poli in cy research and education on economic security and employee benefit issues. 10 retirees ar third sa Craig Copeland, EBRI Source: E2004 y the m ye pl were oyee B very confident (40 percent), and ano enefi a lot behind Ve t R ry L esearch Insti ikely schedule t7 ute and Mathew Som (34 percent), ewhat Gr Li eenw21 40 kel th al yd & er 4 in 1 and fewer than Associates, Inc., 2005 R 0 Not are Too Li somewhat k4 in ele ytirement C 10 des confident (40 percent). Retiree onfi c21 17 N ribe them dence S ot At All L urvey. ik selves as having ely Likelihood of Staying in a Workplace Savings Plan if 2004 O cent) that they will have enough m ASDI Trustees Report, Assumptionsoney to live com and Method 51% s Undfeortably throughout t rlying Actuarial Estim haeir retirem tes, ent years. Even Don’t worry about it 1 3 Source: Empl Not Total Sa at all oyee Be conf vingsident .................................................................................................................. nefit R20 16 17 11 12 esearch Institute and Mathew Greenwald & A7 13 16 ssociates, Inc., 1994 ........................ -208 11 05 Retirement 15 9 A fund option major can expect to live until age factors. About that is desig one- ned for p quarter view the expenses 85. eople of your age of buying or remodeling a home (27 percent) or Sale or refinancing of your home 3 1 Figure 18, Common Worker Expenditures (Once a Week or More Figure 13 Often), by Retirement Planning decision say they did so for economic reasons: having 48% to work longer to make up for losses in the stock level of confidence (in some case EBRI’s member s, perhaps unrealis ship includes a tically hi cross-section of gh confidence) in t pension funds; businesses; trade associations; heir future retirement Security perce syste ntage o m will continue to provide r amount benefits of at least equal value to the benefits received by retirees 2005 40% 20 38 21 20 Respondent and/or Spouse been confidence has also re 50% on track (36 percent). mained relativel y stable over the past few years. Confid ww enc w.se Su sa.go rveys. v/OAC Will have/have inheritance T/TR/TR04/ Automa wp1566 tic 83 ally Enrolled, Among Worke0 rs Offered 2 The results of the calculation m Self-Estim 37 percent of ation of Pr workers who have not saved at all for retire ogress .................................................................................................... organization committed to original public policy ight be even more reliable if the methods used w ment say they are at least ere im ................ proved. While somewhat 15 Figure 17 Figure 9 education expenses (22 percent) as and income level and automaticall major y be factors. Workers are le comes ss likely to believe that the expenses of Inherita nce 3 45% 3 labor unions; health care providers and insur 44% ers; government organizations; and service firms. aSource: Empl market, lack and Saving Progress and Curre oyee Be of confidence about Social nefit Research Institut Rep e and Math ont Saving Status rSecurity ted Toew tal Savin , co Greenw ncern about a poor econom ........................................................................ g ald & A s andssociates, Inc., 1995 Investments 43% y, a hig -2005 R her-than-expected cost etirement 18 whenever you receive a pay financial security. At base, however, the RCS rein 42% forces a premise of financial education efforts, 42% Choose to Ha toda ving e y (8 nou percent), and almost one-quarter say gh money to pay for the y are somewhat confident (23 percent). At the same ti 42% me, The additio The percentage of preretirem n of the phrase “and/or yo ent inco ur spouse” to the q me that workers uestion w think t ordi hng ey for married res will need is related to hous pondents starting in 1 ehold incom 999 is e. Not surprisingly, workers who have not saved for retirement are almost twice as likely as savers to feel Other 11 13 mor Why Be e than one-third of workers doing a c hind? 30% .................................................................................................................... Employer-Spons alculation go ored Pth lan to But Not P a financial advisor (35 articipating percent) and 1 in 10 each say ...................... 16 ® more confident of conservative a having en s your oug retire h m ment da oney for r te etirement. 38% Reported Frequency of Selected Purchases, Among Workers Figure 29 Confid A lump-sum inform Informatio ®enceation technology (such as cell phones or com Sur distri veyn Sources for Retirement Planning s.bution from an empl oyer- puters, at 8 percent), the expenses of carin 39% 19% g for older Most Useful Tools in Helping Save for Retirement ? About EBRI of livin • This g, and raise Issue B generally rief wa reports findings of the 15 nting t(o Not Inc r m esearch and education on economic security and ake sure they ludin78% 19% g Value of are annual Retirem financially Primary s Re ecure. 1% se ide nt Confidence Survey nc27% e) 33% 17% (RCS), 19% long-term care Save respo Figure 19, mn o—or, health perm sib re than two-thirds are le for 60% approx Workers Reporting T imately itting, work f four to five per not too ( ypes of o 33 rever! percent) or cent Debt age poi ..................................................................................... nts of the increas not at all (35 percent) confident e between 1998 and 19 that future Social Security 99. .... 19 52% 37% Those with less than $35,000 in household income are more likely than higher-income workers to think their they are 40% Expense behind s schedule i ....................................................................................................................... n their retirement planning and saving a , and the likelihood of repor .......................... ting bein 17g behind they use an online calculator (11 nears 21 EBRI’s work advances knowledge and unders percent) or fill out a worksheet or form tanding of emplo44 (10 percent), 37 29 yee benefits and their percent say5 they do Source: Empl provided cash balan oyee Be Almos nefit R ce o esearc r defined h Institute and Matht ew Greenw About ald & Associates, Inc., 2005 R About About etirement Confidence 33% 12% relatives (7 percent), or entertain When making retirem 20% ent savings and in ment expenses (6 percent) play vestm Figure 21 ent decisions, workers who have saved for retirement are a major role in keeping them behind A fund option that is desig Calculated Life Expectancy ned for for Workers, by Gender • While retirement confidence is related to retirement preparation, there are indications that at least 1995 Wo NA NA NA NA 32%rkers which points to potential solutions to the American retirement savings problem, benefits will match or exceed the value of toda 32% y’s benefits. Worker confidence that Social Security will income in retirem Retirees are less likely ent will n tha eed to equal or better their 25% n in 2004 to say they are not confident (33 percent, down from preretirement incom 39% e for t 12% hem to live com 44 percent) that 22% fortably in EBRI Debts31% .......................................................................................................................... importance to the nation’s economy among policymakers, the news ............................. media, and the public. It 19 schedule decr Figure 20, Survey. W eases sharply orker Confide as household nce in Having Eno emplo savings and i yee benefits. ugh M nv oest ney m to Live C ents increase. Progress al omfortably Throug so appears to be hout Their An option that automatically 29% raises your contribution their own estimate and 10 percent ad benefit plan ? Benefit mit the Ev y guess. ery 3 Times 2 Once Once 1 Less New findings in this In Person year’s RCS include: schedule. most likely to rely on the input of others and written materials. Depending on the specific source, this means people of your age a 43% nd income Employee Benefit Research Institute Education an2000 d (not surprisingly) household incom16 35 e tend to be the major factors 29 19 in whether workers have so 50% me of those who say Professio Retiree Co nal finan the cial ad y nfidence in Having Enough Money are vi ve sor ry confident about their financial prospects in retirem to Live 27% ent are Males 10% Females continue to specifically ways that could help worker provide benefits that are at least equal to today’ s save m s value increas ore through their em es sharply ploym with age, ent-based and retirees Medicare will continue to provide be does this b nefitsy of equal value, and overa conducting and publishing policy re ll confidence levels are con search, analysis, and special reports on siderably retirement. On the other Retirement Confidence or 30% hand, those with higher inco Overconfidence?................................................................................. me are more apt to think they will need 70 percent or 19 related to hou by a certai sehold income and to havi n percentage or amount whe ng done a re never tirement savings needs calculation, with higher-income Support from child Retirement Years ren or other famil ............................................................................................................... y Day a Week a Week a Month Often ........ 20 Very Working in Retirement EMPLOYEE RCS Underwriters that many • While m level a mo ast y be using dubious or nd aut Ameri omatically cans save for retire unprofessional info ment through the workplace, steps can be taken to m rmation in developing their plan for reti ak rem e ent. 2003 EBRI’14 34 s overall goal is to promote soundly con- 26 24 saved for retirem overconfident. Twenty A budget to h ent. Moreover, married workers are elp yo percent of those who say u manage your curre mornt spen e the likely y are ding than those who are single, and those who very confident are not currently 15 saving for 75% expect to live until ag employee benef e: its issues; holding educational br 76 iefings for EBRI memb 80 ers, congressional and What we do are more likely than worker Fundamentals Comfortabl s to be confid y Throughout Their Retirement Years ent about the future value of Social Security benefits. higher than t Overetirem rall Retirem hose ent plans. measured ent Confide in 19 nce 95 ( .................................................................................................. very confident increased fro Work m 6 ers percent in 1995 to Retirees 20 percent in 2005; ............ 19 less of their preretire you receive a pay raise ment income to live comfortably. 19 37 37 40% 7 A soft drink o workers and those who have done a calculation less members r snack from 0% a vending likely than thei1 3 r counterparts to say they are behind Confidence in Other Financial Aspects of Retirement Figure 21, become Retiree Confidence in Having Eno s more conservative as ugh Money to Live Comfortably Throughout Their BENEFIT Al m2004 workplace ret ost 9 in 10 m 40% A book a ire arried workers who have saved for mebout nt savin plannin federal agen gs plans even m g and cy savi staff, and th ng for retireme 16 35 ore succe e news retirement say the ssmedia; ful. As other nt and sponsoring public opinion survey yresea use in rch has 26 22 put from 11 docum their s ented, pouse when s on emplo workers yee Many wor 50% expe kers expect to work for ct to live until age: pay in retirement to supplem 85 ent their income. 85 In 2005, two-thirds of have attem retirement, 52 percent do pted a retirement savings needs calculation are not have an IRA opened mo with m re apt than those wh oney saved outside o o have not f an em , to have saved. ployer’s Confidence in Other Fi Mnancia ortgages l Aspects of Credit Card Debt Retirement Car Loans ............................................................................ College or Home 21 A matching 20% contribution of up to 3% of your salary “To contribute to, to encourage, and Figure 16 16 35 35 14 somewhat Don’t kno Two-thirds of 2005 RCS un w confident from /Refuse workers expect that their standard derwriters include: d 28 percent to ceiv 42 percent). ed emplo of li Worker y Figure 3 ee benefit programs. EBRI does not ving i 4 confidence in the value of Medicare benefits n retirement will be adequate (66 7 percent), machine or convenie1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 nce store 21% 13% 24% 26% 14% 27% schedule. At lower asset levels, other factors appear related to the perception of retirement planning and The 2005 RCS finds that worker confidence is highest in having enough money to pay for basic expenses • Importance of Employer Match: your retirement date nears More than 7 in 10 workers 76 19 2 not currently contributing to 23 45 14 11 2005 SomRetirement Years ewhat ............................................................................................................... benefit issues. EBRI’s Ed17 30 Figure 24 ucation and Research Fund (EBRI-ERF) performs 25 26 the char ........ it 20 able, Rmaking retirement savings and investm ESEARCH surveyed iA professio n t? he 2005 Fellows RCS say nal calculation o an em eploy nt decisions (87 f how mu er matchi ch mone ng contributi percent), 63 percent of y you on is a major incentive to save workers use the advice of a for 25% expect to live until age: 89 90 Others workers say more likely to they ex have saved for retirem pect to work for pay after they ent include hom retire (66 percent). While the eowners (compared with non 2005own RCS di ers) and those d not ask about retirement plan, and 37 percent have not done a retirement needs calculation. Student Loans Improvement Overconfidence....................................................................................................................................... 22 An option where a professional financial manager also remains far above 199 A meal in a restaurant or take 5 levels ( out very confident inc 6 reased fro 20 m 2 percent in 1995 to 41 22 7 percent in 2005; 12 coVery mpared wit confiden h 7 in 10 retir t Expenses Keeping Workers Behind Schedule in Saving for Retirem 26% 26% 33% ees who describe their current 19% 31% lifestyle t34% his way37% (71 percent). About 2 in 10 each 40% 39% 42% ent, 40% saving progre The Vanguard Group ss: Among workers with less than $25,000 in savings Mellon Hum and investm an Resource ents, those m s & Investor Sol ore likely to utions Source: Empl A fund option oyee Be that maintain nefit R Method of esearc s a pre-set educa h Institute and Math tiona Determining Savings Needed for Retirement, l, and scientif to enhance the development of sound ew ic func Greenw tions of the Instit ald & Associates, Inc., 2005 R ute. EBRI-ERF is a tax-ex etirement Confi empt organization dence during retirement, and lowest in being able to afford medical or long-term care expenses. More than one- 30% will need to save for retirement 10 their employer-sponsored retirem Confidence That Social Security Will Continue to Provide Benefits lobby or endorse specific appr ent plan say an employer contribution of oaches. Rather up to 5 percent , it pro- INSTITUTE financial professional, and 57 percent us retirement. Seven in 10 16% nonparticipants say e the advice of fam 29% 20% they would be ily 18% much more or friends. Just over half of savers use written or somewh Loans 35% at more likely to ® Source: Empl who have acc Figure 22, reasons for working Confide oyee Be Reasons for Retirem ess to e nce in Entitle nefit R mployer-provided retire in retir m esearc ent Program em h Institut ent, the 2004 RCS docu ent Confidence, Am s e and Math ............................................................................................. ment planning ew Greenw ong Nonsavi m inform ente ald & A d that all but ation or invest ssociates, Inc., 1995 ng Workers and Retirees Confident 3 in m 10 ent advice workers expecting to work -2005 R......... e (co tirement m 19% pared wi 23 th makes in Source: Empl vestment de oyee Be cision nefit R s for you b esearc ah s Institute and Ma ed on thew Greenwald & Associates, Inc., 2005 Retirement 10% Online Coffee from Somewhat speciconfident alty coffee sho 47 42 34 28 39 41 37 32 35 27 40 ps 3 2 6 10 78 somewhat confident from 19 percent to supported b 30 percent). y contributions and grants. describe their Survey. • Postponi retirement standard of livi Among Workers Behin ng retirement and working for ng as struggli d Schedule in Planning and Saving for Retirement pay ing (20 percent of workers, 17 percent of n retirement continue to be favorite worker strategies to retirees). describe the level of ri mselves a ? sk a s How to Join EBRI behind nd gen schedule erally has include workers in good, fair, or poor health (compared with those in third of workers are very confident they can meet their basic expenses in retirement (35 percent), while The TIAA-CREF Institute An Internet site on plannin 11% g and saving for retirement MassMutual Financial Group 8 by Doing a Retirement Needs Calculation Confidence Su Not T rveys. oo of at Least Equal Value to Benefits Received by Retirees Today employee benefit programs and materi participate if the plan had a als received at work ( of their salary would m Confidence Survey. 55 percent) or newspapers matching contributi ake them much more on of , or magazines, or other written m up to somewhat more 5 percent of salary likely to participate (72 percent). aterial (54 percent) to for pay in retire of Having Enough Mone ment identified at least one financia y to Live Comfortabl l my o Thr tive for doing so. Howe oughout Retirement ver, just one-quarter of ................................. 21 those who do not have access). Expectations About Retirement your responses to a questionnai .................................................................................................. re 15 20 49 ..24 14 A movie, video, or DVD 1 5 19 35 41 Not too Source: Econfident mployee Benefit Re18 20 18 24 20 14 10 16 12 16 12 search Insti tute and Mathew vides balanced analysis of alternativ Greenwald & Associates, Inc., 2005 Retirement C es based on the onfidence Survey. 13% Major Minor Not a Even fewer describe it as a mix of co a nservative, well-off (13 percent of workers, 10 percent of retirees). However, unless workers make up for inadequate retirement preparation. While some worker 12% s may find these strategies are better health) and those who do 20% not have access to employer-provided retirement planning information or another 4 in 1A class on pl 0 are somewh annin at confident t g and savin hey g will for reti do s rement o (42 percent). Slightly fe8 wer are confident that they State Far Life expecta m Insurance Cos. ncy is calculat 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 ed by adding expected ag 11% e at re J.P. Morgan tirement and e Chase xpected lengt 11% h of retirement for help them make financial decisions about retirem (multiple responses accepted) ent. Fewer report having used inform 11% ation from the A fund option (72 percent). that maintains a pre-set level of risk and The stagnant proporti retirees r • Half or Retirem eport having actua ent Age more think t ................................................................................................................. on hof eyAm wo lly worked for pay at some EBRI Issue B erican wo uld be much more rkers w riefs are period ho save for retirem or some icals providing exp time during their retire what more ent has both likely ert evaluati to participate if the plan offered m ons of emplo pe enrsonal and na t (26 ...................... percent). While yee benefit issues and tional 24 A lottery ticke Not 0%at all conf t ident ? Media6 8 11 24 1 sound public policy through 8 11 11 11 11 13 3 9 15 73 7 Figure 23, Worker Confidence in Financial Aspects of RetirementFactor ....................................................... Factor Factor 21 moderate, and aggressive are able to maintain an adequate standard of living at a far lower replacement ratio than current retirees have, investment advice (co successful, others More in mpar come/ em d with those aw yinni find themselves f ng lottery who have acc orced to re ess). tire with fewer r 7% esources than 4 they would like. are doing a g workers prov ood job prepa iding both p ring financial ieces of informatio ly for their ret n in the RCS. irement, with one-quarter 22% very confident (26 percent) facts. Through its activities, EBRI is able to fulfill its Expectations About Retirement Workers As with overall confidence, confidence about each trends, as well as critical analy of these specifi ses of employee benefit po c aspects of licies an retirement has rem d proposals. EBRI Notes ained is a Internet (36 p gene Wor N1994 o kt At All rall ing in y ha eRetirem rcent), television or radio 1995 s a mix of con ent 1996 .......................................................................................................... s 1997 ervative, mo 1998 (27 percent), derate, 1999 2000 seminars (19 percent), or com 2001 2002 2003 2004 puter software (18 per- ................. 2005 25 Society for Human Resource Management Hewitt Financial Services econom retirees a “lifecy ic implications, sin most cle” often say fund (6 they worked ce Americans are far 6 percent); a provisi for pay because on that autom more lik they ely to save enjoy atically Did Retirem ed working for retirem raises workers’ con ent Need and ent than the wanted to stay involved (66 s Cal tributio y culatio are to save for ns b n? y a fixed Everyday expenses 49% 38% 13% Source: Empl RCS Met • Simplified Options: inve oyee Be h st odology ment nefit R s esearc Other retirem h Institute and Math e56 38 nt plan ew Greenw options that nonparticipants say would make ald & Associates, Inc., 2005 R 4 21 e46 tirement Confi11 dence14 Source: Employee Benefit Research Institute and Math objective research and education.” ew Greenwald & Associates, Inc., 1995-2005 Retirement a much higher proport Four in 10% Family a 10 retirees report that they ion dvi of workers ce/myself/hard may find t wo retired earlier th rk hemselves struggling in retirement than are current retirees. an expected, usually due to negative reasons 2 such Figure 24, Confidence That Social Security Will Continue to Provide Benefits of at Least Equal and 46 percent somewhat confident. Almost one-quarter are very confident (23 percent) and 38 percent are Very confident 3% 3% 5% monthly periodical providing cu 6% rrent information on a variety 7% 7% 8% 6% 7% 7% of employee benefit topics. 8% ? Members Only relatively and ag Retirem stable over the past few y gressi ent Lifestyle ve inve ........................................................................................................... stments ears. While the percentages of 13 workers 36 not at all confident has increase .................... 32 25 19 d cent) to help Not surprisin with these decisions. gly, the likelihood of reporting that debt is a problem is inversely related to household percent), the large am Total ount or percentage when the majority also identify y receive a pay at least one rai financial reaso se (55 percent); a matching contributiYes n for having worked (81 percent). Yet No on of up to 3 any other goal. The RCS finds that one-quarter of workers save Shell Oil Co. mission to advance the public Genworth Financial only for retire ’s, the media ment and have n ’s, and o other Survey. Child An option wh -rearing exp ere a p enses rofe ssional 39 17 44 Confidence Surveys. Retire Source: Ement Age mployee Benefi All options/ t Research Insti 8% co tute and Mathew mmon sen 20% Greenw se/anythi ald &ng Associ 26% ates, Inc., 1994–2005 Retirement Confi44% 1 dence Surveys. Workers who are These findings are part of the 15th annual Retire them mbehind ore likely to con schedule in saving m tribute are an invest ay already ment foresee that reality Confidence Surve ment option that autom y: They (RCS), a are m tically becom a survey that gauges the ore than twice as es more as poor health or changes Value to Benefits Receiv EBRI’s at their co ed by Pension Investment Report Retirees Toda mpany. Ma yn ......................................................................... y cu provides detailed finan rrent workers are likely cial inf to ormation on the universe of find themselves 23 Somewhat Why Behind? somewhat Our By P confident that t hone hey will not outlive their retirement savings. Fewer workers are confident they will Length of Retirem 1% ent .............................................................................................................................. 27 very a income: The lower the income, the slightly Perhaps not surprisingl for some indicators, these y, among the sources of retirem m in ocreas re likely es repr the proble esent a return to 2003 levels. ent information identifie m from debt. At the same ti d in the RCS, savers me, workers who are most Gue Don'tss 46% Know 10% 76% Source: Empl savings goal ( Medi almpercent of salary cal e ost half of retirees who xpe oyee Be 26 percent). nses nefit R (51 percent); or a “lifesty eTwo in 10 searc worked in retire h Institute and Math save for their ch melnt ar e” fu ew Greenw ildren e nd (4 no longer doing so (45 9 percent). F ’ald & A s or grandchildren ssociates, Inc., 2005 R 35 ewer be ’ percent), many s education (20 percent), and lieve a m 30 etirem anaged ent Confi because they account denc 35 e are The addition of the phrase " financial man and/or your ager makes spouse" for the question wording for married respondents starting in 1999 is responsible for approximately 4 Schering-Plough Corp. Financial Engines Retirement Income 0% Something else defined benefit, defined contribution, and 401(k) plans. EBRI 2 Fundamentals of Employee On average, workers today plan to ? Programs retire at age 65, while the average retiree retired at age 62. About one- likely views and attitudes of working-age and r as thos subject to similar health and workplace st e who are on track to describe their retirem etired Americ resse ans regarding retirement, their preparations for s when ent lifesty they reach retire le as struggling, despite the ment age. fact that both conservative as their retirem confident 16 17 17 16 21 21 26 25 26 28 23 policymakers ent date appr ’ kno oaches (66 percen wledge and understanding of em- Site Map Search t) and a feature that Workers who consider themselve have enough money to meet medical s behind schedule in expenses (20 percent their retirement preparat very confident, 38 pe ions view expenses a rcent somewhat confident) s one or Retirement Income.................................................................................................................................. 27 Figure 25, Confidence That Medicare Will Continue to Provide Benefits of at Least Equal Value to Survey. Although Do you wo r own estimate rkers who think they are ahead of schedule or 21 on track37 are somewhat more likely than those 7 behind often say schedule are al they find advice from most twice as like a financial professional ly as workers who are to be mahead ost helpful (38 percent). Far f or on track to say their level of debt is ewer find a to 5 Ca percenta r expen ge inve pse oints of the i s stme Less Than $25, nt deci ncrease betw sion 000een 1998 and 1999. s for $25, you 000–$49,999 $50,000–$99,999 $100, 30 000–$249,999 39 $250,000 or More 31 approxim not health would persuade them ately y 1 in 10 each save for a home purchase or enough or are t to participate (35 percent). oo old. (“Lifecy renovation (11 cle” funds are designed for specific age and percent), an emergency (9 percent), Nothing 2 Benefit Programs offers a straightforward, basic explanation of employee benefit programs in Not withstanding the past six years of individual benefit statements being mailed to the U.S. population groups appea third of worNot Prudential Fi too kers plan to retire prior to re r equall confident y nancial likely to sa42 40 36 31 38 39 33 38 35 31 33 y they aching age need the same 65; 16 percent say level of preretirement income replacement. Not Fidelit th ye Inves y will r tme etire before age 60 and nts 19 retirement, their confidence with regard to various aspects of retirement, and related issues. The survey was of the ke long-term RCS Methodology yautom factors that keeps the cara etically raises workers’ contributions expenses (1 ................................................................................................................ 7 percent m from s ver aving the y confident, 30 percent way the by a f y should. Half say ixed am somewhat ount or percentage when they confident) in retirement. high expenses play a ........28 major As would be expected, worker confidence in ha publications ving enough money for a comfortable retirement increases Ask a fina Benefits Received by ncial advisor Retirees Today ........................................................................................ 18 35 5 24 who believe they Expenses of • Workers buyi are m ng o a behi y also underesti r rem nd schedule to odeling a ho mate how say me they much of their pr spend money onc eretirement income they e a we 27 ek or more often on a meal in a 22 will need to r51 eplace in Overconfid problem advice fro based on (they are about eight tim ence m fam? ily you or frien Publications r respo ds m nses t the priv ost helpful (17 es as likely to sa plo o a ate and p yee benefits and their impor ublic sectors. percent), followed b y it is a EBRI Databook on Employee Ben major problem y inptance to our nation u ). Nonsavers ar t from a spouse (11 efits is e a stat moistic re likely percent), ’sal refe than rence their general well-being (8 percent), or a vacation (8 income groups and automatically become mor p e c ercent). Sm onservative as retir aller proporti ement near ons of workers mention s, while “lifestyle” percent plan to retire between the ages of 60 and from Workers who plan to work N the Soci ot at all al Security Administration in retirement , the large ma are subject 64. One-quarter of workers say jo to the sa rity of workers do not know the age at which the me stresses that c the ay n lead to an unplanned will retire at age 65 y can surprisingl conducted in y, tJanuary hSource: Empl e likelihoo 2005 d throu of expecting t oyee Be gh nefit R 20-minute telephone interviews with 1,25 e osearc struggle in h Institut re and Math etirement is inversely ew Greenwald & A related to ho 3 individ ssociates, Inc., 2005 uals (1, useho 001 workers ld income, Source: E Procter & Gam mployee Benefit Res bear le ch Institute and Mathew Greenwald & Associates, Inc Fay ., 2005 Ret ez Sarofim irement Conf & Co. idence Survey. Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey. role in keeping them with household incom Endnotes Rea receive a pay raise (55 p d or h ....................................................................................................................... ear that is how m behind e. Worker confidence also in schedule (51 percent). Roughl uch n ercen eed t). ed creases with savings and in 7 y 3 in 10 each report career choice 6 vestments an ................ 7 d im (33 percent), proved 29 volume on employee benefit programs and work force related issues. restaurant or takeout, or on Education equexstionn penseaire s 78 a movie, video, or DVD, a majority16 of behind-schedule workers sp4 22 15 25 36 end m21 oney 53 22 savers to say informorder to fu ation from they have a problem nd newspap an adequa ers or te lifesty m with agazines (11 percen le in reti debt, but half rement. While half of of current savers describe t t), written materials fro retireesm say h work (9 percent), and t eir level of debt as a they use 70 percent or he Workers provide conflicting responses with respect t Figure 26, Planned and Actual Retirement Age ................................................................................... o confidence and retirement preparation, suggesting .. 24 saving for a car, truck, or van (4 percent), a second home funds maintain a pre-set level of risk and generally h or vacatio ave a mix of conservative, m n home (3 percent), debt reduction ( oderate, and 2 per- confid Retireme ent nt Confidence Survey. receive full Social Security retirement benefits without 38 38 39 44 33 33 32 30 31 32 35 a reduction for early retirement. Half of workers (26 percent), early retirem and one-quart ent. Although er intend to re work for pa economy tire at ag y during retiremen . e 66 or even later (24 percent). t is rising, it is unlikel However, these y that all who would like to asset and 252 retirees) age 25 and older in the s, and health status: The lower the income or hea United States. Random lth status, the digit dialing was used to obta more they expect to struggle in in a job loss or fre Fill out a worksheet o quent jo ? b changes (31 percent), wanti What's New r form ng a co 5 mfortable lifesty 10 le (29 percent), and lack of 0 health status. Not surprising Expenses of i Principal Fin nformatio ancial Group n techn ly, workers ology (co who think the mputers, cell yphon are ahead es) CitiStreet of schedule or 8 on track 34 in planning an 59 d Among participants with matching contributions, 14 percent say they contribute less than their employer this frequently on m Source: E morem of their preretirement incom ployee B eals pr enefit Repared outside the hom esearch Institute and Ma ethew to fund a retirem Greenw e. Moreover, workers who are ald & Associent lifesty ates, Inc., 2005 R le t eh tirem at is at least ent C behind onfidence S schedule or not adu equate rvey. , a majority of that many problem Internet (7 pe workers . When it com rcent). No more than 2 percent of wo may be e overconfident s to specific ty about their re pe of debt, beh rkers who have saved for retirem tirem ind-schedule workers, women, and married workers ent security. A general public op ent find any of the inion survey other Source: Empl • Automatic Enrollment: oyee Benefit Research Two-thirds of nonparticipan Institute and Mathew Greenwald & A ts indicate they would be ssociates, Inc., 2005 Retirem very ent Confi or dence cent), m aggressive invest oney for health expenses (2 pe ments; In managed accounts, a pr rcent), or children, inheritances, or fa ofessional financial m mily anager makes (1 percent). However, investment Retirees Figure 23 Figure 27, Percentage of Preretirement Income in Retirement............................................................... 26 believe they will be eligible for unreduced benefits sooner than they actually will (52 percent). One-third retirement. expectations are at odds with the experience of current work will be able to do so. For som Contact EBRI e, this Publications, (2 may resu retirees: The lt in reduced resources for retirem 02) 659-0670; average retiree retired at ag fax publication orders to ent, and these workers’ (20 e 62, and 2) 775-6312. representative cross section of the U.S. population. Starting with the 2001 wave of the RCS, all data are Use an on-line calculator 5 11 <0.5 financial discipline (28 Expenses of caring for ol percent) are der relative maj s or factors that keep them behind. Less than 2 in 10 as 7 15 sign a major 77 saving for retire The likelihood of doing a retirement savings ment are more likely than those who think the needs calculation incr y are behind eases with household income, schedule to indicate they are will Workers are s match an Pacific Life d 28 omewhat les percent contribute the s receptive to maxi options that autom S m ince its inception, EBRI’ um their employ atic er The Brookings Institution ally will increas match, but no m e their contributions. Two in 10 s membership has ore. One-third currently Survey. saving for retirement ar workers expect they will e even m need less than ore likely 70 percent of than those ahe their preretirement inco ad/on track or saving to re me to do the same. port they spend such as the RCS cannot pr are tested sources of inform more likely than their c ovide a defini ation to be m ounterparts to tive answer to ost helpful in indicate they their retire whether workers are saving adequatel have credit card debt. Also not sur ment savings and investment decisions. yp for retirem risingly, then e t, nearly 2 decisions based on respons in 10 workers do not nam es to a questionnaire.) e any savings goal at all (16 percent). Very somewhat confident likely to rem 12 ain in th 7 14 19 17 26 28 27 27 18 21 eir employer’s plan if they were automatically enrolled incorrectly think they will be eligible for unreduced bene Subscriptions to EBRI Issue Briefs fits at age are included 65 (33 percent of all workers), and 2 in as part of EBRI membership, or as part of a 10 fewer than 3 in 10 sa retirement security is likel y theWorker Co y retired at age y to be innfidence in Financial Aspects of Retirement jeopardy 65 or later (27 percent). . weighted by Figure 28, Descriptions of Cost of living age, sex, and education to reflect the act or lifestyle Retirement Financial Lifest ual prop 2 yle..................................................................... ortions in the adul 1 t population. 4 Data from the 26 Figures Entertainm ent expenses 6 36 57 role to po education, an looking forw or iard to a com nvesting (1 d the amount of savings an 7 fpercent). ortable retirement. d investments. In addition, married workers are more likely than indicate they contribute more than their employer will match, but less than the plan maximum (32 percent), participants say money weekly on a item their employ s from er’ a vendin s retirement plan g machine or convenience store. includes an option to automatically increase their tendency to report having a mortgage increases with household income and with education, and married however the RCS does provide som Somewhat Northwestern Mutual e strong indications. First, wor Barclay kers who are who are s Global Investors very confident about $199 annual subscription to EBRI Notes and EBRI Issue Briefs. Individual copies are available While workers may find a professional financial advisor most helpful, retirement planning materials • Automatic en • Only a m (66 percent). inority of worker rollment in 401(k) plans, a s take the ti grown to r sme to est opposed epresent a cr ito mate waiting for the worker to sign up, coul how m oss section of pension funds; uch it will take to fund a com d fortable also think t Now it’ hey wil s easier than ev l be eligible even before age 65 (20 er to find ex per actly what y cent). Only 19 percent are a ou’re looking f ble to give the correct age or with our In general, ol Spouse calcu der workers are lated more likely to report hi 1 gher amounts of assets. However, those age 45–54 1 1 2005 RCS are also weighted by retiree status due to th Figure 8 is year’s ove 3 rsample of non-retired Americans. Data Very Somewhat Not Too Not at All unm Figure 29, arried workers to have tried to do Calculated Life Expectancy one. Savers for Workers, by Gender (compared with nonsavers), participants in a defined ............................................................ 27 and one-quart Source: Empl er think the oyee Benefit R y contribute the esearch Institute and Math maximum thew e plan allows (24 percent). Greenwald & Associates, Inc., 2005 R etirement Confidence contribution whenever they receive a pa with prepay raise (20 percent). yment for $25 each (for printed cop Among participant ies) or for $7.50 (as an e-m s who do noa t iled have this electronic file) their retirem workers are confid ent financial prospects appear to be moent re apt than those who are not m 30 36 34 34 34 33 38 31 36 39 37 better prepared, on arried to say they ha average, than those who are ve a mortgage. Workers with househo somewhat ld Orders/ However, al Nationwide Financial most 4 in 10 workers who have not Figure 12 saved for retirement are nonetheless Aon Consulting confident they will provided increase plan by an employ participation er or retirement plan provi and savings. Nonpartic der can also be effective in persuading som ipants appear to accept automatic enroll e workers to ment—40 Other 3 retirement. Slightly more than 4 in 10 F have atte igure 28mpted to do a retirement needs calculation (42 per-2 3 at which they will be eligible for full retirement benefits, and 9 percent believe they will be eligible later than and those age 55 and over are statistically equally Confid likely to report each asset c ent Confident a Confid tegoryent . As one Confid might suspect, ent for the previous waves of the RCS have been weighted Retirement Educational Materials Figure 26 to allow for consistent Used and Found comparisons; consequently, Survey. • Social Secu extensive searc rity: Near h engine and sit ly 7 in 10 of today’s worke e map. Jus rs are skeptical th t type in the k at Social Secur ey words ity will Figure 1, Workers Having Tried to Calculate How Much Mone businesses; trade associations; labor unions; health car Figure 15 y They Will Need to Save ................ 6 e contribution plan (compared with no by calling EBRI or from nparticipants and those not www.ebri.org. of Change of Address: fered a plan), and those saying the EBRI, 2121 K Street, NW, Suite y are option available in their re Workers not Not too confident participating in their em tirem35 36 33 31 33 27 20 30 22 26 26 ent savings plan, ployer’ 27 s plan su percent indicate they ggest that a large em would be ploy very er match would be the best likely to use this Figure 18 confident. In turn, those who are income of at least $35,000 Figure 30, Largest Expected and Actual Sources of Inco Retirement Lifestyle are somewhat more likel confident y than lower- appear to be better prepare income workers, and those with dependent children are me in Retirement ........................................... d overall than those who are 28 have enough money to live comfortably throug Worker Sav hout theiings Goals r retirement years (37 percent). When asked to change their behavior. More than 4 in percent say they would be Descrip veryt likely io 10 workers say ns o to s f Ret tay iremen in the pla the t F y have received retire in na if their em ncial Lifest ploy yleer autom ment educati atically onal m enrolle ated them rials or they actually Milliman, Inc. cent). However, even among t will be. Two in 10 work hose who say ers say they do the no y ha t know when the ve made the effort, som American Express y will be eligible to re e use methods that may ceive full Having enough money to take care of som total savings e data in the 2005 Source: Empl and investm oyee Be RCS may nefit R ents increase sharply differ slightl P esearc lanne h Institute and Ma d and Actua y with with hou da l Re ta published i thew tirsehold income and with education. In addition, e Greenw ment Age ald & A n previo ssociates, Inc., 2005 R us waves of the RCS. Data etirement Most Helpful, Among Workers Sa 600, Washington, DC 20037, (202) 659-0670; ving for Retirement fax number, (202) 775-6 312; e-mail: continue to provide benefits of at least equal value to those received by current retirees ahead of schedule or on track (compared with those behind schedule) more often report trying to do a Not at all option way Factors Keeping Workers Behind Schedule in Planning and Saving for Retire if it w to encourage participa ere part of their plan and tion in workplace retir 33 percent would be ement somewhat plans. Not surprisingly likely to do so. Sim , these workers ilarly, 19 percent ment, most often not confi Figure 2, Amount m Worker Retirement Saving Progress ore likely dent. than those without such chi of Savings Needed for Retiremen Common Worker Expe and le ldren, to repo t us do t nditures (Once a Week or More t, by he w rt Doing a Retirement Needs Calculation having a car loan. Finall ork for you. Often), y, and again no surprise, t ...... 7 he 30% explain this apparent inconsistency subscriptions , the pro mviders and insur ost common responses are they ers; government organizations; and will have money from an employer seminars from an employer or work-re(multiple responses accepted) lated retirement plan provider in th e past 12 months (42 percent). in one, an yield less-than-reliable res d 26 percent would be ults, such as doing their somewhat likely to do so. own estimate (37 percent) or guessing (10 percent). Saving Outside of Work benefits fro Some workers Confidenc basi m Social Security (20 e Su c ervey. xpe ma nses y have unrealistic expectations about Publications Subscr percent). (In reality iptions@ebr , th i.org. e Social Securit how m Membe uch of their preretirem rship Information: y normal retirement age varies fro Inquiries reg ent income they arding EBRI will m homeowners MetLife (compared with nonowners) and workers who have do AARP ne a retirement savings needs calculation presented in tables in this report m ay not total to 100 due to rounding and/or missing categories. Most confident 15 11 9 11 12 9 7 8 11 11 12 calculation. In addition, a 80% (68 percent). This propo mong those with household rtion has remained rela incom 71% e less than $35,000 tively con 26% stant in recent years, but is below , workers with access to As would be expected, the likelihood of naming everyday expenses as a major factor in keeping workers of non sayparticipants say that adding an em the ploy y would er match of up to 5 be much more likely to participa percent of salary wou te in a plan with this option, while 37 ld be likely to encourage them to begin For exam likelihood of by Retirement Planning and Saving Progres ple, the reported t having a college or student loan increases w otal of savings and investments increases as confidence in having 25% ith educa s and Curre tion, and is inversely nt Saving Status related to age: the enoug h Among Workers BehinRetirement 69% d Schedule in Planning and Saving for Retirement or will always work (19 percent each). Fewer workers are relying on other money or property (9 percent) or Am Figure 3, Met ong these workers, 20 percent report m1995 38% hod of Determining Savin membership and/or contributions to EBRI-ERF gs Needed odifying t 66% for Retirement, b heir retirement planning as a result of the y49% Doin should be directed to EBRI President/ASEC g a Retirement Needs 9% material they3% need to support themselves during their retirement years. Almost 2 in 10 workers think they will need less age 65 to age • Employers wi 67, b th a retirem y year of birth.) ent plan can help their workers achieve investment diversification thro Used Helpful ugh (compared with those who have not) tend to have higher levels of savings. In theory, each sample of 1,252 yields a statistical pr service firms, including actuarial firms, emplo ecision of plus or minus three percentage yeepoints (with A minority of workers—less than 4 in 10—report having an IRA (38 percent). T 24% hree in 10 say they have • A retirement savings calculation appears to be an especially effective way to affect retirement employ er-provided retirement planning information or investment advice are mWork ore likely ers than those without percent would be Ruth Hel participating i behind sched the 1995 level (79 percent). W manule in saving is resear nsomewhat more their em ch director at Mat plo for retirem yer likely. ’s plan. ent is inversely T o h hrkers continue to ew Greenw ree in 10 sa a ry the e ld lated to hous & Associat y would be unable to identify the age at which bes, Inc. Dalla ehold incom e much more es Salisbury —m likeleaning th y to cont is CEO of EBRI; at the lower ribute if this youn Source: Empl ger the worker, the more likel oyee Be nefit Research Institut y they e and Math have a school loan. ew Greenwald & Associates, Inc., 1995 Curre -20 ntly Sa 05 Retirement ving money to live comfortably Children’s o throughout r gra Chairman Dallas ndchild retirem ren’s edu Salisbur ent incr catio yeases, and the likelihood of n at the above address, (202) 659-0670; 20 having m e-mail: salisbur oney saved for y@ebri.org 70% stocks (8 percent), sound Calculation 25%2000 40 .................................................................................................................... planning or money management (8 percent), or faith that44 the m9 oney........... will be there (8 7 7 received, most frequently by saving more (42 percent) Major Role or changing the allocation of their m Minor Role No Role oney (31 per- Saving for Retire than 50 The percentage respondin Input from sp percent of their ment ouse preretirement income in order g correctly is unchanged fr to live com om when the question was first asked in 2000 fortably in retir 87% ement (18 percent), while 4 11% . the investment options they offer. Employers looking to help employees make more informed 95 percent certainty) of what the results would be if all Americans age 25 and older were surveyed with (expected) an IRA opened with m And, y preparation b ou can order man oney saved outsid ehavior. Among t y of our publications online — wit eh of an em e 42 percent of workers who ployer’s retirement plan (31 pe have done a calculation, 44 rcent), while 2 in 10 have h delivery wit percent say hin access to say they have attem Workers pted a calcu Retirees lation. Confid the incom Most workers are confident the ence Su e, the higher the rveys. impact of everyda y can save the am y Retirement expens ount th es on nonsavi ey think theP ng. Inrog yre need for a com ss additi on, workers for R fortable retirem etire who have not ment ent. option Variny were available (31 p Paladino of EBRI ise director of th rcent), and 41 percent would be e Retirement Confidence Surve somewhat more y, a proje likely to do so. ct of the Em Lp ikely plan loyee Benefit retire ment, contributing to they will be elig A home pua workplace r rchase or reno ible for fu benefit consulting firms, law firms, accounting firms, ll Social Se etire vation ment plan curity benef , or having a its. n IRA opened with m 11 oney saved outside 2003 33 45 10 11 percent). cent). High expenses 51% 31% 17% Advice from a financial professional 63 38 Workers age 55 and in 10 investm believe they will need 50–70 ent allocations may be able to do over are more likely th percent (41 percent) an so m youn ore ge effectively r workers to respond correctly . Twenty b -ty hree percent think t offering lifestyle. or lifecy hey willcle f need 70–85 unds Figure 4, Li 60% kelihood of Staying in a Workplace Savings Plan if Automatically Enrolled, Among complete accuracy. There are other possible sources of error in all surveys, however, that may be more an IRA opened with money rolled over from an employer’s retirement plan (19 percent) (12 percent report Editorial B they have m oard: Dallas L. Salisbury, publisher; Steve Blakely, ade changes as a result, usually starti editor. Anyng to save views expressed in t more hmone is publicati y (52 percent). Other evidence on and those of the authors should Almost 3 in 10 are very confident (28 percent) and nearly Ahead of 4 in 10 are somewhat Reti confident (38 percent) they rees Research Inst graduated from Despite econom Mone itute Education and Resear college are y for an ic ups and emergen mo downs, a re likely cy nd ongoing gover than college ch Fund (EB gR raduates, and those who do I-ERF); and Craig Copeland is senior r nment and private-sector ef 9 not own forts at educating the their esear hom ch e are participation would not be as high, however, if a matching option were capped at 3 percent of a worker’s an e Other Enhancements to Doing a retirement savings needs calcula Self-Est mploy2004 36 er’s retire imation of Prog ment plan increase 48 hours! It’ Employer-Sponsored Plans ress s with confiden tion tends to s as easy as clic ce. Si change savings behavior. milarly king a butt ,47 the tendency to perform on! Fort8 y-four a percent of retirem8 ent Career ch Advi oice ce from family, friends, co-workers 33 57 30 37 17 percent and 3 • Most Behind Schedule in Saving: percent expect to need 85–95 percent of th A majority of workers believe they are eir preretirement income. Just 4 percent think behind schedule their not be Retirement Confi Many rather than managed accounts. Am ascribed to the officers, 20% workers are looking trust dees, en to som m ce or Over em and investment management firms. bers, or e form ong participants other sponsors of the E of personal sav confiden not currentl ings to m ce? ployee Benefit Research prov y offered these t ide their largest share of income in Institute, the EBRI Educ ypes of funds, 23 ation and serious than theoretical cal Workers Offered Em culations of sa ployer-Sponsored P mpling error. lan But Not P These include refusals to be interviewe articipating ........................................ d and other 8 Many A majority work of retirees who ers who are offered investm have not saved for retir ent advice im eme pln em t are also confident in ent only some of the advice, preferring to m (ac their prospects for a tual) ake having both). 17% Schedule/ Behind that a retirement savings calculation is effective can be gathered from the fact that, compared with can reach thei American public about t 50% Gene r savings goal by ral well-being he importance o the time th f saving for ey retire. Less than 2 in retirement, the RCS shows that the prop 10 each are 8 not too (19 percent) or ortion of not at salary associat While more likely . Less than 2 in 10 e at E worker than hom BRI. Any confidence that Social Security will continue to eow views expressed in this report noncontributing workers would be ners, to say day-to-day expenses ar are those of the authors and shoul e a much more major provide benefits at least equal reason they likely to participate in a workplace are behind. The d not be ascribed to in value to those who do If employ2005 ers a calculation report the wish to add funds to ty h make changes as eir retirement plan to help em 35 42 a result. Most often, those who do a calculation say ployees make mo11 11 re informed investment savings needs calculation increases Job lo ss or frequent job changes with confidence in havin 31 g enough money 18 to live comfortably. 50 Research Fund, Written mate or their staffs. rials received from work Nothing herein is to be construed as an attempt to aid or hinder the adoption 55 of any pending legislat 9 ion, regulation, retire income in retirem mwhen it comes to planning and saving for ent. Approxim ent will n atelyeed to be about the sam 2 in 10 each say they expect that m e as retirem right before ent (55 percent). Most of those oneyretirement and 6 percent expect to need from a workplace retirement savings behind a percent say they would be very likely to participate in a lifecycle fund, 21 percent would be 15% very likely forms of nonr financially Many comfortable reti wor esponse, the effects of question wordi kers recognize that they rement, with 59 percent be are not doin ng g eno ing at least and question ugh to plan somewhat order, and screening. Whil and save for retirement. Alm confident in their abilit e attem y o t st one- op ts are their own investment decisions. Nearly one-quarter of workers report their em Total On Track Schedule Yes ployer provided themNo access Figure 5, Li those who do not, workers kelihood A vacation of Using Savingwho com s Plan Feature plete the calculati if Offered, Among Wor on appear to s kers Participating in an e8 t more realistic savings goals and 14% all or interpretative workers saving for retirement increased from relationship between other types of expe Doin (15 percent) confident. g a goo rule, or as d job of prep legal, accoDespite the fact that the ari unting, ng actuarial, o nses and de r other such prof Today 1994–2000, , EBRI is r y m tend to t essional advice. ographic characteristi but declined significantly in 2001 and has hecogniz ink they need t ed as one of the most cs is o save higher amounts, worker also often as expected: s Private automatic savings a retire those received by the officers, trustees, or others sponsors of EBRI, E ment plan if their em retirees toda p rrange loyy er added a hm as decreased slightly since 2004, ents th 3 per at micent match (16 percent), and mic the autom BRI-ERF, or their staffs. Nei atic deduction an retiree confidence in the value of Social one-third woul d ither EBRI nor EBRI-ERF nvestment features of a d be somewhat they start saving m Furtherm decisions, lifecy Wantin Overall Retirement Confidence ore, g a co Newspap confidence in the abilit mfortable life cle and life oers, maga re (52 percent), but sty szin tyle le funds may es, o yt t her written m o other steps th accu be m muo lat re popul e a the am 29 terial ey take inclu ar than m ount needed for retirement increases with de changing t anaged accounts. Thirt 54 43 he allocation of their m y-eight percent of 27 11 oney 40% plan, such as a 401(k) ( higher incom to participate in a lifesty e. 21 percent), or p le fund, and 15 ersonal savings and invest percent would be very likely ments outside of a workpla to participate in a mace plan (18 p naged er- schedule say that high expenses, particularly everyday expenses (49 percent), child-rearing A meal in a restau afford a co to professional invest made to quarter descri 15% mim nimize thes fortable retirement. When asked wh be themselve rant or take m e fa entctors, it is impossible to advice for retire out s as a little behind ment purposes in the last 12 m 67% 73% 62% schedule y quantify the errors that may they are confident the (23 percent) and one-third yonths (23 percent). will r have enough esult from say74% 54% the them y for a are Of these, . For a lot behind EBRI Members — c A car, truck, or van heck out the special password-prot4 ected area where you Em are ploy moer-Sponsored Retirem re likely to be ahead or ent Savings Plan on track in planni ....................................................................... ng and saving for retirement. 9 who have calculated a retir financially for retire em ment ent savings goal are almost twice as likely as those who have not to be very workplace ret Lack of finan Security lobbies or takes positions on specific policy rem Workers with dependent ch ained fairly constant si benefits re ire cial di ment savin sci mpline ains gs plan are available, but fe snce then tatistically ildren are . Seven in 1 unchanged si more likely prop 0 wor osals. EBRI invites comment on this resear t 28 hnce last y w workers ta an kers report th those without ear. However, both ke advantage of them at dependent ch they44 and/or their spouse 12% workers and retirees ildren to sa . Only 28 ch. 15 y have saved thpercent at child- are more likely Information from the Intern to do so (35 percent). At the same time, it et should be noted that some workers do not participat 36 7 e (13 percent), confidence in having en workers who contribute to EBR Am I Issu eri e Brief cans ex starting to save less (11 percent), rese is register press a fair degree of confidence about t ed in the U. ough m a workplace r oney S. Patent and T to live com etirement plan curre rademarf k ortab Office. arch ly, I ing other savings m SSN: 0887 despite the hntl eir financial prospects in retirement. One-quarter y - invest in funds 137X/90 fact that savings goals also tend to rise 0887 etho -13d 7X/90 $ . s (10 percent), reducing debt that maintain a pre-set level 50+.50 ® authoritative and objective resources in the world on A soft drink o cent) will provide their largest share. While workers account. r snack from a vending with higher household income or higher levels of assets indivi schedule (32 dual qu 30% estion sam A second h percent). Fewer than 4 in 20% ple size, please see the co ome or vacation 10 believe th home 10% mplete 2005 RCS ey are on trac PowerPoint k (37 percent), and only 3 presentation file available 7 percent describe 71 percent say this advice comfortable r expenses (39 percent), and m etirement despite their lack of savings, r was offered in person, 2 10% edical costs (35 percent), are a 4 per etir cent indicate this advice was offer ees are most likelyma to r jespond that Social Security is or factor in keeping them ed online, and Many1995 financial planners suggest that workers plan for a retire 25 47 ment income replac18 10 ement ratio of at least 70 Poor in confident abo m rearing expenses ar oneyve for retirem Information from televi sting ut being able ent (69 percent), and approxim e a majoto save that am r cause of delay sion or radio ount. Confid ed retirement saving. 10% a 17 tely 6 in 1 ence is also 0 worke Am related to ho rs say ong thos 27 23 they e with dependent children, ar usehold inco e currently 60 saving f me and total 2 or of workers save for retirement at least in part thro Figure 6, Cha in their em more likely nge in Likeli pl in 2005 than 10 oyer’s plan despite having hood of Parti y17% ears ago to say cipating in Sa these the m ugh ay tc are vings Plan if hes av automatic wit very ailable. Thirteen percen confident about Social Feature Were Offered, Among hdrawals from their bank accounts, but t of nonparti Security. cipants report a (5 percent), and o of risk and of of workers are hav fer participants a e access t pver ening y confident the new accounts (5 percent). o hundreds of EBRI publications and researc mix of aggressive, y will have enough moderate, and conservative invest money to live comfortably through their ments. Among workers h online! retirement with confiden • When asked what would be the single most useful ce. Perhaps some of the increased preparation am thing in ong the m helping ore-confident workers is due to the them save for retirement, workers 1 are machine o m Did ore likel you read ry than lower-income wo convenie this as a np ce store ass-along? 8% Sta rkers to cite sav y ahea59 54 63 d of emplo ings as their largest share o yee benefit issues with your f retire o55 66 wn subscr ment income, iption to EBRI many Debt reduction 13% 2 enough f on the EBRI the • m Workers selve or them Web site at www.ebri.org/rcs/2005/in s as are (31 percent) or that t ahead mor of e likely schedule. to save through the workpla heir expenses ar dex.htm e low enough that the ce than on their own. More y do not need m than 8 i uch m n 10 oney eligible (21 15 percent say it was offered over the telephone. Sim 2000 28 49 ilar to previous years, of the 46 percent13 10 who say they percent of their preretire 10% from saving. ment incom emplo e. Cey rtainly ee benefit issues—health car , many current retirees report they have higher incom e, pensions, and e Source: Empl Information from semi oyee Benefit Researcna h Institute and Math rs ew Greenwald & Associates, Inc., 2005 R 19 10% etirem ® ent Confi 1 ® dence asset workers under age 35 are m retirement (62 percent). s, increasing as household i 20% ore likely ncom t eh or assets incr an older work ease. ers to find this type of expense a major factor. sizeable their em Sim Workers Offered Em majo ila ploy rly rity of those who do , 7 er’s plan percent of workers are offers up to a 5 ployer-Sponsored P not use auto pe very rcent confident that mam lan But Not P tic atc de h, ductions are nonetheless aware that th while 14 percent report up the Medicare sy articipating ...................................... stem will continue t to a 3 percent match. ey have t o pr 10 ovide his fact that they who do years (25 not h a percent), while 4 in 10 describe the are generally ve this type of f mound re likely available, 2 in than less-c m 10 w onfident workers to particip selve ould s as be somewhat very likely to i confident (40 percent). One-third of nvest in it if it ate in an employment-based were offered as Note: The electronic version of this themselves most often identify having access to a professional financial advisor (27 percent). publication was created using version 6.0 of Adobe 6% Acrobat. Those In Evidence of the succes Issue Brief 6% for only $49/ s of doing a retirement savings year electronically e-mailed to yo calculation also comes fro u or $199/year printed and mai m other re led. For more i sults. Less than nformation A movie, video, or DVD Money for health expenses 24 30 19 2 29 17 of these workers may not be saving at rates necessary to provide the needed income. 2003 24 45 15 14 subsequently Surveys. percent). Fewer retirees g The RCS was co-sponsored workers say requested and received spe they participate in a workplace retir ive other reasons for their by the Em cplo ific reco yee Benefit mme confidence, say e ndations on m Research Institute (EBRI), a private, non ent savings plan (82 percent); 38 percent of how the ing they y hav should invest their m e other money or pr profit, oney opert , only y replacement r Computer sof atios: Al tware most 4 in 10 retirees (38 percent) say their current incom 18 e is about the s ® <0.5 am ® e as their option (68 benefits of at least equal va Similarly percent). Given this level of , the tendency to identify lue to the benefits me awar dicaeness, it l expenses a received by is not surprisi s a retirees today major fact ng that onl or in not saving enough increas , while 30 percent are y about one-third of workers somewhat es as workers, however, are less Twenty-one percent of non confident that participants say they t will hey woul have enough m d be much more oney to li likely ve comfortably to begin contri thbuti roughout t ng to th heir eir retire part of their r m • ent plan and to have acce abo Less Than Half Have Tried to Calculate Need ut subscri etirement plan (21 ptions, visit our pe ss to e W rcent), and nearl eb site at mploywww er-provi .ebri.or y half would be ded educational material or i g or compl ed Savings: ete the for somewhat m Approxim belo likw ely nvest and r to do ae m tely 4 in 10 workers turn it to EBRI. e so ( nt advice. 46 percent). having tr addition, workers say ouble opening the pdf docum they would be m economic security ent will need to ost likely to upgrade their . take advantage of e computer to Adobe mployer-provided professional Reader 6.0, which Figure 7, Li A lottery ticke 10% ketlihood of Saving for Retirement Through Auto 12 13 12 matic Bank Withdrawals, Among 11 14 2 in 10 workers think the Children, inheritanc y need to accum es, or family ulate $500,000– $999,999 to have a comfortable reti 1 4%rement (18 per- Other workers are planning to rely 2004 on Social Security26 47 (18 percent), an employer-14 12 provided pension (16 per- nonpartisan public polic y research organization; and Mathew Greenwald & Associates, Inc., a Washington, 16 percent implem (12 percent), workers have an indiv Online p money ented all of the recommendations, 59 rofe from ssion an em al invest idual ploy retirement account ment ad er (9 percent), or vice faith that the (IRA). Prom percent implem oting pl money ented some of the recommendations, will be there (9 percent). ans that allow autom 11 a<0.5 tic preretirement incom EBRI Periodicals subscribers also ha e (meaning about a 100 percent repl vacement of their preretirem e a password that allo ent inco ws them t me), 14 percent o reported health status declines or as household income decreases. In addition, women are more likely than who do plan if it adde confident in the sy Automatic Enrollment in Employer-Sponsored Plans not 5%use auto d a lifecy mstem atic withdrawals f cle fund . Many m optio ore, however, are o n, r retire yet twice as ment savings descr not to manyo sa (33 y t pe hibe themselve ey rcent) or would be not at som s as e all ve what more (2 ry 8 per (9 percent) or cent) confident likely to do so Two in 10 retirem pla ent y n participants say ears, with 17 percent ea they inve ch describing themselve st in a lifecycle fund (whic s as not too h becomes or not more conservative as at all confident. While the However, wo Some behind-schedule workers are e investm say they have tried to calculate how much th rkers who are the m ent advice if it were offered in-person (25 ost con specially fident about likely to m their financial security ey need to accumulate for retirem e percent ntion particular factors that pla very likely, 39 in ret percent irement also t somewhat yed a ent. More role in their end to likely) Coffee from can be downl Workers Not Currently Using Method speci oaded for free at www.a alty coffee shops dobe.com ................................................................................... 11 13 10 /products/acrobat/readstep2.html 12 11 11 cent), while less than 1 in Name Other 5 10 each believe they need to save $1 million–$1.49 million (8 percent) or $1.5 2005 26 46 12 16 cent), or employment (14 percent). In particular, lower-income workers are more likely than those with DC-based withdrawals f 0% Non market resear e of these romch fir individual bank accounts may m. The 2005 RCS data coll not significantl ection was funded by y increase non- N/A grants fworkplace savings. rom about two dozen 1 and 24 percent did not implement any of the recommendations. Workers with household income of at least say their current income is higher, and almost half say it is lower (46 percent). (Retirees were not asked to somewhat men to think (28 percent) likely medical expe to save this way nses play a major in role in the future. The majority say preventing them from savin they are g for retirement. not too (27 percent) or (44 percent). that Medicare’ The RCS finds that Nineteen percent of these workers say s benefits will continue to access all online more than 8 in 10 eli equal or exceed EBRI Issue Briefs gible workers say they would the benefits received by they be particip and/or much more ate in a retire Notes likely to begi beneficiaries !ment savi n contributi toda ngs plan at y. Again, ng to expect to get retirement nears) as part of percentage of workers the most out of retire not at their workpl all m co ent. nfident about ace retir Workers who are ement havi plan (19 percent). Am ng enou very confident that t gh money to l ong those who ive com hey will fortably have enough m do not currently in retirement is oney current financial situation. rather than online (16 percent Nothing 16 For example, very the likelihood of say likely, 29 percent ing that high expenses play somewhat likely) or by telephone (8 a major role in percent very than one-third of these workers say they asked a financial advisor to calculate this number million or more (7 percent). Yet workers who do a calculation are m ore likely than those who do not to Source: Empl Organiz oyee Beation nefit R Struggl esearc ing h Institute and Mathew Adequat Greenw e ald & Associates, Inc., 2005 R Well Off etirem ent Confidence Figure 8, Reti higher household i rement Educational Materials Used and Found ncome to say that their largest share will co Most mHelpful, Am e from Social Security or em ong Workers ploy ment. Far 2 $35,000 are public and In this case, ignorance is not the issue: Nearly pri mv oate organizations, with st re likely than lower-income workers aff time donate 7 to say in d b 10 of those who do y t EBRI hat theand Greenwald. RCS m ir employer offers them not currently use automatic access to this type aterials and a list account for inflation.) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement not at a workplace r worker confidence about t work (82 Not surprisingly all (35 percent). percent) likely to save for retire etirem , the expenses of buy In cont ent plan if it were to autom he future value of Medicare rast, just 3 in ing and rem 10 workers say the ment in th aticall ode is way y raise their c benefits increases with age, and retirees are ling a hom . Receptivity y and/or e a ontribution w their spouse h re m to o this type of saving re often cited by hen the ave an IRA opened with y received a pa homeowners more y slightly higher in 2005 than in 2004 (13 percent) and 2002 (10 percent), there has been no consistent change to live com keeping them behind sched have this opti 0% for on, 2 tably throughout t Source: Empl 3 percent would be ule is inversely related to oyee Be heir retirem nefit R very esearc likely ent y h Institut ears andhousehold income and ass are 45 percent would e and Math more than ew twice as likel Greenw be somewhat ald & A ets y as those who are less .ssociates, Inc., 2005 College graduates are likely to invest in it if it Survey. likely, 20 percent somewhat likely). estimate that they need hig or used their own estim her amounts, even ates; 10 percent say th when ho (co usehold inco ntinue ey sim d) ply guessed how m me is held constant. uch they will need fewer sayAddres thas t their largest share will co me from the sale or refinancing of their home (3 percent), an Saving for Retirement ............................................................................................................ 11 of underwriters Confidenc me Su ay be accessed at the E rvey. BRI Web site: www.ebri.org/rcs of investm withdrawals f ent advice. or retirement savings are already aware that they have this option (68 percent). This publication is available for purchase online. Visit www.ebri.org/publications or call (202) 659-0570. Source: Employee B Before 55 enefit Research Insti 55–59 tute and Mathew 60–61 Greenwald & 62–64 Associates, Inc., 2005 R 65 etirement C 66 or Older onfidence S Nu ever rvey. (compared with those who do not own their home) and those with dependent children (compared with those arrangem raise, co likely money than w e saved outside of an nt is highest am mpar Retireme o ed with 37 rkers to be confident. nt Co ong workers u percent who say the nfide em nploy ce Surve er’s retirem nder ag y. y e 35 a would be ent plan nd lowest among t (31 percent). somewhat more Since em hose age 55 and likelyploy to do so er-spo older. if thei nsored retirem r plan added ent were in confidence over the past few y made available. Finally, 16 percent of worker ears. s who contribute to a workplace retirement plan currently confident to e mor e likely than those with less educati xpect to live 30 years or more in retiremen on to feel that their career c t. They are also less likely to expect that the hoice has inhibited their retirement y will Visit EBRI on-line today: www.ebri.org Citin rey/Stattire/Z emIP ent. Retire/Never Worked Mail to: EBRI, 2121 K Street, NW, Suite 600, Employee B W enefit R ashingto esear n, DC 20 ch Institute 037 or Fax to: (202) 775-6312 2121 K Street, NW
Suite 600
Washington, DC
20037 1 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey. © 2005, Employee Benefit Research Institute -Education and Research Fund. All rights reserved. EBRI Issue Brief No. 280 • April 2005 • © 2005 EBRI • www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org EBRI Issue Brief No. 280 · April 2005 · www.ebri.org 12 18 22 23 20 28 27 17 29 21 26 19 25 15 13 11 16 10 14 8 5 7 3 9 6 2 4 phone (202) 659-0670
Fax (202) 775-6312 EBRI Issue Brief No. 280 · April 2005 · www.ebri.org 24 EBRI Notes • October 2003 EBRI Notes • December 2003 15 15 www.ebri.org The premier organization

Volume 280

Pages 32

EBRI Issue Brief

Ruth Helman

Dallas Salisbury

Variny Paladino

Craig Copeland

Retirement