Jan. December 1994 Feb. EBRI Table 23 Chart 9 Chart 5 Mar. Table 19 Table 6 Table 2 Table 1 Table 10 Table 7 Table 14 Table 12 Table 9 Table 4 Table 20 Table 3 Chart 3 Chart 12 Table 11 Table 16 Table 5 Table 15 Chart 4 Chart 11 Table 21 Characteristics of Survey Respondents Personal Confidence Index by Household Income Government Confidence Index by Age EMPLOYEE Cross Tabulation of Personal and Current Standard of Living Understanding of and Confidence in Social Security and Medicare Confidence in Ability to Cover Expenses In Retirement Reasons for Not Saving More Money for Retirement Standard of Living In Retirement Profile of Personal Confidence Index Groups by Selected Demographics 401(k) Plan Ownership, Contributions, and Effect of Materials Received Size and Percentage of Personal Confidence Investments for Current Workers; Investments Attitudinal Profile of the Four Segments Level of Financial Risk Willing to Take Expectations In Retirement Reactions to Proposed Changes in Social Security and Medicare Systems Distribution of Personal Confidence Index Scores, 1992–1994 Distribution of Personal Confidence Index Scores, 1992–1994 Size and Percentage of Government Sources of Retirement Income Confidence in “Understanding” Selected Demographic Characteristics of Segments Demographic Profile of the Four Segments Apr. Government Confidence Indices Compared with Parents at Same Age Compared with That When Working Providing Payments for Retirees Index Groups, 1992–1994 BENEFIT Total Employed Confidence Index Groups, 1992–1994 Social Security and Medicare Programs Retired Other 12 Very Somewhat Not Too Not at All Very Somewhat Not too Not at all Don’t 60 Strongly Total Like and Somewhat Confidence in Government Index Somewhat Not Retired Like But Do StronglyRetired Would Not Don’t Major Personal Confidence Index Minor Not a (n=1,000) (n=652) (n=220) (n=128) Most Major Minor Not a 18 RESEARCH 60 Substantial Risk for Confidence in Government Index Retirement Confidence in America: Confident Confident Confident Confident Confident Confident Confident Confident Know Not Retired Retired Not Retired Retired Confidence in Government Favor 1992 Expect To Do Favor 1993 Oppose Not Expect To Do 1994 Oppose Like To Do Know Reason Not Retired Reason Reason Retired May 1992 Important 1993 Source 1994 Source Source 1992 1993 1994 Substantial Gain Above-Average Risk for 10 59% INSTITUTE ® Personal 16 (percentage) Self- Doubly Very low (n) (percentage Low % (n) High (percentage % (n) Very high % 50 Self- Doubly 5% Very Low Above Average Gain S How Confident Are You That You How confident are you that... 56% Not Not (percentage) Not Not 58% (percentage) Confidence Age 50 Very low Index Groups Index Groups Low High Very high (n) (n) Worrieds (%) (%) (n)(n) (percentage) Faithfuls (%) (%) (percentage) (percentage) (n) (n) (%) sufficients (percentage) (%) assureds Not Retired owning (percentage) receiving payments Worrieds Faithfuls sufficients assureds Annual Household Income (percentage) Have Salary Reduction Plan 8 14 (1,000) 35 (757) 44 (243) 1992 8 Jun. 17% Very Low and Your Spouse... retired Retired retired Retired retired Retired retired Retired 26–34 25% 32% na 31% 50% Not Retired ‘92 ‘93 ‘94 ‘92 investments) ‘93 ‘94 ‘92 from investments) ‘93 ‘94 ‘92 ‘93 ‘94 a 40 Money Your Employer Reduce Benefits to High A Lot Better Off (1990) 30% NR 37% 35% 25% 28% 17% 25% 18% 29% 2% 20% You Have a Good Understanding Typically Contribute(d) Maximum: Paying for necessities prevents (1992) 14% (353) 52 48% (333) 28% 50 (20)10% 85 1% 60 47% 35–44 (percentage of all respondents) Very Low (Low through 4) Very Low (Low through 5) 24 1992 32 1993 0120 1994 1992 2 132 2 1992 15% 199317 1993 1994 135 1994 124 A Lot Better Off 1992 1992 1993 17% 16 1994 1993 173175 1994 1992 18 11% 1993 18% 1992 1994 Low 1993 1992 9% 19941993 1994 Getting Ready for T 12 omorrow b S 6 1993 40 Somewhat Better Off Very Confident 28 32 30% 32% 29% Put into a Pension Plan Spend More Time with Your Children or Grandchildren Income People Receiving Employer Provide(d) Educational (1992) R 34 78% 2029 19 17 27% 1521 9% 3 39 of How the Social Security me from saving more (1993) 20 62% 38 21% 2716% 15 1 45–54 Low (5 or 6) 20 24 2269 27 35 270Somewhat Better Off 35 345 1636 11 Jul. Low (6 or 7) 224 29 188 24 227 24 a Individual Retirement Account 41% (percentage) (percentage) 24% Low Somewhat Confident 27 20 19 About the Same Social Security (1993) 22 14 44 26 14 13 3 Very Low 1992 Maintain Your Preretirement Lifestyle System Works Materials or Seminars about Plan 5% I am saving for other major goals, 6% 4% (1994) 2% 21 (353)71 72 40 (333) 18 25 73 (20)12 45 10 2 30 a Gender 58% 10 (percentage) About the Same 53 56 55–64 Personal Factors Money You Put into Savings or High (7 or 8) 12 10 19235 NR 11 30 23 197 (percentage very/somewhat confident) 2631 232 2824 17 Gender High (8 or 9) Salary reduction plan, such as 228 29 211 27 285 30 50 4 1994 Not Too Confident 45% 7 11 9 1993 Do Volunteer Work Somewhat Worse Off Read the Materials 4 8 3 (1994) 12 2 6 41 (253)6828 92 (244) 14 1092 14 (9) 100 High 203 Will Be Able to Afford to such as a home or college 1992 29% 48% 45% 37% 17% 8% 7% 5% b 31% S Male 48% 43% 46% 44% 40% 50% 53% 57% 52% 56% 49% 47% 65 or older 30 20 2 79 9 Somewhat Worse Off 13 15 Think they did a good job of preparing Male Retirement Plans through Work Very High (9 through High) Very High (10 through High) 31% 42% 40% 153 46% R 193 49% 20 25 44% 15 172 49% 251 51% 22 3222 48% 281214 52% 292022 59% 56% 40 47% a 401(k) or 403(b) 44 8 34% 8 Aug. A Lot Worse Off Not At All Confident 6 5 36 38 43 Live Where You Want to 1994 Travel More Than You Do Now Topics Covered Included 5 8 19933 No More Than 36 3 50 (234) 38 63 31 (225) 14 19 8 (9) 117 0 8 You Have a Good Understanding The Employee Benefit Research Institute (EBRI) is a nonprofit, nonpartisan public policy education for my children (1992) 12 40 31 20 3539 High 20 3 Female 52 57 54 56 60 50 47 43 48 44 51 53 1994 Average age in years 20 Increase the Taxable Portion of 48 41 (1990) 70 44bbbbb A Lot Worse Off 4 7 financially for retirement Female 2 Pension or retirement plan to which only 58 31% 60 54 42% 51 38% 56 26% 30% 52 51%49 41% 52 42% 48 93% 90% 4191% 44 92% 5396% 91% a Social Security Move to a New Home More Suitable for Retirement Living Parents Did Not Live as LongMinimal Risk 0 22% NR 2 14 38 18 13 53 46 14 of How the Medicare System 40 Description of investment options available I will save more when I get 1994 (1993) 32 49 16 38 95 3131 17 29 96 8 21189 1 112 Age Average Risk for 6 Don’t Know/Refused 42% 2 2 Low 1992 Social Security Benefits 5 research organization based in Washington, DC. Established in 1978, EBRI provides educa- 11 9 (1992) 4 bbbbb Very High your employer contributes money 51 42 b 21% S Marital Status20 Don’t Know/Refused 2 5 Think they will be able to afford to live where Age Obtain More Education and Training Advantages of saving in tax-deferred plans 44% R 38% 27 42 92 1993 26 1592 23 89 56 8 Works closer to retirement 38% (1994) 21% 42% 17 20 34 25 2751 20 2 Sep. 26–34 26 29 33 20 22 22 Average Gain 29 29 29 23 14 17 0 10 1993 for Retirees with Incomes 6 9 6 (1993) 3 22 30 19 26 3 40% a19% Very High Will Have Enough tional and research materials to employers, employees, retired workers, public officials, 21% 1992 15% 27 33 52 38 14 22 5 5 Married Your Own Personal Savings 65 66 38% 58 NR 74 41% 22% 27 27 31 14 those who are “low” and “high” on the index. they want to during their retirement years 26–34 Own a Vacation Home Principles of asset allocation and diversification Life is too unpredictable for 4 23 26 27 47 25 42 relationship between the two indices. This analysis 2725 3873 31 62 25 52 21 28 45 73 23 97 98 2696 67 45 19 98 2297 96 when they were working. this gap appears to be widening. While the proportion of Table 15, Confidence in “Understanding” Social the Social Security and Medicare systems work they do not save more to be “very” confident that they will have enough money 35–44 The Employee 39 27 26 30 26Reasons for Confidence in Retirement children (28 percent), while 11 percent are responsible Confidence in Government Index able to afford retirement: that they may have to spend 7 or 8 are considered to have “high” confidence in the 25 33%33 30 28 22they are not willing to take saving enough money for 19............................... 20 —Among the 18 four areas. How- their money to prepare themselves Most current their home are shown for each of the segment groups in waves of the study, which were conducted in 1990, 1992, Charts report having a salary determine how 1994 Greater than $30,000 5 9 6 (1994) 4 Table 13 18 32 37% 22 24 have been classified as 5the respondents 30 • Most Americans are confident that they will achieve financial security b 1992 Money to Take Care 1993 40 43 43 40 11 9 5 4 Divorced or separated 14 15 7 16 or Investments Start a New Career Materials Lead to R (234)13 14 (225) 20 13 33(9) 76 29 35–44 The Social Security System Will me to save more 38 27 (1992)25 5 34 20 25 26 28 28 27 25 425027 226 3 22 20 2 45–54 c members of the press, academics, and the general public. The Employee Benefit Research 16 21 20 19 14 17 14 16 19 15 20 22 Because many of the older respondents are 10 reveals a fairly low positive relationship between the Think they will have enough money to take per Year Oct. money for retirement is that they are saving for other (43 percent). By comparison, 3 in 10 report they are “very current workers who were confident about being healthy to live comfortably in retirement (28 percent compared Security and Medicare Programs In addition, Description of Personal Confidence Index Groups 2 ............................... Benefit Research Retirement Confidence Scores 21 current workers who are “very confident” that they will for three or more. (Table 15, Chart 8, Table 16, Table 17, Chart 9, much of their retirement savings for medical expenses or government (24 percent), and those with scores of at any more than minimal retirement. ever, they are more among the financially for retire- workers are confident that and 1993. chart 11. reduction plan such as a 401(k) or 403(b) (44 percent) much money of Your Basic Expenses 0 1994 43 47 41 37 8 10 8 “very low” on the per- who are “very high” 6 from the work force before age 56, while 13 percent say Widowed 8 2 28 5 will be doing about the same (53 percent). These respon- 27% 33% High 1992 45–54 Change the allocation of money among 3 10 in retirement. Two in three respondents to the 1994 EBRI/Greenwald 1 20 0 20 6 21 16 19 17 16 18 20 12 18 21 Continue to Provide Benefits (1993) 30% a 7 24 39 26 4 55–64 11 12 10 11 20 12 15 11 13 16 18 14 Table of Inheritances NR 2 6 36 54 care of their basic expenses during retirement Under 45 Years 45–54 Years Over 54 Years Institute Education and Research Fund (EBRI-ERF) is a nonprofit, nonpartisan education 10% 50 59 61 58 67 64 98 99 97 98 99 100 already collecting from Social Security and Medicare, 3 personal and government indices (Pearson’s r = 0.21), Have Like and Do Not Single, never married 20 13 17 7 5 Chart 1, Confidence in Having Enough Money to current workers have was the same in 1993 (83 percent), it was 10 percentage Table 16, Size and Percentage of Government with 21 percent). major goals, such as a home or college education for their confident” that they understand the programs 1993Raise the Payroll Tax That All 3 11 8 Institute (EBRI) (1990) 6 8 have enough money to live comfortably in their retire- Table 18) long-term care, and that their retirement expenses will least 9 are classified as “very high” on the index 24 Seven in ten respondents report owning their 25 40 financial risk (44 percent), 3 In general, current options likely to be confi- ment. they will be able to save the The index 55–64 of Equal Value to the Benefits the options available Retirees 8 1(1994) 5 13 6 13 15(table 3). 44 2 82The wording of some survey questions varied, Doubly Assureds are the most optimistic about 15 17 344 6 12 317 3 33 14 they (and their 14 3 65 or older 0 8 12 11 b 207%17 25 10 14 12 24 2sonal confidence index 9 or “high” on the 28 they will retire after age 65. Respondents with higher dents are somewhat more likely to feel they will be EBRI Retirement Confidence Survey report being “very” or “somewhat” con- R 2 6 15 75 Are Doing/Have Done 1992 21 24 48 49 19 10 10 13 0 Done Personal Confidence Index Expect To Do Expect To Do and research organization established by EBRI in 1979. EBRI-ERF produces and distributes Nov. Think they will have enough money to take care 1994 65 and over Workers Pay Toward Increase the amount of contributions to the plan 5 10 11 7 (1992) 12 7 14 7 13 14 233 7 18 17 32 1933 1730 1944 4 27 23 age is a leading factor in determining respondents’ level Received by Retirees Today a meaning that they measure different dimensions of Marital status Live Comfortably in Retirement ..................................4 begun saving at an points higher for retirees (78 percent). children (40 percent). Among the rest, more report that (29 percent), 19 percent are “somewhat confident” and Employment Status Confidence Index Groups, 1992–1994 Working Americans aged 26 and over can be 12 and Mathew ........................34 22 567 own residence (72 percent). Retirees (77 percent) are ment years (n=160), the largest proportions indicate Comparing the Two Indices be/are lower than when they were working. Many (22 percent) (table 16).89 ........................................ and another 33 percent say workers feel they should 22 available dent that they will includes their confidence amount needed to live The 1994 EBRI/Greenwald Retirement Confidence Survey was funded by grants from the Money from the Sale or NR their retirement years. Nearly all in this segment are depending on whether the respondent was retired or not 1 Current workers who are more educated, have 113945spouse) will a Good Job of Preparing 1993 23 35 46 41 18 11 11 (18 percent), while a index are over age 10 annual household incomes are more likely to say they Paying for necessities prevented a,d better off in retirement (27 percent) than worse off 17% Social Security Under $25,000 $25,000–$50,000 Over $50,000 fident that they will have enough money to live comfortably throughout (1993) 8 23 25 40 5 of medical expenses during retirement 17 18 14 25 22 25 85 81 80 91 90 90 b Married a wide range of educational publications concerning health, welfare, and retirement policies. 17%63 64 61 63 60 62 67 67 68 70 65 70 Employed full time 10 57 88 na na rated (14 percent) or single (13 percent), while 8 percent of confidence in the government’s ability to help support Methodology Very High Contents 1992 Refinance of Your Home Retired 3 7 7 8 R retirement confidence. This value indicates that only 3 6 12 76 Marital Status Financially for Retirementme from saving more 1994 24 Personal Confidence Scores 31 47 43 Chart 2, Amount of Thought Given to Retirement 3922 19 28 17 14 11 ........ 10 earlier age than retirees 9 percent are “not too confident.” Confidence in under- Table 17, Description of Government Confidence divided into three distinct groups in terms of their own this is not a reason (39 percent) than report it as a minor EMPLOYEE Roughly 6 in 10 respondents are confident that Greenwald & feeling this way because of good planning (28 percent), slightly more likely to own their home than those who (Table 19, Chart 10, Table 20, Table 21, Chart 11) respondents believe they will have to spend much of 15% A description of the four groups, based on the they are just willing to take be saving more money for (44 percent), have enough money concerning four areas of comfortably. Of those who following organizations: AT&T, Aid Association for Lutherans, American Council of Life retired. Of those interviewed, 757 are not retired (includ- confident that they have taken the proper steps in higher household incomes, and are married are more Worrieds need to have Very low Low High Very high score of 6 or 7 places S 54, while higher will retire at an earlier age. Table 22 (1994) 8 (17 percent), compared with how they are doing now 22 21 44 5 The Medicare System Will Continue (1992) 3 25 44 24 3 Divorced or separated14% 17 19 20 14 13 12 14 10 13 6 10 9 Employed part time 8 12 na na Dec. their retirement years (66 percent of workers, 66 percent of retirees). Government Factors 1993 Married 4 8 62 9 5411 54 63 68 67 69 64 68 68 67 71 Through its books, policy forums, and monthly subscription service, EBRI-ERF contributes to I was saving for other major goals, a are widowed. Retirees, naturally, are more likely to be them in their later years. As shown in chart 9, as the 4 percent (Pearson’s r squared = 0.04) of the variability Money You Continue to NR Chart 3, Level of Financial Risk Willing to Take 4 214626 ..........11 say they did. More than standing the Social Security and Medicare programs has they will have enough money to take care of their view of retirement security: the roughly one-fifth who reason (20 percent). Index Groups Maintain Your Preretirement Lifestyle ............................................................... Associates, Inc. 22 52% are employed (71 percent). having saved money through savings or payroll deduc- Retirement Confidence Index average risk for average gain. Less than one-quarter are their retirement savings for medical expenses or long- questions used to construct the confidence in government 14% retirement, and retirees ..................................... 33% 25 while one-third said the materials led them to increase to pay their basic retirement: have tried to figure out how much they will need Average Retirement Confidence Insurance, The Boston Company, Buck Consultants, Coopers & Lybrand, Hewitt Associates to Provide Benefits of Equal (1993) 5 preparing themselves financially for retirement. They ing students, unemployed, and homemakers with saved by the time they retire to live comfortably in their likely to report having an IRA, a salary reduction plan, 24 40 26 4 Widowed 4 4 8 10 13 9 7 5 4 13 14 respondents “low” on the proportions of those 8 Unemployed or laid-off More than 4 in 10 retirees say they retired Will Have Enough Money 3 1992 na 18 na 26 22 37 (table 7). 35 29 24 14 12 Gradually Raise the Age BENEFIT Confident that the Social Security system will continue 1994 Divorced or separated 3 9 such as a home or college 19 8 22 8 22 14 13 14 9 11 11 9 9 11 b 0 However, both groups of respondents are substantially more likely to be (percentage very/somewhat confident) Earn from a Job Spend More Time with Your Children or Grandchildren the formulation of effective and responsible health, welfare, and retirement policies. EBRI R 51 3 8 14 15 30 72 Value to the Benefits (1994) 6 widowed than those currently working (28 percent 25 31 33 Faithfuls 5 level of confidence in government scores increases, the Single, never married 16 13 11 13 in either of the indices can be explained by the other. A 15 17 12 18 14 12 10 S 13 Retired Scores for Selected Demographic Groups to Take Care of Your 22 1993 na 100 22 33 na Table 18 33 Chart 4, Distribution of Personal Confidence Index 35 24 17 18 11 6 in 10 current workers declined somewhat. Indeed, the proportion of respon- medical expenses in retirement (55 percent of current Table 18, Profile of Government Confidence Index say they are “very confident” that they will be able to live One-third of retirees say that saving for other have conducted tion plans (24 percent), or because of their investments (Chart 12, Table 22) term care (58 percent of current workers, 57 percent of willing to take above-average risk for above-average gain index, is presented in table 17. Almost by definition, Among those who do own their primary resi- feel they should have the amount of their contributions to the plan expenses • (n=259), fully 74 percent say they are confident that they doing a good job of preparing financially, to provide benefits of equal value to the LCC, John Hancock Mutual Life Insurance Co., Massachusetts Mutual Life Insurance Co., When People Collect (1990) 8 employed spouses), and 243 are retired (including are also more likely than other groups to have faith in retirement years (34 percent), a proportion which is and a pension or retirement plan to which only their 15 16 58 2 Widowed education for my children 6 7 10 7 347 index (24 percent). Those with scores of 8 or 9 are 8 14 9 11 49 5 11 9 who score “very 8 between age 61 and 65 (44 percent); 18 percent retired at Similarly, 56 percent of retirees say their 1994 Under $25,000 $25,000–$49,999 $50,000 or More Do Volunteer Work 39 10 50 Received by Retirees Today a Household income Text RESEARCH Homemaker Medical Expenses Did a Good Job of Preparing and EBRI-ERF have—and seek—a broad base of support among interested individuals and 7 “somewhat” confident than “very” confident. 1994 na 18 na 1992 31 57 Chart 6 37 11% 31 66% 90% 21 20 96% 19 13 Support from Children or Profile of Government Confidence Index Groups by Selected Demographics NR compared with 2 percent). 2 2 26 69 proportion of respondents in each of the groups who are benefits received by retirees today Single, never married Social Security 13 (1992) 18 14 6 6 16 5 cross tabulation showing the relationship is presented in 11 615 12 52 13 5320 13 51 15958 7 11 6 2 14 63 1152 55 I wanted to save more when I got Scores, 1992–1994 .......................................................17 a survey of Americans’ views concerning their confidence who have started saving major goals was a major reason they were not able to comfortably in retirement (21 percent), the 45 percent workers, 62 percent of retirees). The proportion of dents who are “not at all confident” that they understand Groups by Selected Demographics ............................. 23 Respondent Profile (21 percent). dence (n=720), two-thirds are paying off a mortgage (17 percent) or substantial risk for substantial gain retirees). While the proportion of current workers who nearly all of the respondents who have “very high” scores ......................................................... saved more. Fully 26 (31 percent) than (33 percent). • will be able to save that amount, with 37 percent saying having enough money to take care of basic expenses, Milliman and Robertson, Minnesota Mutual, The Prinicipal Financial Group, The Pruden- homemakers with retired spouses). The margin of error the government’s ability to provide Social Security and nearly identical to that found in 1993 (35 percent). Even employer contributes money. Older respondents are also considered to be “high” in personal confidence low” or “low” in age 64 or 65. Twenty-five percent retired prior to age 56. Travel More Than You Do Now 30 standard of living is about the same now as when they 13 58 a b Full-time student Under $25,000 Financially for Retirement Average Retirement 2 n 30 a 44 na 40 1993 12 35 15 37 49 57 16 89 20 1497 23 25 17 Self-Sufficients Other Family Members Benefits from 65 to 70 Personal Confidence Index by Percentage Holding College Degrees (1993) R 7 —2 18 17 559 288 closer to retirement, but did not 27 26 44 S organizations with interests in employee benefits education, research, and public policy. Roughly two-thirds of respondents are employed younger than age 45 decreases. Accordingly, respondents table 19 for all three survey waves. Confident that the Medicare system will continue Move to a New Home More Suitable for Retirement Living 16 Chart 5, Personal Confidence Index by Household 9 73 regarding their financial security in retirement. The for retirement (n=463) how the programs work has gone from 36 percent in who say they are “somewhat confident,” and the one- Table 19, Cross Tabulation of Personal and current workers who are confident has stayed the same save more for retirement (34 percent). However, one-half Will Have Enough Money to Household Income 1992 na na na (63 percent). Three in ten indicate that their mortgage is (Table 23) agree with this statement has remained the same since (5 percent) (chart 3). are confident that both the Social Security (79 percent) na Employed Americans who are “somewhat na na 73 percent of current na na on any of the other • they are “very confident.” Among the one-quarter who INSTITUTE having the ability to afford to live where they want to, Various aspects of 401(k) plan ownership appear tial, TIAA-CREF, William M. Mercer Companies, Inc., and the members of the Employee $25,000–$34,999 24 17 18 23 Confidence in Government Index (95 percent confidence level) for this survey is approxi- Medicare benefits equal to those received by retirees smaller proportions of retirees say they tried to deter- 23more likely to report having an IRA. 14 16 18 15 20 17 19 Other/don’t know/refused ® Confidence Index Score 1 na na 1994 9 7 (30 percent), and those with scores of 10 or more are 56 85 98 personal confidence Seven percent retired at age 66 or later. Again, retirees were working. Retirees are fairly evenly split between (1994) 8 16 20 52 4 Life is too unpredictable for me to Methodology .......................................................................4 to provide benefits of equal value to the benefits Pay for Most of the Recre- Under $25,000 Obtain More Education and Training 1993 43 55 na 56 na 26 na 3210 34 na 24 31 na4 21na 16 na 84 16 na 10 (65 percent)—either full-time (57 percent) or part-time in the “very high” group are substantially more likely to $35,000–$49,999 • Working Americans aged 26 and over can be divided into three groups: 22 22 20 20 21 16The respondents have been examined further by 26 29 27 24 24 22 Income..........................................................................19 survey, which was funded by a number of financial say they started at age 30 third who are “not too confident” or “not at all confident” 1992, to 38 percent in 1993, to 43 percent this year. since 1993 (55 percent). However, the proportion of indicate that this was not a reason at all (49 percent). Government Confidence Indices Note: Question wording for married respondents included spouse’s pension plans, savings, etc. ................................. 24 confident” (n=340) are somewhat more likely to provide paid off (28 percent), while 9 percent say they either paid last year (59 percent), the proportion of retirees who and Medicare (90 percent) systems will provide equal Females, older respondents, those with no workers say they need to three measures of to be somewhat effective in predicting respondents’ level are not confident in their ability to save the amount they and Benefit Research Institute. have saved more 20 today. Indeed, the proportion who feel Medicare benefits mately four percentage points for the total sample, four mine how much money they would need in order to live 19 Four in ten retired respondents indicate that 54 Level of Education classified as “very high” on the index (29 percent). Double Assureds are 35–54 years old. who are more affluent are more likely to report that they [If Married (n=651)] Older respondents, those holding college degrees, Will Be Able to Afford to 1992 16people receiving Social Security benefits (69 percent). those who feel they are better off (20 percent) or worse 75 95 100 received by retirees today Own a Vacation Home Reduce Benefits to All (1990) Very low 4 4 7 Low 6 2 9 44 4618 5 High 1 6 368 5 Very high 92 7S 2 59 60 65 ational, Entertainment, or $25,000–$34,999 1994 22 1219 19 30 25 42 24 15 29 18 18 22 1913 18 14 17 23 15 Survey Findings a$50,000–$74,999 ................................................................. 15 13 11 4 13 14 10 26 18 19 18 19 20 1992 1993 1994 EBRI Issue Briefs provide expert evaluations of employee benefit issues and trends, as well Not retired. Chart 10 (8 percent). Just over 2 in 10 are retired (22 percent). In be aged 55 and over. Interestingly, the proportions of grouping them according to their scores on the two the roughly one-fifth who are “very” confident in their financial security Chart 6, Personal Confidence Index by Percentage services firms and associates, is the fourth in a series of or younger (61 percent). Two in ten Americans who are currently working cite Table 20, Attitudinal Profile of the Four Segments in their retirement security (33 percent). retirees who are confident has dropped six percentage Spuose’s Employment Status The confidence in government index is created Live Where They Want to 45 1993 ......25 15negative reasons rather than positive reasons for feeling cash for their home or that it was given to them. Retirees agree has increased substantially (46 percent in 1993). college experience, those with annual household incomes benefits to those offered today. By comparison, roughly 65 95 100 save more money than personal confidence, of confidence in their ability to live comfortably in retire- • have determined they will need, 11 percent are “not too whether they will have enough money to pay for of will be equal to those received by retirees today has percentage points for the “not retired” sample, and eight comfortably before they stopped working (27 percent). they currently receive payments or benefits from a $35,000–$49,999 Start a New Career 60People Receiving Social 20 (1992) 20 13 2 22 22 611 23 Results of the personal confidence index show 25 25 274 2659 24 893 25 Likewise, those 23 retired at an earlier age. and those who are more affluent are more likely to Travel Pursuits You Desire b Fully four in ten favor this measure strongly off (22 percent) now compared with when they were $75,000 or more 5 3 4 3 1 7 13 11 18 9 10 13 Retired. Confidence in Retirement Security Confident that they have a good understanding of how ..............................4 Name and Size of Segments, 1994 a Employed full time as critical analyses of employee benefit policies and proposals. 54 65 1992 1993 11 1994 62 1992 1993 1994 1992 1993 1994 EBRI Notes 1992 1993 1994 provides up-to- During Retirement Years 1994 addition, of the respondents who are currently employed 11 63 93 99 respondents between age 45 and age 54 are fairly evenly Security (1993) 3 T indices. Based on their level of confidence (very high/high ables 10 24 60 3 $50,000–74,999 9 8 4 17 17 15 Holding College Degrees 19 13 16 ............................................. 24 23 23 19 surveys conducted on this topic as part of the Retirement One-quarter say they started between the ages of 31 and Table 21, Demographic Profile of the Four Segments points from 68 percent, after increasing seven percentage by adding the new “understanding” score with respon- “life is too unpredictable for me to save more” (20 per- Those who are not confident that they will be in retirement (21 percent), the 45 percent who say they are “somewhat” 40 ...26 they are currently saving in order to live comfortably in this way. Sizable proportions are only “somewhat are much more likely than those still employed to say One-half of current workers agree that when they retire, under $25,000, and those who are retired are more likely one-third of those who have “high” scores on the index ment. Respondents who received educational materials and this proportion confident” and 14 percent are “not at all confident” in their medical expenses. All Respondents We are currently enlisting the support of organizations who are interested in sponsoring the Don’t know/refused14.5 14.8 4 14.6 2 7 6 percentage points for the “retired” sample. steadily increased since 1992. Similar to Faithfuls, more However, this number has increased somewhat since 4pension or retirement plan to which only their employer 5 4 4 8 6 6 9 that 29 percent of respondents are “very high” on the scoring “very low” express confidence in their understanding of the Social Most current workers and retirees see their the Social Security and Medicare systems work 12 21 23 (41 percent). working. 68 79 83 18 19 26 74 80 85 Employed part time Will be Healthy Enough 10 1992 12 31 4 25 11 51 44 10 13 5 10 (Chart 1, Table 1) (1994) 3 11 23 61 2 $75,000 or more date information on a variety of employee benefit topics. 2 2 3 6 3 7 8 6 12EBRI’s Benefit Outlook 13 14 19 provides Employment status full time or part time (n=652), a few say they have 42% distributed among the four groups of confidence in Will Have Enough Money 1992 or very low/low) on each index, respondents have been 15 76 97 97 50 Chart 7, Personal Confidence Index by Age...................19 Confidence Project. 40 (25 percent), while 10 percent started saving after age able to live comfortably in retirement tend to be less cent) and “I will save more when I get closer to dents’ level of confidence in the government’s ability to Table 22, Average Retirement Confidence Scores for points from the previous year (61 percent). retirement. Two in ten say they are saving as much as they are not paying off a mortgage (80 percent compared confident” in their financial security because of external their living expenses will be lower than they are now feel this way. Few of the respondents with “low” scores to say that they will only take a minimal amount of (percentage) has increased regarding their salary reduction plan from their employer their ability to save that amount. Because many respondents indicate being at 1995 EBRI/Greenwald Retirement Confidence Survey. The cost of sponsorship for the 1995 confident, and the one-third who are either “not too” confident 35 than 8 in 10 Doubly Assureds are confident that they last year (19 percent). contributed money (42 percent). Roughly one-quarter This report of survey findings explains results Unemployed or laid-off Gender 3 2 2 6 personal confidence index this year, compared with on the index are current standard of living as being better than that of Security and Medicare systems. to Enjoy Your Retirement 1993 35 38 48 40 Most current workers expect to have enough or Respondents are next most likely to support an 8 10 4 8 Don’t know/refused 54% 5 3 6 5 2 6 6 5 7 5 6 10 Saving for Retirement Employed full time ................................................... 63 57 65 7 55 54 47 70 69 71 55 47 46 Confidence in Government to Take Care of Their Basic 1993 20 89 99 99 Gender a comprehensive legislative bill chart coupled with observations on the likelihood for passage Table 1, Confidence in Ability to Cover Expenses in retired from a previous career (7 percent). government index scores. a divided into four segments. The segments are shown in Retired Male 14.8 17 15.2 3 14.7 64 14 Chart 8, Distribution of Government Confidence 40. On average, current workers started saving for provide equal Social Security and Medicare benefits. The retirement” (20 percent) as major reasons they do not affluent and less educated than average. Many have not Selected Demographic Groups One thousand Americans over age 25 were A new question in this 1994 series asked respon- Years 1994 .................................. 37 2728 46 they need to be (21 percent), while very few feel they are events beyond their control such as the economy with 23 percent). (51 percent), slightly higher than the proportion who have this much confidence in the government and hardly financial risk. 41 8 14 5 12 considerably since and those who read those materials tend to be more least “somewhat confident” in each of the four areas, “not More educated and affluent respondents, as well survey is $5,000. Sponsorship includes participation in two meetings during which we will In 1990, 1992, and 1993 the Medicare system was included in question wording. understand how the Social Security and Medicare from all survey questions, breaking out responses by receive money from an IRA (24 percent), while few Respondents who are employed, older, and more (68 percent), and travel more than they do now (17 percent) or “not at all” confident (16 percent) that they will be able 30 expect to. Three in ten say they travel more than they 32 percent who were “very high” last year. The propor- slightly more likely their parents when they were the same age. More than Roughly two-thirds of Americans aged 26 and Employed part time 7 13 9 6 10increase in the taxable portion of Social Security benefits more than enough income to maintain an adequate 9 4 3 6 9 5 10 Social Security, an indication that current workers Expenses During Retirement 1994 Security is their most important source of income. 31 86 97 100 Male 50% 52% 51% 50% 49% 48% 48% 40% 45% 56% 55% 52% Adequacy of Savings Employment Status .....................................................8 Homemaker b 12 14 15 4 33% Female 40 46% 14.1 of employee benefits-related legislation. 14.4 14.6 Retirement EBRI’s Quarterly Pension Investment Report .....................................................................6 Among the respondents who are married The demographic characteristics of the groups Question not asked in 1990 or 1992. Low High chart 10 and are explained below: Index Scores, 1992–1994 ............................................21 surveyed, by telephone, between July 27 and August 19, retirement at age 30. dents their level of confidence that they will have enough started saving for retirement or even thought much save more for their retirement years. Roughly one- Table 23, Characteristics of Survey Respondents confidence in government scores range from 2 to 12 Unemployed/laid-off 8 6 5 .........293 saving more than they need to be (3 percent). Results for 5(19 percent), fear of the future (18 percent), or fear that agreed in 1993 (47 percent). The proportion of retirees any of the respondents with “very low” scores are confi- 5 The respondents who are paying off a mortgage Respondents were asked to agree or disagree 4 3 2 3 4 2 1992 (15 percent) confident in their retirement security than those who too confident” and “not at all confident” responses have as those who are married, are more likely to feel “very discuss the format and content of the survey; sponsors will receive a copy of the full report programs work. demographic characteristics and, where appropriate, affluent are more likely to report that they have tried to receive money from a salary reduction plan (8 percent). (63 percent). Respondents who do not expect to do these did when working (30 percent), with another 13 percent tion who are “very low” in personal confidence is 18 than those with one-half of current workers say they are better off than over are notEmployed full time confident that either the Social Security Female to live comfortably in retirement. 55 25 50 5548 58 49 63 50 5652 standard of living in retirement. Six in ten say they will for retirees with incomes greater than $30,000 per year. 59 53 63 52 5660 6255 44 58 57 45 48 54 recognize they will have to be more responsible for their c Respondents not naming a source as the “most Full-time student Age 0 0 na 1 Will Have Enough Money 1992 5 29 82 95 Reasons for Not Saving More for Retirement In 1993, asked as “Increase the tax rate on Social Security benefits...” ..............8 (QPIR) provides historical data on net contributions to pension plans and investment Table 2, Reasons for Not Saving More Money for Retired 13 13 12 25 (n=651), more than one-half say their spouse is employed 19 27 14 18 13 28 34 32 are examined in table 18. Respondents scoring “high” or Age Chart 9, Government Confidence Index by Age ................. 23 1994 by National Research, Inc. Random digit dialing where a 2 is “not at all confident” and a 12 is “very about their retirement finances, and few in this group money to pay for most of the recreational, entertainment, quarter report that these are minor reasons. By comparison, retirees who saved money for Employed part time 9 11 10 5 retirees are similar. Nearly two-thirds feel they should 12(n=453) are fairly evenly divided among those who have Social Security will not be able to provide them enough who agree “strongly” or “somewhat” with this statement with the following statement: “People who are planning dent in the government’s abilities. 8 638% 4 8 9 4 8 and 1993 have not received materials or did not read them. been combined for each of the questions. Thus, each confident” that they will be able to save the amount they Other/don’t know/refused Self-Sufficients are very skeptical about the and raw survey data. Please contact EBRI President Dallas Salisbury at (202) 775-6341 for d 4 5 4 2 making comparisons with questions asked in previous determine how much money they will need to have saved Doubly Assureds tend to be older than respon- things are fairly evenly divided between those who would 26–34 to Take Care of Medical 14.3 13.9 13.7 1993 expecting to. 7 percent this year, compared with 16 percent last year. 27 73 98 “very high” scores their parents were at the same age (58 percent), and (69 percent) or the Medicare system (64 percent) will confident that they have a good understanding of how have just enough income to maintain an adequate One-half favor this proposed change (50 percent), with retirement security than retirees have had to be in the In 1990, 1992, 1993, asked as “Raise all people’s Social Security and Medicare payroll taxes.” 20 important” one to their household in retirement were Homemaker 30 37% 7 10 6 10 9 7 7 6 7 5 9 8 (Table 2) 25% Unemployed/laid-off 26–34 allocation by plan type, total plan assets and their investment mix by plan type, and short- 8 29 733 5 31 5 27 527 Retirement 4 31 5 23 ..................................................................... 518 122 21 2 14 2 15 2 8 full-time (54 percent), while another 10 percent say he or “very high” in the government confidence index are having to pay health and medical expenses (17 percent), 35–44 13.8 14.1 14.1 preparing financially for retirement (67 percent of Doubly 31 percent of the total in 1994; Expenses During Retirement 1994 2Chart 10, Name and Size of Segments, 1994 30 74 96 ...................... 24 was used to obtain a representative cross-section sample. retirement when working (n=134) are less likely to say or travel pursuits they desire during retirement. Similar believe Social Security will provide them adequate confident” in the government. This year’s distribution is Retirees are somewhat more likely to report that a major have saved more money when they were working in money (9 percent). This group has taken some steps to 10 years or less left to pay (29 percent), 11–20 years left has increased only slightly, from 48 percent in 1993 to for retirement that is still many years away should put Similarly, nearly all of the respondents in the (20 percent). “new” question has a three-point scale. As noted earlier, will need to live comfortably in retirement. federal government’s ability to assist them during more information or to sign up as a sponsor. waves of the study. The final section reports on a Retire- dents in other segments—3 in 10 are aged 65 and over. by the time they retire. Respondents with no college 401(k) Plans 38% like to do them but do not expect to and those who say Most respondents say they do not expect to buy a A description of the groups, based on the ques- to be aged 35–54 fully 30 percent believe they are a lot better off. Two in continue to provide benefits of equal value to the benefits Education Full-time student 32% 2 32% 2 1 1 2these programs work. standard of living (61 percent), while 22 percent feel they 18 percent favoring it “strongly.” 2 1 2 1 11 2 2 past (table 5). 15 asked if it is/would be a major, minor, or not a source of 35–44 • Over two in five Americans also say they are “very confident” that they 35 28 28 36 29 27 26 28 25 23 13 17 Retired 18 15 17 30%17 15 19 20 25 20 25 29 26 Types of Investments Owned .......................................9 45–54 14.1 14.8 14.8 Worrieds and long-term earnings. Faithfuls EBRI’s Washington Bulletin Table 3, Investments for Current Workers; provides sponsors with short, timely she is employed part time. Two-thirds of married, much more likely to be retired than those scoring “low” while just under one-tenth cite the fear of the future workers, 70 percent of retirees). However, 31 percent of Assureds 34 percent in 1993; 32 percent in 1992. No college 42 34 57 18% 51 Chart 11, Selected Demographic Characteristics This survey included some questions from previous they started saving at age 30 or younger (28 percent). proportions of respondents in both groups, roughly 6 in reason they did not save more was that they wanted to income in their retirement. This differs from the views of shown in chart 8 along with the distributions from Education Low order to live comfortably in retirement (63 percent). ensure their financial security in retirement, but they (30 percent), or more than 20 years left (30 percent). 50 percent this year. savings in investments like stocks and bonds rather than “very high” group are confident that they have a good Amount of Thought Given to Retir data for the questions have been transformed so that a retirement, but most feel good about their own ability to A leading Of the retirees who tried to determine how much ement ment Confidence Index and the segmentation of the Correspondingly, this segment has the highest propor- experience are less likely to say they have tried to do they would not like to do them (table 9). 45–54 16 22 15 15 vacation home (92 percent), start a new career 17 tions used to construct the personal confidence index is 21 20 20 22 11 17 (chart 7). 19 ten say they are doing about the same (22 percent), while received by retirees today. The proportions of respon- Homemaker 20 8 9 7 8 10will have more than enough income. Fifteen percent feel 7 This group tends to be less educated and not as The other three proposed changes are opposed by 5 9 8 6 7 8 Current workers who are more affluent are more income for them. Three in ten current workers not 55–64 26% 15.1 15.41016%15.1 will have enough money to take care of basic expenses during retirement (Table 3) 25% Some college Some high school updates on major developments in Washington in employee benefits. 27 30 12 15 20 18 27 16 10Investments Providing Payments for Retirees 21 7 5 8 9 9 7 ............9 23% employed respondents indicate that their spouse is or “very low.” The proportion who report annual house- (10 percent), insufficient savings (8 percent), and concern retirees feel “very confident” that they did a good job of of Segments They are ...................................................................... high in personal confidence 27 Full-time student 55–64 2 14 2 8 1 13 2 12 21 Respondents who have 401(k) plans or who receive 3 1 10 1 12 217 110 19 1 21 1 16 3 Indeed, fully one-third say they started saving in their 10, are confident that they will be able to pay for most of many financial experts who contend that the less afflu- save more when they got closer to retirement (27 per- previous study waves. As shown in the chart, the results Three in ten claim they saved as much as they needed Retirees (48 percent) are more likely than those who are feel vulnerable to external forces, which drives their understanding of how these two systems work certificates of deposit and less risky investments, be- 22% 22% factor in determining respondents’ level of personal rating of “three” indicates that respondents are “very money they would need to live comfortably (n=66), prepare financially. Nearly all Self-Sufficients are 65 or older 15.9 16.4 16.2 survey respondents on which it is based. tion of retirees, and less than one-half are employed full these calculations. Nearly four in ten current workers say they (89 percent), obtain more education and training presented in table 13. As would be expected, very large Table 14 presents the demographic characteris- a few report being somewhat worse off (12 percent) or a dents who are “not at all confident” that these systems affluent as other segments. Less than one-quarter hold large majorities of respondents. More than eight in ten they will not have enough income (table 8). likely to say that their most important source of retire- naming money they put into savings or retirement plans College graduate 31 35 21 21 High school graduate 28 5 32 28 35 39 33 23 29 24 30 29 30 401(k) Plans................................................................... and, for the second year in a row, confidence appears to be increasing in Introduction 9 calculated by summing respondents’ ratings to questions 65 and over 6 10 13 10 14 11 20 17 21 26 36 33 Table 4, 401(k) Plan Ownership, Contributions, and Personal employed full time (65 percent), another 14 percent say hold incomes of $75,000 or more has changed from that Social Security will not be able to provide them Marital status preparing financially for retirement, compared with Chart 12, Distribution of Personal Confidence Index and high in confidence in the govern- Most working Americans aged 26 and over have given at money from them (among retirees) were asked a series of thirties (32 percent) or after age 40 (35 percent). On ent have the least to worry about because Social Security for each of the survey waves are these things in retirement (61 percent of current work- cent) rather than that life is too unpredictable 10 similar. All three indices (30 percent), while few feel they saved more than needed Saving for Retirement currently employed (26 percent) to say they have just need to begin saving more for their retirement years. If cause stocks and bonds tend to do better over the long (98 percent). Nearly three-quarters of those in the “high” confidence is household income. As illustrated in chart 5, confident.” roughly one-half say they either were (48 percent) or confident in their ability to prepare financially for Education time. However, Doubly Assureds are fairly affluent, as would like and expect to move to a new home more Some college/trade (84 percent), or move to a new home more suitable for tics of each of the four personal confidence index groups. majorities of the respondents who are “high” or “very lot worse off (6 percent) than their parents were at that will be able to continue to provide benefits of equal value college degrees, and almost one-half report annual oppose reducing benefits to all people receiving Social These proportions are similar to those when this ment income will be money their employer puts into a through work as their most important source say it will Marital Status Confidence Chart 1 0 (Table 4) Household Income Married 14.6 14.9 14.9 about how confident they are concerning four areas of this area. The proportion of current workers and retirees who are “very EBRI also publishes EBRI/Gallup public opinion surveys, special reports, studies, and books. Effect of Materials Received ....................................... 10 Some high school 20 24 21 9 their spouse is a homemaker. By comparison, 64 percent 9 18 Scores, 1992–1994 8 10 1............................................................ 0 8 6 5 28 3 percent in 1992 to 8 percent in 1993 to 10 percent this enough money (8 percent). 24 percent of current workers who are this confident ment concerning retirement. least some thought to their own retirement (89 percent) or business school 33 37 32 27 27questions on the types of materials their employer has 23 33 25 30 28 27 25 average, retirees started saving for retirement at age 38. (20 percent). Indeed, 53 percent say that wanting to save income will replace a substantial proportion of their ers, 59 percent of retirees). However, retirees are much are have the same mean scores (6.6). (5 percent). no problems arise for this group, they feel they will do 10 years or less left to pay on their mortgage. group express this level of confidence (72 percent), while run.” A majority of both current workers (62 percent) and more than one-half of those scoring “very low” on the were not (48 percent) able to save the required amount. retirement, think they will be able to afford to live where The personal confidence index has been con- Married 61 64 61 67 roughly one-third report annual household incomes of 66 66 69 67 70 65 60 65 suitable for retirement living (38 percent). However, Very Low Low High Very High retirement living (73 percent). Respondents in the “very low” group are less likely than high” on the index are confident about their retirement Chart 2 Confidence age (table 6). has increased somewhat: Social Security (23 percent in Less than $25,000 28 20 50 32 household incomes below $25,000. Indeed, the proportion Security (84 percent), with a majority opposing this question was last asked, in 1990. In that wave, pension plan, savings or retirement plans through work, Confidence Confidence in Having Enough Money to Live Divorced or separated 13.9 13.4 13.5 be a major source (31 percent). Nearly that many report As part of the Amount of Thought Given to Retirement High school graduate 35 .................. 34 32 10 28 retirement: the job they have done preparing financially 34 29 29 37 30 25 23 25 College graduate 0 confident” that they will be able to cover basic expenses increased 27 16 22 23 Table 5, Sources of Retirement Income 24 22 37 41 38 34 34 .......................... 38 12 of married retirees say their spouse is also retired, while year. Insufficient savings (28 percent), a negative Divorced or separated 16 16 18 16they are doing a good job. Worrieds 14 While many experts feel that savings rates are lower 16 9 26 percent of the total in 1994; 12 8 9 9 12 (chart 2). Indeed, more than one-half reported that they provided them, what those materials covered, and how Most current workers who have started saving for income in retirement, meaning their standard of living more likely than current workers to say they are “very closer to retirement was a major or minor reason, while $25,000–$49,999 As with the personal confidence index, respon- 38 40 31 38 fine financially in retirement. However, the fear of the about one-half that many in the “low” group do so retirees (52 percent) agree with this statement. Three in As level of education and income increase, the Amount of Thought Given to Retirement Respondents were also asked a few demographic personal confidence index have household incomes below structed by summing the responses to these four they want to, and think they will have enough money to Widowed 15.7 16.4 14.8 $50,000 or more. Nearly 4 in 10 of this group’s members many say they would not like to do this (46 percent). Comfortably in Retirement those in the other three groups to be married and more outlook in each of the four areas. However, those who are A separate question asked current workers if 1992, 26 percent in 1993, 33 percent in 1994); Medicare Seven in ten retirees report that they are better Some college/trade College Graduates reporting incomes under $25,000 is substantially higher 16 percent expected to have more than enough income in measure “strongly” (61 percent). More than seven in ten and personal savings and investments and less likely to that their own personal savings or investments (27 Home Ownership data analysis for High in (Chart 2) Self-Sufficients No College Some College, Trade/Business College Graduate For information on subscribing to EBRI publications or on becoming a member of Doubly Assureds for retirement, whether they will be able to cover basic Widowed 6 4 9 5 5 5 10 9 7 14 19 10 $50,000 or more 26 32 10 21 Table 6, Current Standard of Living Compared with Survey Single, never married 14.0 roughly 10 percentage points from 1992 to 1993 and has inched up even 14.4 14.6 11 percent say their spouse is employed full time. economy (22 percent), having to pay for health or medical now than they were 20–30 years ago, findings from this Most respondents also indicate that they are 27 percent in 1993; 28 percent in 1992. have given a “great deal of thought” to their retirement those materials affected their 401(k) plan decisions. As retirement report that they try to save regularly, that is, will not change dramatically. confident” that they will have enough money to pay for dents have been just 39 percent say that life being too unpredictable was or business school 27 29 27 33 proportion of current workers who say they need to save 37questions that are not presented in table 23. The average unknown gives this group of respondents concern. ten respondents in both groups “agree strongly” 29 31 23 26 29 30(36 percent). Just 29 $25,000 annually (56 percent), compared with only Financial Decision-Making questions for each respondent answering at least three of take care of their basic expenses. Self-Sufficients are on hold college degrees, the same proportion as Self- Roughly one-quarter say they would like and expect to Own na na 64 na they think they will work on a part-time basis after they likely to be divorced or separated. While there is little na“very high” in personal confidence are somewhat more 65 na na 75 na na 81 off than their parents at the same age (69 percent), with (24 percent in 1992, 26 percent in 1993, 33 percent in 31% than it was in either 1992 or 1993. They tend to be older retirement, 58 percent expected to have just enough, and oppose gradually raising the age when people collect say that Social Security will be their most important Single, never married 28% 18 15 13 13 percent) or money their employer puts into a pension 15 13 13 12 14 12 12 14 this study, three Financial Decision-Making Index Household income EBRI, call or write to EBRI at 2121 K Street, NW, Suite 600, Washington, DC 20037- .........................................11 expenses during retirement, whether they will be able to 60 Parents at Same Age.................................................. 13 Number of Children Under 18, College graduate 18 15 18 30 Three in ten respondents hold college degrees 21 25 33 31 33 38 42 Retir 42 ement Comparing the T expenses (22 percent), and the Social Security system not Rent wo Indices further this year. na na 33 na “very” or “somewhat” confident that they will have nasurvey seem to indicate that current workers are actu- 31 na They are na 26 low in personal confidence and na na 22 (56 percent), and one-third have given it “a little bit of 1994 1993 1994 1993 shown in table 4, overall, of the respondents who have a once a month, once a pay period, or in some other regular most of the recreational, entertainment, or travel divided into four fairly a reason. By comparison, the most affluent working more money for retirement decreases. Similarly, retirees The largest proportion of those who are not confident monthly mortgage payment for those who are paying off (29 percent for each). Respondents are fairly evenly split 2 percent of those in 10 percent of those rating “very high” on the index. the questions. The resulting index scores range from par with Worrieds regarding confidence in the Social Household income Sufficients that are graduates, and more than that of obtain more education and training (27 percent) and own retire from their final full-time job. Fully two-thirds say difference in the proportions who are employed, those in likely than those who are “high” to be confident about 37 percent saying they are a lot better off. Just 1994).Under $25,000 13.7 13.7 13.2 than Worrieds or Self-Sufficients; one-fourth are aged 65 23 percent did not expect to have enough. Social Security benefits from 65 to 70 (72 percent); more source of retirement income. Current workers who are Chart 8 plan (25 percent) will be major sources of income in indices have Percen- Level of Financial Risk Financially Responsible For ............................................... 11 afford to live where they want to, and whether they will 1896, (202) 659-0670. Table 7, Standard of Living in Retirement Under $25,000 28 35 31 22 (31 percent). Nearly that many have attended some 31 24 28 24 25 27 33 31 being able to provide them with enough money Home Ownership enough money to take care of their basic living expenses ally doing a better job of saving than those who are low in confidence in the government thought” (33 percent). Just 10 percent have not thought At different points in the survey, respondents were asked Findings 401(k) plan (n=353), one-half say they contribute or way (89 percent). Results are similar for retirees. Fully even sized groups pursuits they desire during retirement (30 percent Americans tend to express higher levels of confidence in $25,000–$34,999 In general, among both current workers and 14.3 14.8 14.4 who say they should have saved more for retirement a mortgage is $644, while the average monthly mortgage about being able to live comfortably in retirement between those who “disagree somewhat” (16 percent the “very low” group Security Accordingly, 42 percent of the respondents “very high” on 3 (not confident) to 12 (very confident). As shown in Security and Medicare programs to provide equal Worrieds and Faithfuls. They are the segment most a vacation home (25 percent). Fifty-six percent would not Distribution of Government Confidence Index Scores, they think they will work part time (65 percent). By the “very high” group are more likely to be retired than the job they did preparing financially for retirement 14 percent believe their standard of living is about the tage NoneOlder respondents, those with less education, 59 48 95 51 and over. than one-half oppose this “strongly” (52 percent). Two- Retirees were asked a similar question about more educated are also more likely to say that personal retirement. Fully 21 percent of those currently employed 50 56% been developed Chart 7 (Chart 3) $25,000–$34,999 23 19 21 20 have enough money to pay for medical expenses. 17 15 18 22 16 25 15 18 Own na na 56 na na 71 na na 73 na na 84 A correlation analysis has been used to examine the Compared with That When Working ......................... 13 $35,000–$49,999 14.9 14.9 15.0 college (27 percent), while 42 percent have no college (21 percent) are the most often cited reasons by retirees (84 percent of both groups). While the proportions of both currently retired. Six in ten current workers indicate concerning retirement. about their retirement at all. questions about their financial decision-making. Respon- contributed (among retirees) the maximum amount their 81 percent of the retirees who saved money for retire- retirees, those who are younger, less educated, and have compared with 19 percent). based on their level of their ability to live comfortably in retirement. This group One or two •28 Respondents have been segmented into four groups based on their 38 2 241992–1994 tend to be those who are less educated and less affluent. payment for respondents who have paid off their mort- (n=247) say they feel this way because they have not current workers, 11 percent retirees) or “strongly” are confident that the confidence index report household incomes exceeding chart 4, this procedure produces an index where a few benefits to those received by retirees currently. likely to own their primary residence. Doubly Assured like to obtain more education and training, while comparison, among today’s retirees, just 12 percent those “low” or “very low” in personal confidence. (98 percent compared with 85 percent) and much more same, and very few believe they are doing worse off than and lower annual household incomes are more likely to thirds of Americans over age 25 oppose raising the their current standard of living. Seven in ten say they savings or investments will be their most important Rent $35,000–$49,999 na 18 na Personal Confidence Index by Age 21 39 17 na 26 who do not say that money they continue to earn from a na27 26 26 na 20 na27 2621 26 na na 19 20 15 to summarize the outlook of respondents regarding their 100 50% $50,000–$74,999 14.8 15.6 15.5 Sources of Retirement Income.................................... 11 The confidence in government scores are calcu- Three or more Nothing herein is to be construed as necessarily reflecting the views of the Employee Benefit 11 12 1 23 Table 8, Sufficiency of Income to Maintain an experience. Those currently employed are more likely who are not confident that they will be able to live groups who were confident about being able to cover that they have started saving for retirement (61 percent), Most Americans dents are much more likely to say that they are in Not surprisingly, as age increases, the proportion employer allows them to (52 percent). 40 ment report that they tried to save money regularly. is more likely to have given thought to their retirement lower annual household incomes are more likely to say confidence in the In general, among both current workers and $50,000–$74,999 20 22 16 14 19 15 gage was $324. Roughly one-quarter of the respondents saved enough money (40 percent). Sizable proportions (9 percent current workers, 14 percent retirees). Sizable 16 17 17 19 15 17 they have a good 14 $50,000 annually, six times the proportion of those respondents have very high scores and a few have very Nearly 6 in 10 Self-Sufficients are under age 45. Personal Confidence and Government Confidence Index scores—Dou- are less likely this year to employed full-time 45 percent would not like to own a vacation home. report that they do work full time or part time at jobs for likely to be confident that they will have enough money Also, respondents who are in the “very high” does the average retirement confidence index score. In their parents (11 percent). feel confident that the Social Security and Medicare 90 $75,000 or more 15.2 16.7 16.1 Retir have enough income to maintain an adequate standard payroll tax that all workers pay toward Social Security, ement Confidence Index The demo- source of retirement income. job will be the most important source say it will be a retirement. The first examines how confident respon- 21% 19% (Table 5) Percentage Owning Homes lated by summing respondents’ ratings to four questions. Research Institute or the Employee Benefit Research Institute Education and Research Fund Adequate Standard of Living in Retirement .............13 $75,000 or more 28% 7 8 9 9 than retirees to report having graduated from college 6 12 9 7 12 3 8 10 comfortably in retirement (n=76). Own or Rent Primary Residence basic living expenses is unchanged from a year ago believe that they will be financially secure in retirement. excluding Social Security taxes or a pension plan their of current workers who have given a “great deal of control of their financial well-being and are directly Employment status 29% Three-quarters say that their employer has outlook, to have started saving for it, and to have started that each is a major reason for why they are not able to government. Results those who have already retired, those who are married, Table 17 Reasons for Not Saving Mor also blame the economy (25 percent) among the many say they paid off their mortgage either between 1990 and proportions of those currently employed (13 percent) and understanding of how e for ranked “very low” on the index (7 percent). low scores. The average score for the personal confidence Self-Sufficients are the most educated of the four seg- (46 percent) than in 1992 (55 percent). 80 Most current workers say they would not like to bly Assureds, Worrieds, Self-Sufficients, and Faithfuls. 18 which they are paid a fee. group are more likely to own their home (84 percent), to pay medical expenses (96 percent compared with addition, respondents aged 55 and over, college gradu- systems will be able provide benefits of equal value to Among both current either “somewhat” (21 percent) or “strongly” (44 percent). of living (70 percent). Retirees are graphic By comparison, among retirees, fully 42 percent major source and another 46 percent say it will be a dents are in their own abilities to prepare financially for Don’t know/refused 3 2 8 4 3 7 7 3 8 4 8 7 Expectations for Retirement Own 50 72 ...................................... 71 77 12 69 Two questions measure respondents’ level of confidence 30 Employed full time 14.3 or as an attempt to aid or hinder the passage of any bill pending before Congress. 14.5 14.2 Table 9, Expectations in Retirement ..............................14 (35 percent compared with 21 percent). lowest. Respondents who answered “do not know” to Description of Government Confidence Index Groups (83 percent for each group in 1993), the proportions who Two-thirds of respondents indicate that they are ranges from 1 to 4. Respondents who were confident of employer pays for but including money from salary very or thought” to their retirement also increases. Also, those Self Sufficients responsible for it (70 percent) than that there are too 28 percent of the total in 1994; provided them with educational materials or seminars Adequacy of Savings have more education, and have higher household in- are similar to those saving at an early age. While members of the above save more money for retirement. 70 reasons given. 1994 (24 percent) or between 1980 and 1989 (26 percent). those who have retired from the work force (22 percent) 33% the Social Security index is 8.0, compared with 1993 and 1992, when the ments—nearly 4 in 10 hold college degrees, and more A second factor in determining respondents’ A retirement confidence index has been constructed by Worrieds are very concerned about funding their start a new career (76 percent). The rest are evenly split 90 while those in the “very low” group are considerably less 74 percent). This has also been the case in previous ates, retirees, and those who own their primary workers and retirees, those who the benefits received by retirees today. Employment Status Age, income, level of education, and employment evenly divided between those who characteristics of say that Social Security is their household’s most impor- Rent 26 16 27 22 27 Retir minor source. ement retirement. The second index inspects their level of Table 8 Employed part ime 14.9 13.1 14.4 (Table 6, Table 7, Table 8, Table 9) in the government’s ability to provide Social Security or Respondent 45 Table 10, Understanding of and Confidence in Social Nearly 4 in 10 respondents report an annual Level of Confidence in Specific Attributes of Retirement more than one of the four questions used to construct the 60 — are “very confident” have increased slightly (43 percent somewhat their understanding of both programs received a 4, while reduction plans. Respondents with higher educational confident that they will have enough money to with higher levels of education, higher annual household many things that affect their financial well-being that 26 percent in 1993; 23 percent in 1992. regarding their salary reduction plan (72 percent). Of average income group tend to express high levels of found in previous comes are more likely to be “very confident” about each Employed full ime 68 65 66 65 62 Fifteen percent say they paid of their mortgage during say they “do not know.” 69 Responses are similar for retired respondents. 55 56 50 54 41 and Medicare systems 42 level of personal confidence is education level. Four in average scores were 8.2 and 7.8, respectively. The than two-thirds have at least some college experience. retirement. In general, they do not feel that they have combining the personal confidence and confidence in between those who would like to and expect to Unemployed/laid-off 80 12.8 13.7 13.1 likely (56 percent). years, although to a lesser extent in 1992. residence have somewhat higher average retirement are more educated and more 48%Sufficiency of Income status serve as good predictors of whether respondents 20 feel they have more than enough survey respon- tant source of income. One-half that many say the most 45% 55% • Current workers began saving at an earlier age. More than 6 in 10 Roughly one-fourth of the retirees not naming Government Confidence Index confidence in the federal government’s ability to provide [If Own (n=720)] 14 Attitudes Toward Social Security and Attitudes Toward Social Security and Medicare ....... 14 Medicare benefits of equal value to the benefits received 38% Employed part time EBRI Issue Brief is registered in the U.S. Patent and Trademark Office 7 7 7 5 Security and Medicare 8 7 8 9 11............................................... 8 3 8 15 50 40 household income between $25,000 and $49,999 Very Low 27% Despite the fact that a majority of those surveyed have government index have been excluded from the analysis. Survey respondents were read a series of statements compared with 40 percent for workers, 47 percent live comfortably throughout their retirement years those who were not confident of their understanding of levels and those who are more affluent are more likely to incomes, and those who are married are more likely to say are beyond their control (30 percent). © 1994. Retired They are high 15.5 in personal confidence 16.5 16.3 these respondents (n=253), 92 percent say they read the S confidence about their financial security in retirement, T study waves. Respon- of the statements regarding retirement security. Among ypes of Investments Owned Many of those who are “very confident” that they will be the 1970s, while 12 percent paid off their mortgage work. ten of those measuring “very high” on the index are median score for the index is 8 this year, the same as it Accordingly, they are the most affluent segment, having to Maintain an Adequate Standard done an adequate job of preparing financially for retire- government index scores (before being collapsed into the (13 percent) and those who would like to but do not Paying Off a Mortgage 70 Of four reasons provided for why respondents do/did not Among those ranking “low” on the index, only confidence index scores. Respondents who are separated affluent are more likely to feel they Reactions to Proposed Changes in Social favor or oppose these proposed changes to the Social 81% income (14 percent) and those who dents are important source is money their employer put into a 46% 47% them as their household’s most important source of support to them in their retirement years. The third current workers who have started saving for retirement say they started Unemployed/laid-off 6 6 3 6 3 3 3 4 4 3 5 1 21% (Table 10) by retirees today. The other two questions measure 40 Homemaker 14.0 1214.5 14.6 Very low Low High Very high ISSN: 0887-137X 0887-1388/90 $ .50 + .50 . Table 11, Reactions to Proposed Changes in Social Medicare (38 percent). Just over one-quarter cite household Profile already begun saving for retirement, many individuals about their level of confidence concerning various aspects Yes Two questions measure respondents’ level of 63 78 19 69 compared with 43 percent for retirees). (66 percent for both workers and retirees). However, the either program received a 1. Those confident in their report that they have started saving for retirement. 10 they have given “a great deal of thought” to their retire- As annual household income increases, the 35 and low in confidence in the government of Living In Retirement materials. Of those who read the materials (n=234), many analysts and experts argue they are saving at current workers, younger respondents are more likely to dents with a score of 4 Employee 75% earlier. Among those who are renting, the average Sour able to continue to live comfortably in retirement (n=69) ces of Retirement Income The percentage college graduates (42 percent)—more than twice the was last year and the year before. the largest proportion of respondents with household 60 ment, and very few have confidence in the federal four categories). The result produces an index with expect to (13 percent). Retired 14 10 13 13Confidence in Gover save more for retirement, paying for necessities is 18 3 in 10 are confident they will have enough money to pay 13 24 19 22 nment Index 31 43 39 or divorced have somewhat lower retirement index are better off than their parents Security system. In general, older respondents, those say they do not have enough presented in pension plan (20 percent). A few report that the most retirement income say that Social Security (26 percent), index, the retirement confidence index, is a combination Full-time student 13.6 14.1 43% 15.9 37% 30 at age 30 or younger (61 percent). One-quarter say they started between Reactions to Proposed Changes in Social Security Security System respondents’ level of confidence in their understanding of 1 No/paid off 28 18 60 22 Low 65% Security and Medicare Systems ................................ 16 10 41% incomes under $25,000 (28 percent) or $50,000 or more believe most Americans, including themselves, need to confidence in the government’s ability to provide Social of retirement security, including retirement, health Respondents who are employed were asked if they proportions of both current workers and retirees understanding of Social Security but not confident in Married respondents are also more likely to have started Very large majorities are also confident that 10% S who ment. proportion of respondents who say they are in control of concerning retirement. Homemaker 5 10 7 7 nearly all say they included a description of the invest- 7 6(percentage very/somewhat confident) 9 10 10 3 8 6 rates inadequate to maintain their standard of living or less are classified feel “very confident” that they will be healthy enough to Benefit 17% 50 say this is because they saved money through savings or currently monthly rent payment is $458. of respondents who proportion of college graduates among those in the “very incomes exceeding $50,000. To facilitate analyses, respondents have been 30 64% government’s ability to support them. Most also do not scores ranging from 6 to 24. This index is shown in chart Education A similar question was asked of retirees. One- mentioned most often. Table 2 shows the responses to medical expenses (30 percent). Comparatively, roughly scores. were at the same age. Also, among 20% who are retired, those who are less educated, and those income (15 percent). table 23. Re- important source is money they put into saving or 20No/paid in cash or house given 9 5 20 9 money they put into savings or retirement plans through of the first two. Not Retired Retired 0 System .................................................................... age 31 and age 40 (25 percent), while 10 percent started saving after age 15 how the Social Security and Medicare systems work. As has been the case in previous study waves, more 18% Full-time student 0 2 1 2 Table 12, Size and Percentage of Personal 2 1 1 3 2 1 1 2 (26 percent). Retirees tend to have lower household Security and Medicare benefits of equal value to the be saving more. An overwhelming majority of Americans status, financial preparedness for retirement, and having currently have any of three types of investment plans. Some high school 14.0 13.5 13.3 they will be able to afford to live where they want to their understanding of Medicare received a 2. Corre- are confident have declined slightly from 1993. As shown Of eight sources of income in retirement, one-quarter of saving. Faithfuls their financial well-being also increases. Also, those Fifty percent of retirees say they gave their 16 percent of the total in 1994; 31% ment options available to them (95 percent) and covered once they reach retirement. However, others argue that enjoy their retirement years, while those who are older as “very low” on the Research Confident That the Social Security System 40 8 14% 1992 The confidence in government index reflects respondents’ payroll deduction plans (38 percent), their pension or 1% Seventeen percent of those who are retired or 10% 43% are “very” or “some- 84% low” group. Indeed, as shown in chart 6, there is a linear further divided into four groups based on their personal Faithfuls do not feel that they have done a good feel they have a good understanding of how the Social 12 along with the indices from 1992 and 1993, which are half say they have maintained their preretirement 25 (income this series of questions for current workers and retirees. 6 in 10 are confident that they have prepared well (income Not Retired Retired current workers, younger respon- 10 Widowed respondents appear to less confident spondents are fairly evenly divided among five age who are less affluent are more likely to oppose reducing 1992 Of eight things they might do in retirement plans through work (15 percent) or their own work (22 percent), and their own personal savings or Respondents were described five possible changes in the The indices utilize the survey questions thought Education 30% [If Paying Off Mortgage (n=453)] 16% High (Table 11) These two questions have been combined to form one respondents feel they have a good understanding of the High school graduate 14.4 440. On average, current workers started saving for retirement at age 30. 14.6 14.6 Confidence Index Groups, 1992–1994 S ........................18 Will Continue to Provide Benefits of Equal Value to 12% 1993 27% incomes than those who are employed. Indeed, while 1 8 38 84 feel that people in the United States do not save enough benefits received by retirees today. enough money for retirement. The wording of these One-half of current workers indicate having a pension or (70 percent of current workers, 80 percent of retirees). spondingly, those confident in their understanding of in chart 1, retirees are more likely than current workers those who are currently working believe the most By comparison, 55 percent of the retirees retirement “a great deal of thought,” and another holding college degrees are more likely to say they are in 13 percent in 1993; 18 percent in 1992. expected) the advantages of saving in tax-deferred plans have) confidence in govern- members of the baby boom generation, in particular, are are more likely to be confident that they are doing a good Institute- 30 confidence in the federal government’s two primary employed say either they or their spouse owns a busi- retirement funds are adequate (26 percent), or they have what” confident in relationship between level of education and scores on confidence index score. The proportion of respondents in job of preparing themselves financially for retirement 0 8% 6 Security and Medicare programs work, although confi- similar. The average score of the retirement confidence lifestyle (52 percent), and another 14 percent say they Number of Years Left on Mortgage 27% Some high school 10 12 15 31 As shown in the table, 62 percent of current workers and 10 financially (56 percent) and that they will be able to 12 9 9 10 15 10 14 than in 1993. Indeed, the average retirement confidence dents are more likely to feel they 20 groups, with the average age being 48. Nearly one-half of benefits to all people receiving Social Security and retirement, current workers are personal savings or investments (14 percent). Some college/trade investments (20 percent) are major sources of income. to best represent each person’s level of confidence in his Social Security system that have been proposed by 6% Confidence Index the Benefits Received by Retirees Today ............................................................. 16 1994 “understanding” measure. This “new” variable also Social Security system than they do the Medicare 2 8 30 79 1993 By comparison, retirees who saved money for retirement when working Table 13, Description of Personal Confidence Index 32 percent of those employed report annual household money to live comfortably in retirement. In 1994, 8 in 10 statements varied, as appropriate, for retirees and those retirement plan to which only their employer contributes Two questions measure how confident respon- High school graduate 28 32 27 30Retirees (49 percent) are substantially more likely than Medicare but not confident in their understanding of 30 important source for their household will be personal indicate that they were able to save money for retire- 26% 26 32 29 28 31 35 35 27 percent gave the issue “a little bit of thought.” How- control of their financial well-being. 10 years or less They are 20 low in personal confidence and 29 26 48 38 (92 percent). Three-fourths say the materials they read ment index saving adequately and are currently enjoying a higher job of preparing financially for retirement, they will be Education programs for the elderly and an evaluation of how well investments (23 percent). ness. Most of these businesses employ fewer than four their understanding their personal confidence index. Specifically, as the each of the four groups is presented in table 12. As and are only slightly more confident than Worrieds in or business school 23%14.3 14.5 14.5 dence is rising in this area. index is 14.6, the median is 15.0. In 1993, the average expect to do that. One-half also say they have spent more 47 percent of retirees report they do/did not save more afford to live where they want to (63 percent), and a very S A Great Deal of Thought score for widowed respondents has decreased from are worse off than their parents 4 all respondents are younger than age 45 (49 percent), reducing benefits to high-income people and are less most likely to say they would like Retirees who are more educated and those who 15 Very High or her own ability or the government’s ability to fund his people who feel they may be necessary to ensure that the1990 1994 1990 1994 Retired Introduction Not Retired ................................................................. 16 ranges from one to four. system. While six in ten respondents are “very” or S 11–20 years Confident That the Medicare System Will Continue to Some college/trade 22% 30 32 18 23 1992 0 5 32 85 1 Groups .........................................................................18 are less likely to say they started saving at age 30 or younger incomes of $50,000 or more, just 10 percent of retirees respondents said Americans do not save enough money not yet retired. Table 1 presents the results for this dents are that they understand how these programs money (51 percent). Slightly smaller proportions report College graduate 14.8 15.8 15.3 current workers (32 percent) to be “very confident” in Social Security received a 3. For the purpose of asking certain questions, survey respondents were divided ment, aside from Social Security taxes or a pension plan savings or investments (27 percent), money their em- ever, retirees are somewhat more likely than those high 10 in confidence in the government covered the principles of asset allocation and diversifica- standard of living than their parents were at the same (18 percent), while a able to afford to live where they want to, and they will they feel they understand how these programs work. people (71 percent). Indeed, 39 percent employ just one 1994 Responses are primarily negative among retirees of these programs scores on the personal confidence increase, so does the shown in the table, respondents with scores of 5 or lower that respect. However, this group has much more faith in and score was 14.8; the median was 15. In 1992, the average Worrieds are more likely to be female than male time with their children and grandchildren (51 percent), money for retirement because they spend/spent money large majority are confident that they will have enough 16.4 in 1993 to 14.8 this year. On the other hand, retired were at the same stage in life. while one-third are aged 55 and over (32 percent). The likely to oppose raising the payroll tax that all workers and expect to spend more time are married are somewhat more likely to say that money Expectations for Retirement or her retirement. Each question used to build the Social Security system has enough money to pay benefits More than 20 years Provide Benefits of Equal Value to the Benefits or business school 30 2 3232 34 18 26 26 39 1993 30 331 27 31 9 23 32 28 2384 25 10 into two categories: retired or not retired. Of the 1,000 people interviewed, Personal Confidence Index Home Ownership .........................................16 “somewhat” confident that they have a good understand- 5 Table 14, Profile of Personal Confidence Index Groups 2 do so. for retirement (83 percent), 7 percent said they do save series of questions for retirees and current workers for work. having an individual retirement account (IRA) These two questions have been combined to form 0 (28 percent). Indeed, fully one-third say they started saving in their this area. their employer paid for, but including money from salary ployer put into a pension plan (25 percent), or money (percentage) As shown in table 15, more than 4 in 10 respon- currently employed to say they did not give their retire- Level of Financial Risk concerning retirement. tion (73 percent). have enough money to take care of basic expenses in age. score of 5 or 6 places Like the personal confidence index, data for the ques- who are “somewhat confident” that they will be able to person. Twelve percent have eight or more people in the A Little Bit of Thought appears to be increas- proportion of respondents who have graduated from the federal government. Roughly one-half are confident Research Received by Retirees Today College graduate 31 22 32 36 1994 and more 6 in 10 are under age 45. Less than one-fourth 31 score was 14.4; the median was 14. The average retire- 290 32 31 7 S 38 36 26 3290 27 and another 14 percent say they expect to do that 757 (76 percent) were classified as not retired and 243 (24 percent) were paying for necessities. Among both groups, roughly one- money to take care of basic living expenses during respondents feel somewhat more confident in their Asked about their stan- average age among retirees is 70, and 79 percent are pay toward Social Security, raising the age when people with their children and grandchil- their employer put into a pension plan is their most Own a a 15.1 indices is measured on a four-point Likert scale. Re- for future retirees. They were then asked whether they Geograohic Area (Chart 4, Table 12, Table 13, Chart 5, Chart 6, 5 0 ing of how the Social Security system works (61 percent), Personal Confidence Index Worrieds Faithfuls Self-Sufficients Doubly Assureds by Selected Demographics ..........................................20 classified as retired. (Homemakers have been classified as retired if their Six in ten respondents say they are not finan- one “understanding” measure. This “new” variable enough, and 7 percent said that some do and some do the 1992, 1993, and 1994 survey waves. (41 percent), up slightly from 1993 (36 percent), but still Home Ownership dents are “not at all confident” that they understand how reduction plans. As with current workers, retirees who they put into saving or retirement plans through work Current workers (83 percent) are more likely ment any thought (21 percent) (chart 2). Following is a brief profile of the segments. The thirties (32 percent) or after age 40 (35 percent). On average, retirees More Than Enough 16% 22% 20% More than four in ten of those who read the 14% respondents “low” on retirement. Rent Very Confident S a S Not Too Confident a 13.6 tions used in the construction of the index are first live comfortably in retirement (n=93). More than one- company. ing among college. that they will receive Social Security and Medicare Fund. hold college degrees, and they tend to be less affluent. ment confidence index scores for various demographic (table 9). 3 half of those not identifying this as a major reason say it Two-thirds of current workers expect to retire between retirement (86 percent). retirement security. The average retirement confidence dard of living in retirement Northeast Confident That You Have a Good Understanding of 18 17 17 22 1992 aged 65 and over. can begin collecting benefits, and increasing the taxable 0 21 dren (78 percent), maintain their 56 95 important source of retirement income. Retirees with These are questions 25b through 25e for nonretired persons or questions 25b sponses have been transformed so that the higher the favor or oppose these changes. 2 3 4 5 6 7 8 9 10 11 12 spouse is retired or not retired if their spouse is currently working. In this Chart 7, Table 14) Own na na 67 na 51 percent believe they have a good understanding of na 71 na na 78 na na 73 0 Just About Enough 58 61 62 70 Most respondents indicate being conservative regarding cially responsible for any children under age 18 not. This is similar to 1990 and 1992, when 85 percent lower than the proportion who reported having an IRA in Seven in ten Americans aged 26 and over say than retirees (68 percent) to be confident that they will (23 percent). Just 14 percent of current workers say their are more educated, more affluent, and married are more No Thought at All data are shown in table 20 and table 21. Annual house- 2 South While many current workers have given a lot of How the Social Security and Medicare Systems Work 34 36 30 34 1993 materials about their 401(k) plan from their employer 0 30 S 66 95 the index (36 percent). through 25e for retired persons on the survey. Respondents who answered “do In a separate series of questions, respondents started saving for retirement at age 38. transformed so that a “4” indicates the highest level of third are just “somewhat confident” because the economy respondents in all benefits of equal value to the benefits received by For more information, see Paul Yakoboski, “Baby Boomers in Retirement: All rights Another leading factor that helps determine Somewhat Confident report “not retired” respondents are sometimes referred to as “workers,” Also, the proportion reporting incomes of $25,000 or less groups are presented in table 22. As would be expected, Four in ten retirees indicate that they do volun- age 56 and 65 (63 percent); 32 percent expect to retire at is a minor reason. Few respondents ranking “very low” on the index score for retirees was 15.5 in 1992, compared with compared with what it is now, one- S portion of benefits for retirees with incomes greater than Two-thirds of respondents are married preretirement lifestyle (71 per- annual household incomes under $25,000 and those who a Rent Not At All Confident S na na 31 na na 27 na na 21 na na 24 rating the higher the level of confidence. As shown in table 11, the largest proportion, by The personal confidence about retirement index is a Under 35 Years 35–54 Years Over 54 Years Not Have Enough 23 15 16 15 Not asked. Government Confidence Scores Medicare (table 10). not know” to more than one of the questions used to construct the index have What Are Their Prospects?” Midwest EBRI Issue Brief 29 no. 151 (Employee Benefit 28 35 22 1994 although a few are, in fact, unemployed, students, or homemakers who have 2 36 72 98 financial risk. More than four in ten Americans say that (59 percent). Three in ten are responsible for one or two and 83 percent, respectively, felt Americans were not they are confident that they are doing or did a good job of 1990 (46 percent). Four in ten current workers also be healthy enough to enjoy their retirement years, and most important source of retirement income will be likely to indicate that they saved money for retirement thought to their retirement, just one-third have tried to hold income, level of education, and the percent owning said the materials led them to change the allocation of Those with scores of were asked to agree or disagree with two aspects of being confidence in the government, while a “1” represents the is not doing well (35 percent). Roughly one-half fear groups and especially 4 respondents’ level of personal confidence is age. Many of retirees today. Furthermore, more than 8 in 10 are reserved. 5 has increased 10 percentage points since 1992. as respondents’ annual household income increases, so teer work (39 percent) and 10 percent report that they age 64 or 65. Seventeen percent say they expect to retire personal confidence index are confident in any of these Four in ten current workers say a major reason 16.3 this year. These questions are #46b and #46d on the survey. half of current workers feel they been excluded from the analysis. (65 percent). Similar proportions are divorced or sepa- $30,000. cent), do volunteer work are not married are much more likely to say that Social These questions are #46a and #46c on the survey. Research Institute, July 1994). far, favor a measure to reduce benefits to high income West The index scores for personal confidence are 19 19 17 23 employed spouses.) measure of respondents’ confidence in their own ability EBRI Special Report SR-27 • Issue Brief Number 156 • December 1994 • © 1994. EBRI December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief 16 28 4 20 2 12 24 22 8 10 18 30 26 14 6 December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief December 1994 • EBRI Special Report/Issue Brief 13 31 29 19 25 15 27 11 23 17 21 5 3 1 7 9 Percentage Percentage Percentage Special Report Special Report Percentage Percentage and Issue Brief Number156 Percentage and Issue Brief no. 156 Percentage of Respondents 6 Percentage of Respondents Percentage of Respondents 8 Percentage 10 12 14 16 18 20 Percentage 22 24

Volume 156

Pages 22

EBRI Issue Brief