Reflecting the growing concern over health care costs and economic issues, American workers' confidence in being able to afford a comfortable retirement decreased over the past year by a rate unmatched in the 18 years of the Retirement Confidence Survey® (RCS), according to results released by EBRI.
• Retirement worries growing—Americans’ confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values, according to the 18th annual Retirement Confidence Survey® (RCS). Decreases in confidence occurred across all age groups and income levels but were particularly acute among younger workers and those with lower income.
• Overall retirement confidence drops sharply—The percentage of workers very confident about having enough money for a comfortable retirement decreased sharply, from 27 percent in 2007 to 18 percent in 2008, a decline of 9 percentage points and the biggest one-year drop in the 18-year history of the survey. Retiree confidence in having a financially secure retirement has also decreased sharply, from 41 percent very confident to 29 percent, down 12 percentage points.
• Health care costs have become a big issue for retirees—Among retirees who left the work force earlier than planned, more than half (54 percent) say they did so because of health problems or disability. Almost half of retirees (44 percent) say they have spent more than expected on health care expenses. More than half of retirees (54 percent) say they are now more concerned about their financial future than they were right after they retired, a 14 percentage-point increase from a year ago (40 percent in 2007).
• Workers may be waking up to the lack of health insurance in retirement—The RCS finds that 34 percent of all workers now expect to have access to employer-paid health insurance in retirement, down 8 percentage points from last year (42 percent in 2007). Although 41 percent of retirees say they currently have access to health insurance through a former employer, many employers are eliminating health care coverage for future retirees.
• Retirement planning up, but still not high—Less than half of workers (47 percent) say they and/or their spouse have tried to calculate how much money they will need for a comfortable retirement, up from the 42 percent measured in 2004–2006 and considerably higher than the low point of 29 percent recorded in 1996. As before, the 2008 RCS finds that doing a retirement savings calculation is particularly effective at changing worker behavior: 44 percent who calculated a goal changed their retirement planning, and of those almost two-thirds (59 percent) started saving or investing more.
• Most savings levels are modest—The percentage of workers (72 percent) saying they have saved for retirement has returned to 2001–2006 levels after a slight dip in 2007 (66 percent). Forty-nine percent of workers report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $50,000. Twenty-two percent of workers and 28 percent of retirees say they have no savings of any kind.
total savings While the average age at retirem Retirees have also had thei However, it a and investm ppears that ents (not incl r conf more workers c en idence shaken about t is likely uding t ould to continue to incr hFigure 11 Figure 19 e valu Figure 5 Figure 8 Figure 15 Figure 13 Figure 10 be en e of their pri having a fina couraged to seek advice. Sixty ease mary ncially and m residence or any secure retirement. Onl any workers -nine percent report defined benefit may work until y 29 per- Confidence in Other Financial Aspects of Retirement Endnotes Improving Retirement Preparation Preparing—or Not—for Retirement their planned cent now say that if the plans) of less than $50,000. However, the large y they are retirement age, others could find t were leaving an em ver Workers Ha y confident abo Attitudes About Mana Americans Having Saved Mone Worker Pre Post-Retire Amount of Savings American Workers Think Reported T ploy ving Tried to Calculate How er and had u ferences for Retiremen t havin ment vs. Pre-Retirement Spending o htal Savings and Investments emse g Figure 17 m eno oney in a retirement savings pl m ging Mone a lves retiring sooner. The R ugh m jori ty of workers oney yy in Retirement for Retireme tot live com Calculator Much Mone who have not put m fortably thro nt Can, the S has consistentl y yugh woul oney oud be t their aside for yvery found or The 2008 RCS also finds that confidence has decreased in more specific financial aspects related to Ruth Helman is research director for Mathew Greenwald & Associates. Jack VanDerhei, Temple University, 1 Figures In the RCS, retiree refers to individuals who are retired or who are age 65 or older and not a em aployed full time. Moving Workers to Action Saving for Retirement that a large proportion of re retirement y Whi somewhat retirement have little in savings at all: ch would Wo Wo ears, co likely Wo you prefe to seek advice fro mpr ared with appro ? The tirees leave the work for The y Need y Need Sources of Income in Retirement Among Those Providing a Response m x to Save for a Comforta their retire imfor Retirem Seventy ately 40 rker -m per six ce earlier than planned (51 sent Retir cent in the 2 percent of these workers say ent, b plan provider. Alm y Hourk ble Retirement 001–rkerer sehold Incomes Retirs 2007 waves of the RCS. At the same ost percent in 2008). Many e as es many their assets t e saes y the Retir y o would e tal less than es be retirement. Although worker confidence continues to be highest in having enough money to pay for basic is research director of the EBRI Fellows Program. Craig Copeland is senior research associate at the Worker Introduction refers to all individuals who are not defined as retirees, regardless of employment status. It may It would be take more than a superficial review of work heartening to find that Americans are reac ers’ting to their decre planning for retire ased confidence in having a ment to shake their confidence One that asks for 7 to 10 p 2007 H ieces of detailave Saved ed inform Cu atio rre n and ntly Sav (Plann e2008 ed) Have Saved 2007 2008 (Actual) Wo EBRI Issue Brief (not in2008 47% cluding value of primary residencerk or defineers Hou d besenefit plans) hold Incom Retire ees retirees time, 35 percent of retirees are not confi likely $10, Figure 1, W 000. who retired early to look to a financial services co orker Confiden cite negative reasons for leav ce in Having Enoug dent about mpany retained by Figure 3 h Mo having en Figure 4 ing the work ney t their em o oug Live Co h mforce before oney ploy mfortably (17 pe er to provide advice (65 percent) or an rcent T they hrough expected, including not too out T confident, heir Emexpenses during retirement, only 34 ployee Benefit Research Institute (EBRI). This percent of workers report the Issue Brief was written y are ve with assist ry confident about ance from the Institut being able to e’s a a th ® 2 financially in the effectiveness of their preparations. In the secure retirement by improving their retiremen 2008 RCS, workers were t preparations. In fact, asked at both t the percentage of workers he beginning and gives an a You (an Much lower than befo nswe d you r to fit your person r spouse) can re yo always u retire aMoney l situcut b ation d ack on Money 24% Money 56% 22% The Brian K. All 18 Buc wave of the Retire ks, Arthur B. Kennickell, and Kevi 2007 ment Confidence Survey $10,000–n B. Mo $25,00 ore, “Recent (RCS) finds that A 0– (Expecte 43 Changes $50,00 d) in 0– U.S. m$35,00 eric Family Financ $100,0 ans’ 0– confidence in their (R 00– epo es: Evide rted) nce 17 percent health proble independent financial services co Workers continue to tr Retirement Years nom t at all s or disability (54 coWorker nfid ............................................................................................................... Retiree ent), com y to Co percent), changes at Co push back the nfidence in Financial Aspects of Retirement m pared with rou nfidence in Financial Aspects of Retirement pany or advisor (59 per ir expected ghltheir com y 25 retirem percen cent). Fifty pany, such as downsizing or closure (33 per- t in the nine ent age, -two percent would be often with the previous surve intention of i ys........... (Figure 2). likely5 to turn mproving to afford basic expenses when they retire (down from a high of 40 percent in 2007). Forty-five percent are resea rch and editorial staffs. Any views expressed in this report are those of the authors and should not be One that asks for 3 or 4 pieceIssue Brief s of basic information and gives say end of the sur your lifes ing A little lower theytyle in retirem a2008 72% nd/or t vey<$1 abh out t eir spouse have saved m 0,000 h ent if it looks like you eir confidence that the2006 42 $24,999 oney y$49,99 were doing a for 64% retir 9 ement no 34 goo $99,99 d job w stands at 72 percent. However, this is 9 of prepa64% $249,9 ring financial 99 $250,0 23 ly for their 00+ fr Social Se om the 20 cu 01 rity and 2004 Survey of Consumer Fi Wo nances rkers ,” Federal Reserve <$3 80% 5,000 Bulletin, Vol. 9 $74,99 2 (Febr 9 uary 20 94% 06) $75,00 : A1-A3 0+ 8. ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries cent), and having t a relative, frie their current financial situation or to increase their fi Decreases in confidence occurred across nd, or co-worker, while 41 o care for a spouse or another fam per all age cent would think about groups and incom ily m nae ncial se mber (2 curity in retireme 5 percent). Others say eacce levels; however, these decr ssing an online professional nt. The typical worker work-related eases somewhat confident. Fewer are confident that they are doing a good job preparing financially for their ascribed to the officers, trustees, or other sponsors of EBRI, EBRI-ERF, or their staffs. Neither EBRI nor Very Very Somewhat Somewhat Not Too Not Too Not at All Not at All Figure 2, Retiree Confidence in Having Enough Money to Live Comfortably Throughout Their an an might use up swer th About the sa at fits most people li 2007 all of your sa me vings ke you 66 60 31 68 31 33 An employeWorkers r-sponsored ret ireme 2005 nt savings plan, 42 statistically Less than $ retirement. Although it wa similar to the percentages 250,000 s hypothesized that responde measured in 20 25% 01–2006 and nts would 49% have less confidence in their retirem appears to be a 25% recovery from 13% a brief di ent p 3 about health costs, the economy, and home values. However, this decreased confidence does not appear to reasons (22 percent) or out were particularly financial advice service retained b expects to retire at age 65, and 20 acute among dated skills younger y perce (14 percent) pl their workers and tho n em t of workers ployer ay (Fi ed a role. se with lo pl gure 21). an to push wer inco Some retirees mention a m Wo on int rkers under age 45 are m m oe their . The percentage say 70s. However, the t ix of positive ore apt than ing the ypical y EBRI-ERF lobbies or takes positions retirement, with 23 percent very confident and 4 on specific policy 8 perproposals. EBRI invites co cent somewhat confident. mment on t Workers are l his resear east likely ch. to Life expectancy is calculated by adding expected age at retirement and expected length of retirement for workers Confid Confid ent ent Confid Confid ent ent No. 316 Confid Confid ent ent Confid Confid ent ent Neithe Retirement Years r/would not use tool ............................................................................................................... 5 ...........6 A little higher Strongly ag2006 70 ree 2004 42 64 47% 7 45% 68 35% 30% 11 such a $250,0 s a 402008 00– 1(k) $499,999 36% 13% 12% 12% 15% 12% 16 11 74 22 36 15 to 66 preparations at the end of the survey tha percent measured in 2007. While n the percenta at the start, that was not the case (Figure 18). In fact, when ge of workers having saved for retirement increased have affected the way most Americans plan and save for retirement. Moreover, the RCS finds that faulty and negative are older workers to indicate they retiree retired at age 62 and E ve BR ry I E confi mploye reasons for retiring earl d eent about Benefit Rese having enough arch In 51 percent say stitut would e Isy sue B , bm u seek advice from each of these rt just 7 ief oney (IS the S for a com Npercent offer 08 y retired 87 -137f Xortable r sooner than p ) is puonly blishe ed m positive reasons. The consequences of tirem ont sources. lanned. hly ent decr by the E eased fro mployee Ben mefit 31 R percent in esearch Institutan e, feel confident about having enough money to meet medical expenses (18 percent very confident, 37 percent providing both pieces of information. Having e Having e nou nou gh mon gh mon ey to take ey to take care Don’t kno Much high Somewhat ag w/Refuse 2005 er than befo d ree re you retire 69 d 62 37 3 37 66 35 8 32 8 Other pe2007 rsonal savings o35 13 10 13 15 14 r investme 2003 nts 43 73 48 $500,0 1100 13th S00– t. N$9 W99,999 , Suite 878, Washington, DC, 20005-40523 10 28 28 1, at $300 per year or is included as part of a membership subscription. Periodi- from comp 1994–2 aring individual worker responses, 000, it declined significantly in 2 66 percent ga 001 and ve has rem identical answers to both questions. ained fairly constant since then. The The remaining assumptions still hinder a realistic assessment of the preparations needed to ensure a financially secure Figure 3, Worker Confidence in Financial Aspects of Retirement April 2008 .....................................................8 2007 unplanned early retirem to 1 Some worker 8 percent in 200 s appear to be counting on ent 8 can be heavy. Retirees wh among workers ages 25–34 employ o re and from er-p tire earlier than planne rovided benefits in retire 28 percent to 16 d are percent am men mt that are increasingly ore likely ong workers than those somewhat confident) and long-term care expenses (13 percent very confident, 31 percent somewhat ® 4 of basi care of c expe basic nse ex s penses cals postage rate paid in Washington, DC, and additional mailing offices. POSTMASTER: Send address change s to: EBRI Issue Brief, 1100 Somewhat di2004 68 sagree2002 38 58 10 9 65 11 11 An individual 20$1 million–$1.49 million 07 OA Source: Emplo2006 SDI Trust retireees Rep ment a yee Benefit Resea39 14 12 12 11 12 o cr cou t, Ass nt or IRA umrp ch Institute and tions and Met 9 Mathe hods Un w Green derlw yia nld & Associates, g 69 4 Actuarial Est Inc., 2008 Re imates, 7 tirement Confidence 34 14 Survey. proporti workers wer on of e as likely retirees havin to gain c g saved for retirem onfidence as they ent has ® were to lose c also remained relatively onfidence by com constant in recent pleting the survey years . retirement. ages 35–44. who retire on unavailable. Sim time or later than planned t Only 41 ilarly, it percent of workers indicate they decreased fromo 14 percent say they are to 5 percent am notor their sp confidentong worker o about havi use currently ng s with household incom a co have a defined benefit plan mfortable retirement e , 13th St. NW, Suite 878, Washington, DC, 20005-4051. Copyright 20 Figure 21 08 by Employee Benefit Research Institute. All rights reserved. No. 316. confident). In fact, the percentages not confident in 2008 34% 2008 34% 45% e45% ach of these financial aspe12% 6% cts of retire9% 14% ment have The 2008 Retirement Confidence Survey was funded by grants from 40 organizations One that give Strongly disa 2003 s you a ra gre nge e of answers b 71 ased on different 62 4 7 64 14 19 An employe2005 r-provided traditional pen 2001 52 sion or cash 13 11 12 11 44 httpFigure 4, $1.5 million–$1.9 million ://www.soRetiree cialsecu Confidence in Financial Aspects of Retirement rity.gov/OACT/TR/TR07/V_d 2 emographic.htm<0.5 l#wp1 ...................................................... 51333 2 4 9 (around 6 4 percent) (Figure 8). Findings in this year’s RCS include: under $3 or about yet 59 percent say 5,0 havi 00 ng enough m and from2007 48 2007 the 25 percent to 1 yone are expecting to recei Likelihood of Seeking Advice from Selected Sources y for basic expenses in retirem 40 42 11 3 percent among t ve income fro35 hose with incom ent. They m such a are also plan in retire8 e of $35,0 more00– m likely ent. $74,7 8 to 9 indicate they 99. increased from 32 percent in 2007 to 43 percent in 2008 for medical expenses and from 44 percent to 54 per- scenarios ® 72% Neithe and Ch2002 72 r/Don’t kno arter Partners w 2000 53 with the American S61 a1 vings Educa 2 tion 62 Co 5 uncil (ASE 6 C). balan $2 million or more ce pl2004 an 54 7 14 11 13 59 4 3 53 14 9 5 1 The 2008 Retirement Confidence Survey: The Employee Benefit Research Institut e (EBRI) was founded in 1978. Its mission is to It is lik ely that this percentage is slightly higher than the actual participation rate, since some workers who do not a Figure 5, Atti • The percenta2006 44 tudes About 2006 35 ge of workers (when le Managing M avin very g an empl confident about oney oye in Retir r with mon em47 40 havi ent eng enou y in a retire ............................................................. gh m9 men7 one t savings pl y for a comfortable retirem an9 7 ) 10 ® ent are now Worker suppositions about their more concerned about their finafinancial needs for retire ncial future than they were right after they ment may be based on unrealisticall retired. y low One that give cent for long- You (or your 2001 s you a sin ter spo m care expenses (Figure 3). use) a gler answe e knowl r ba edg 69 se eabl d on the mo e about st likely 61 61 2003 1999 56 15 11 11 48 7 Don’t know/Don’t reme The compl mber ete list of 12underwriters 18 Figure 18 appears on page 2210 . 6 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2008 Retirement Confidence Survey. contribute to, to encourage, and to enhance the development of sound employee benefit Many retirees are facing financial pressures. Fifty-four percent of retirees say they are now more participate in an employer-sponsored retirement savings plan are not aware of their eligibility. 2005 35 42 11 11 Figure 7 Very 2005 41 42 11 Somewhat Not Too 5 Not at All ® scena estim rio decreased sharpl ates about their spending in retirement. Fifty y, from 27 percent in 2007 to Figure 2 -18 eight percent of percent in 2008, workers think their post-retirem the biggest on 23 e-year drop in the ent investments 2000 78 and investme1998 42 nt strategies NA 59 Like retirees, Although retirees tend to express higher levels of c 2002 Americans Much More Worried About Retirement, some workers are likely50 CHECK to find them OUT sel13 15 15 v EBRI’ onfidence than workers about each of these financial es vulnerable to an unplanned early S NEW WEB retirement for SITE7 ! Source: EmploConfidence in Doing a Good Job o yee Benefit Research Institute and programs and so Mathe und public policy w Greenw f Preparing ald & Associates, through objective Financiall Inc., 2008 Re research and y tire for Retirem ment Confidence education. EBR ent Surve I is the only y. Figure 6, Confidence That Social Security Will Continue to Provide Benefits of at Least Equal concerned about their financial future than they were right after they retired (up from 40 percent in 2007). a 2004 2004 36 Confidence That Medicare Will Continue to Provide Benefits of 44 32 14 Likely 47 Likely 8 Likely 8 8 Likely Neithe18-y r/would Strongly ag ear history of the surve 1999 not use tool ree y. Retiree confidence 73 NA in having a financially 23% 19% 67 59% secure retire 3 18% ment has also spending will be lower than their R 11 percentetirees of respondents did not report t Retiree 1997 Co spending pre-retirement. Forty heir income. The nfidence in Having Enough Mone y are included in the total column but not in the income gro 33 -six percent of retirees repor y to t spending at ups. aspects of retirement, they too show a m private, nonprof arked dec it, nonpartisan line in confidence. The percentage of retiree , Washington, DC-based organization committed exclusivel s very y to health, family, and other reasons. There is some indication that workers may be not be taking these factors Start of Survey End of Survey W Value to Benefits Receiv ho we are ed by Retirees Today..........................................................................10 One reason for this increased concern may be the high cost of health care. Forty-four percent report that they 2003 2003 33 45 10 11 49 31 11 ® ®8 Your retirement plan provider 27% 42% 13% 17% Don’t know/Refused at Least Equal Value to Benefits Received by Health Costs a Big Concern Retirees 2 Today Somewhat ag1998 59 ree 1996 29 public policy research and eduNA cat 43 ion on econ 47 omic s59 ecuri 21 ty and em 35 ployee benefit issues. Not e: The el decrea 2008 ectrsed, from onic versi51% o 41 percen n of this put bl very icat 9% ion confide was creat nt to 29 percent. At the same ti ed 9% using version 6.0 6% of Adobeme, the percentage not Acro13% bat. Those havi12% ng this level and retirees overa Live Comfortabl ll are facing increasing financia y Throughout Their Retireme l pressures. Fifty nt Years -four percent of retirees say they confident about having enough money to pay for basic expenses decreased from 48 percent in 2007 to into account Very confid when they de ent termine their planned retiremen 23% t age. For example, one m 21% ight expect that workers ® have spent more on health care expenses than they had expected to spend. ® ® 1998 45 1998 35 49 10 40 9 6 3 A financial services company retained by Very Somewhat di 1997 sagree EBRI’s member EBRI’ 66 s ship includes a Somewhat Web site is easy to use and pac NA cross-section of 18 Not Too 18 pension funds; businesses; trade associations; 50 18 Not at All 14 ked Source: Emplo 2007 yee Benefit Resea 32 rch Institute and 1995 13 Mathew Greenwald & Associates, 10 32 Inc., 2008 Re 12 tirement Confidence 20 Survey.14 trouFigure 7, Co ble opening th ne PDF fidence That Medicare Will Continue t document will need to upgrade their co o Provide Benef mputer to the cu its of at Least Equal Value rrent version of Adobe Reader, are now confident has increased fro Very more concerned about their fina m 29 percent Somewhat ncial future th to 37 percen an the t for workers and from y were right after they Not Too 21 percent to 34 percent Not at All retired (up from 40 per- 34 percent in Retire Somewhat co ment Age 2008. Many nfident retirees are now only48 somewhat confident of being able 47 to cover these expenses describing their health as fair or poor would be planning on retiring at a younger age than those in better Not surprisingly, workers with higher household income or higher levels of assets are more likely than By Ruth Helman, Math Workers 1993 ma1993 y also be failing to take heal ew Greenwald & Assoc 38 43 12 38 40 11 th care costs sufficiently int iates; Jack VanDerhei, Temp o account whle Univers en estim5 5 ating ity and their your employer to provide advice labor unions; health care prov19 iders and insurers; 46 government organizations; 14 and service firms. 20 Strongly disa1996 60 greConfid e 1994 31 ent Confident NA 14 Confid 14 ent 52 19 Confid 26 ent which can be downloa 2006 ded for free 30 at www.ado 12 be.com/products/acr 14 obat/readstep2 11 .html 13 21 to Benefits Received by Confident Retirees Today Confid .................................................................................... ent Confident Confident 11 for retirees. cent in 200 Not too co 7). nfident 16 18 (45 percent, up from The age at which workers say 35 percent in 2007). Likewise, the percentage they plan to retire has slowly crept u of retirees pwards, fro very m confident that they a midpoint of age 62 in had health. However, the planned retirement age distribution is roughly similar, regardless of health status. with useful information! lower-inco me workers to cite savings as a source of retirement income, but many of these workers may not 1992 1992 25 51 16 28 37 25 6 5 An indep retirement needs, but the 2 endent financiaSource: Emplo l services 008 RCS sug comp yee Benefit Resea g any ests that some rch Institute and workers may Mathe now hav w Greenwe a ld more realistic expectations EBRI Fellow; and Craig Copeland, EBRI Neithe 1995 r/Don’t know 58 NA 2 3 48 3 6 Work2005 ers 43 20 7 11 19 2008 29% 35% 17% 17% Not at all confident 12 12 • Among retirees who left the work force earlier than planned, more than half (54 ® percent) say they did done a go 1996 to age 65 in 2006–2008. T od job of preparing for retirement decreased fro hirty-two percent of workers plan to retire prior m 39 percent in 2007 toto reaching age 65; 11 per- 26 percent in 2008, with EBRI’s work advances knowledge and understanding of employee benefits and their be saving at rates nec Doing a goo essary to provide the needed inco d job of preparing for me. Workers e mployed in the private sector are also Figure 8, Americans Having Sa or advisor Did a good job of preparin ved Money g for for Retirement21 38 .............................................................. 19 21 12 & Associates, Inc., 1994–2008 Retirement Confidence Surveys. about the li You (an2008 dkelihood of having access to you1994 57 r spouse) a4% re not likely to live long employ30% 35% 29% er-provideNA d health insurance when the52 y retire (34 percent, ® 2004 49 14 7 17 15 2007 41 38 10 11 Employer matches have been somewhat effective in boosting participation in 401(k)-type plans, but are Source: Employee Benefit Resea a rch Institute and Mathew Greenwald & Associates, Inc., 2008 Retirement Confidence Survey. importance to the nation’s economy among policymakers, the news media, and the public. It 43 percent cent say so because of the so y mewhat will retire before age 60; and 21 percent health proble confident. Confi ms or disability. Hea dence about having enough lth costs have become a plan to retirem between the ages of 60 and 64. Twent oney to pa major concern am y for medical expenses ong y- retire retire ment ment The addition of the phrase “and/or your spouse” to the question mor A relative, friend, or co-wo e apt than those in the Source: Employee Benefit Resea public sector to be c rker rch Institute and ountiMathe ng on savings. 20 w Greenwald & Associates, Instead, publ 32 Inc., 1994–2008 ic-sector wor 17 kers are 31 Length of Retir This docum enough to use up all of your saving ent is available online at ement http://www.ebri.org/surve s ys/rcs/2008/ along with five 2008 RCS Fact down from2007 2003 41 percent in 2007). 6 54 Forty-one percent of 30 33 28 9 retirees state they 12 have acces13 s to health insurance 12 2006 40 33 12 13 2008 RCS Underwriters • Retirement worries growin Look for these special features: g—Americans’ confidence in their ability to afford a comfortable does this by conducting and publishing policy research, analysis, and special reports on not successfu Figure 9, Americans Having l for all workers. Eighty Non-Retirement Savings..................................................................... ®-three percent of workers offered a plan with a match report 12 wording for married respondents starting in 1999 is responsible for retirees, as almost half of retirees (44 percent) say they have spent more than expected on health care (36 percent four percent of workers say the very 2008 2008 confident, 34 percent y will ret 23% 26% so ire at age 65, wh mewhat confident) and long-ter 48% 43% ile 29 percent intend t 16% 11% m care ( o r 24 percent etire at age 6 12% 17% very 6 or even later. confident, An online professional financial advice Retirement Confidence Surveys. Sheets that provide additi depending on pension income 2006 Strongly agree onal detail on: m5 ore ofte n than those in the privat29 36 28 17% e sector—al 15% so not surprising, given the 24% 17% Declining Retirement Confidence The length of 2002 retirement is a key 45 component of retir7 ement planning 14 , and many Am19 ericans report takin 15 g it through an employer, but many employers are eliminating health care coverage for future retirees (Figure 2005 40 40 12 7 retirement has dropped t emplo oy iee benef ts lowest level in seven its issues; holding educational br years, reflecting worries about health costs, the iefings for EBRI members, congressional and a approximately 4 to 5 percentage points of the increase between participating, compared with 69 percent without a match. Although the W expenses. More than half of retirees (54 percent) say hat we do The a2007 ddition of retirement age of the average retiree h 2007 the phrase “ and/or 26 yo 39 ur spouse” to the question as 45 41 increased fro thwording for ma ey are now m m15 60 in 1996 10 rrie od r respondents st e concern to 62 i e 13 d about their 7 n arting 2006–2008, a gap ® 24 percent service retain somewhat ed by your e confident) are stati mployer stically uncha9 32 nged from recent years (Figure 4). 22 36 Somewhat agree 30 30 30 26 higher level of defined benefit pens Figure 10,2005 Reported Total Savings and I7 ion sponsorship in the publ nvestme30 33 28 nts Among Those Providing a R th ic sector. In addition, lower-inco esponse............. me worker ®13 s • Costs of Health Care in Retirement into consider Source: Emplo2004 ation when they yee Benefit Resea42 27 16 13 1998 and 199 do their fi rch Institute and federal agen 9. nancial plan cy s Mathe taff, and th w Green ning. Si e news wald & Associates, xt media; y-six percent of and sponsoring public opinion survey Inc., 2002–2008 workers and 42 percent of Retirement Conf s on emplo idence Surve yee y s. 16). • EBRI’s entire library of research publications starts at the Alliance Bern econom stein y, and home values, according to the 18 Goldman Sachs Asset Man annual Retirement Confidenc agemee nt Survey (RCS). Overall Retirement Confidence in 1999 is responsible for approximately 4 to 5 percentage points of the increase between 1998 and 1999. ® Adding a Roth 401(k) may be another way to encourage workers to save for their retirement. Twenty- One tool that 2006 2006 appears to be particularly 25 42 effective in changing 50 35 behavior is the retirem 14 12 12 10 ent savings financial future than they were right after they retired, a 14 percentage-point increase from 40 per- rema Several attitudes ins between worker e may bolst xpectations and the experience of curre er worker and retiree confidence in their financial securit nt retirees (Figure 14). y in retirement. Source: Emplo2004 Somewhat di yee Benefit Resea sagreer 6 ch Institute and Mathew Green31 35 26 wald & Associates, 24 25 Inc., 1993–2008 13 Retirement Co 16 nfidence Surveys. benefit issues. EBRI’s Education and Research Fund (EBRI-ERF) performs the charitable, are more likely than those with higher household income to say that their retirement income will come from retirees • say Saving for Re 2003 they consider the num tirem39 ent in America ber of years the 35 y (and their spouse) will spend in retirem 12 11 ent. Those with at Allstate Hewitt Decreases in confidence occurred across main Web page. Click on all age groups Associates and incom EBRI Issue Briefs e levels but we and re particularl EBRI y acute four percent of workers state they Figure 11, Perhaps beca Workers Having Tried to Cal use of the decline in consumer confid would be cvery ulate How interested in this type of plan and 38 percent say Much Mone ence, worries ab y They Need to Save for a out health costs, the econom they would y and job 2005 2005 26 35 46 38 12 13 16 13 calculation. Forty-four percent of those who calculated a goal amount report having made changes to their cent in 200 Strongly disa 7. gree 23 24 16 23 Eighty 2003 -two percent of workers and 61 percent of retir 5 educational, and scientif34 36 25 ic func ees (down from tions of the Instit 70 percent ute. EBRI-ERF in 2007) belie is a tax-exempt organization ve they can 2002 40 32 16 11 Social Security. • Gender Comparisons Among Workers least a bachel ors’ degree are especially likely to take this factor into account. Figure 16 include those amage 35 and ol ong younger workers an der (compared with d those with l young ower inco er workers), workers curre me. ntly participating in a American Express 2004 26 47 IBM 14 12 be somewhat market, and the decline in Comf interested. Thirty ortable 2004 Retirement hom -four perc ......................................................................................................... e values, Notes 38 ent indicate they worker confid for our in-depth and nonpar 31 would ence in their financial prospects for reti be not to13 o (13 p tisan periodicals. ercent) or 16 not at all re .... m ( 14 e21 nt has per- supported by contributions and grants. retire1998 ment planning as a res Neither/Don’t know u4 lt. Most often, these work24 34 36 ers say 6 they started saving or investing 5 16 16 more (59 per- Figure 14 alway • A third of all s cut back on their lif workers (34 percent) now e estyle in retirement if it looks like the xpect to Figure 12 have access to e y might use up mployer-paid he all of their savings. Si alth insurance in xty- 2001 37 37 10 11 • Age Comparisons Among Workers These findings are similar to some other estimates of American household assets. Quantifiable data from Some worker Availability s have not of Emplo yet begun t ye o buil r-Provided d the sources Health Insurance Coverage in Retirement of income from which they expect to draw income ® Although individual workers may be significantly underestimating how long they will spend in workplace ret Ameriprise Financial, Inc. irem 2003 e2003 nt savings plan (compared with th 24 41 ose not participating), workers having a 45 34 Investment Com 15 p 6 any Institute 14 18 ttempted a reached a seven-year low. Only 18 percent of workers in the 2008 RCS say they are very confident they will cent) interested (Figure 20). Interest is higher among workers ages 25–34 (vs. older workers) and women Source: Emplo cent). Other actions reported include: 1993 yee Benefit Research Institute and Mathe3 w Green21 43 30 wald & Associates, Inc., 2007–2008 Retirement Confidence Surveys. • Overall retirement confidence drops sharply—The percentage of workers very confident about five percent of workers and 53 percent of retirement, down 8 percentage points fr 2000 Method of 34 41 14 11 Determining Savings Needed for Retirement, Planned and Actual Retirement Ag retirees fe om last el t year (42 percent in hey (or their spouse) are knowledgeable about 2007). e Although 41 percent of Figure 12, Method of Determining Savings Needed for Retirement, by Doing a Retirement • Attitudes About Social Security and Medicare the 2004 Survey of Consumer Finances (conducted by the U.S. Federal Reserve Board) found that the Workers Retirees retirement, it appears that workers, on average, have in retirement. Eight 1998 1998 y-four percent of workers say EBRI Issue Brief 23 32 is a periodical providing the reasonable ex y are expecting retirem 47 34 pectations about the leng exper17 t ev 19 alua ent i tions of ncome fro emplo 12 13 m y th ee b of their non-workplace enefit issues and retire Ameri m can Institute of Certified Public ent savings needs calculation (com • T Accountants o get answers to many fr pared with those who have not), and those who expect to receive Mass Mutual Financial Group equently asked questions about (vs. men). have enough1992 money to live comfortably1 throughout26 45 25 their retirement years (down from 27 percent in 2007, the having enough money for a comfortable retirement decreased sharply, from 27 percent in 2007 to 1999 Wo • Changing th 31 eir investment mix (20 percent). 39 rkers 20 2 Retiree 8 s invest retirees ments a say nd invest they currentl mentb strategies. yy Doing a have access to At the sa Retirement Needs Calculation health me time, however, 49 percent of insurance through a former em workers and 39 percent of ployer, many Needs Calculation.......................................................................................................................14 trends, as well as critical analy (Expecte ses of d) employee benefit po (R licies an eported d proposals. ) EBRI Notes is a median (midpoint) level of household assets of all Americans is $172,900. This includes the value of the 1993 1993 21 32 47 40 18 11 12 13 retire savings or invest ment. The ty mpical RCS worker expects to retire ents. At the same time, only 56 percent report having these types of savings. Interestingly at age 65 and spend 20 years in retirement. Twenty- , defined benefit income from an employer in retirement (compared with those who do not). Aon ConsultiRetirees ng, Inc. Mercer biggest drop in the survey’s history)employee bene? . Forty-three percent are ts, click on Bene? somewhat confide t FAQs. nt for a total 61 percent of 1998 19 28 24 24 18 percent in 2008, a decline of 9 percentage points a (Planned) nd the biggest one- (Actual year drop in t ) he 18-year • Reducing debt or spendin (multiple re g (7 percent). sponses accepted) retirees (up fr employers are eli om 29 percen minating health care co t in 2007) think periodical providing curren the verage for future retirees. y mayt inf outlive their s ormation on a avings (Figure 5). variety of employee benefit topics. EBRI’s 2008 34% 41 primary home, which had 1992 1992 a median value 21 24 of $160,0046 047 for those who owned a h 21 12 ome. 11 14 this discrepancy RCS Methodology is not apparent among workers expecting to receive income from a workplace savings seven percent expect to be 2008 retired for 20–24 8% years, 10 44% percent think the32% y will be retired for 25–29 13% years, and AT&T Fifty MFS/SunLife -one percent of workers and 46 percent of retirees have savings other than what they may have set Figure 13, workers ver Am y or ount of Savings American Workers Th somewhat confident about their financial security ink They Need for Retirement, b in retirement, statistically y equivalent to t he 1997 33 34 Figure 20 18 11 Before 55 Figure 6 3% 20% Our history of the surveyPension Investment Report . Retiree confidence in havi provides det ng a financially ailed fi Did Retirem nancia secure retire l infoe rmation on th nt Need m s Cal ent has also dec e univ culatio erse of defin n reased ed Higher-income workers are more likely than those with lower income to agree that they can cut back on • Less than half of workers (47 percent) say • Enrolling in a retirement savings plan at they a work (5 percent). nd/or their spouse have tried to calculate how much 2007 41 43 Having e Having e nou nou gh mon gh mon ey to take ey to take care Older workers tend to report higher amounts of assets. Sixty-seven percent of workers under ® age 35 17 percent thi plan—74 percent of workers plan to use 2007 nk they will live in retirement for 30 15 it as a sour y 44 ce ear of incom s or more. At the sam e in retire 22 ment and 70 e time, 6 percent percent say 13 think thethe y y will Barclay aside for retire Household Inco s Global Investors 1996 ment (Figure 9). In fact, me............................................................................................................... 26 42 20 • EBRI’s r 46 percent of eliable health and r workers and 38 percent of PIMCO etirement sur retirees r veys ar e8 port having e just a click .......15 both 63 percent measured in 2001 (the m These findings are part of the 18th annual Retire 55–59 Worker Interest in Roth benefit, defined ost recent low point). contributi7 on, 401(k), b mand 401(k) plans ent Confidence Surve Thirty-seven percent of y Age Group . EBRI Fundamentals of Employee Benefit y (RCS), a survey that gauges workers are 19 not confident All sharply Confidence That Social Security , from 41 percent very confident to 29 Will Continue to Provide Benefits percent, down 12 percentage points. their lifestyle and are knowledgeable about investm 2006 37 ents. Others more apt to consider themselv40 es money • ca the Deciding to re of medi y will need for a co cal expen work longer ( se m s fortable retirement, 3 percent). up from the 42 percent measured in 2004–2006 of medical expenses have total savings and in 2006 vestm 12 ents less than $25 50 ,000, compared with 26 42 percent of older workers. At the 10 live less than 10 currently have such a nest egg. years in retirement, 23 percent think they will live 10–19 years, and 16 percent say they do Buck Consult retirement and non-retirement savings. 1995 ants, An ACS Com 26 Programs pany Approxim offers a straigh 47 ately one-quarter tforward, basic explan Principal Fin say 18 a th ncial Group ae tion of y haveemplo retirement savings onl yee ben 6 efit programs in the y 60–61 11 10 the views and attitudes of they will have enough m oney working-age to live comfortabl away thr and retired AmerWo ough the topic boxes at the top of the page. yrk , wiers Yes th 21 icans regarding retirement, their preparations for percent describing themAge Group selves as No not too confident of at Least Equal Value to Benefits Received by Retirees Today publications 2005 40 42 knowledgeab and considerabl2008 le about inves2008 y higher tha tments are retirem n the low p18% 37% 21% 22% 36% 34% 11% 15% oie nnt saver t of 29 percent recorded in s (compared with nonsave 1996. As before, the 200 rs) and retirement savings 8 RCS Figure 14, • Pl Rese anned and Actual Retirement Age arching other ways to save for retire ............................................................................... ment (3 percent). 15 • Health care costs have become a big issue for retirees—Among retirees who left the work force same tim 2005 e, 21 percent of workers age 45 and older ci 20 42 te assets of $250,0 24 00 or more (versus 5 percent of 9 private and public sectors. The EBRI Databook on Employee Benefits is a statistical 1994 27 37 21 13 not know how long the 62–64 y will live. 11 23 CalSTRS (27 percent of workers, 26 percent of retirees), and less than 10 Procter & Gam percent have non- ble retirement savings only Gue and 16 Others appearss 43% All percent say to be rely ing they are ing on em not at ployWorke aler-provided l confident (Frs 25–3 benefits they igure 1). 4 35–4 are unlikely4 8% to receive. Workers are 45–54 72% 55+ retirement, their confidence with regard to various aspects of retirement, and related issues. The survey was Very 2004 35 Somewhat Not Too 41 Not at All 2007 2007 20 46 18 14 41 36 10 12 plan participants (compared with nonparticipants). Larger shares of women than men agree they could live finds that doing a retirement savings calculation is particularly effective at changing worker 2004 earlier than planned, m 16 referen ore t ce work o han half (54 n emplo 37 percent) yee benefit pr sayogr they ams and did so 31 work force-related issues. because of health problem 11 s or Tabl younger workers). As one might suspect, total savi e of Contents ngs and investments increase sharply with household 1993 27 45 16 7 65 24 14 Figure 15, Post-Retirement vs. Pre-Retirem • Instantly get e-mail noti? ent Spending ................................................................ cations of the latest EBRI data, 17 (6 percent of CitiStreet Ask a fina Workers planning t Very nciintere a workers, 8 percent of retirees). Unfortun l advisosted r o retire at earlier ages tend to exp 24% 32% 23% 19 ately ect the Py,ram 22 percent of workers and 28 perc y is Global Advisors will spend longer in 33 21% retirement than those ent of retirees 5 20% statistically conducted in as likely Source: Emplo January to expect that they will receive Confid y 2 ee Benefit Resea 008ent through r2 ch Institute and 0-mConfid inute telephone interviews with 1,32 ent r Mathe etirement income fro w Greenw Confid ald & Associates, ent m a d Inc., 2004–2008 efined benefit or traditional 2 individ Confid uals (1, ent 057 workers 2006 2006 19 42 20 17 42 32 15 10 long en ough to use up all of their savings. behavior: 4 2003 4 percent who calculated a g 19 oal change 44 d their retirement planni 26 ng, and of t 8 hose almost Enhancing the calculation tool so it can Source: Emplo disabilityy . Alm ee Benefit Resea ost half of retirees (44 percent) say rch Institute and develop resp Mathew Green onses w the ald & Associates, ym have spent ore tailored to each individual’ Inc., 1993–2008 more than expected on health Retirement s situation ® income and with education. Workers 66–69 who have do9 ne a retirement savings needs calculatio 4 n (compared with Figure 1 Do yourSomewhat intere own estimate sted 38 19 45 43 35 37 3 26 Deere & Co say they have no savings Retirement Co mpany nfidence Surve ®of any kinyd s. . Rockefeller Foundation Wo who plan torkers retire at older ages. Howev er, men and women provide similar estimates of the length of time pension plan and 265 retirees) age 25 and older in the (59 percent) as retiree 2005 2005 s are t sur20 38 21 20 34 39 17 o receive veys, publications, and meetings and seminars by clicking United Stat it (53 percent). However, only es. Random digit dialing was used to obta 41 percent of 9 workers in a Contact EBRI Publications, (202) 659-0670; fax publication orders to (202) 775-6312. Introduction................................................................................................................... Confidence Surveys. ....................4 1998 12 35 39 11 Figure 16, two-thirds (5 Availabilit 9 percent) started saving or y of Employer-Provided H investing m ealth Insurance Coverage in Retirem ore. ent ..............17 and to provide a range of possible answe rs based on different scenarios may prompt workers to further care expenses. More than half of retirees (54 percent) say they are now more concerned about their those who ha 70 or ol ve not) tend der to have higher levels of sav 20 ings. In addition, those who have saved for retirem 6 ent Read or h Not too intere ear how mu sted ch needed Worker Co 13 nfidence in Having Enough Mone 9 10 14 7 y to 13 12 14 ELM Income Group 2008 5% Subscriptions to EBRI21% 34% 37% Figure 9 Issue Bri Russell Investm efs are included as part of ent Group EBRI membership, or as part of a they will spend in retirement as well as roughl report they and/or their spo2004 2004 use currently21 40 21 17 36 36 16 11 have this t y sim y ipe lar of expected ages at retirement, despite the fact that plan and 13 percent of workers expecting to rely on representative cross section of the U.S. population. To further increase representation, a cell phone on the Sign Up for Updates box at the top of our home page. Declining Retirem 1993 ent Confidence 12 ................................................................................................ 32 32 14 ....5 Confidence in Entitlement Progra action. Fift • Confidence in specific financial aspe financial future than the Nev ye -r retir six percent of workers report the e/never y were right after they ms cts related to y would retire retire prefer a retire d m , a 14 ent also d percentage-point i ment calculat ecreased. In particular, the ion tool that a ncrease fro sm ked for a year ago Use an onli are m Not at all intere ore likel ne calculato y than those who have not saved for retire sted r 21 7 12 ment to have substantial levels 15 15 27 of savings. In fact, <0.5 35 2007 Live Comfortabl7 $199 annual subsy cription Thro24 34 34 to ughout Their Retireme EBRI Notes and EBRI Issue Brie nt Years fs. Individual copies are available Figure 17, Sources of Inco2003 me in Retirement18 40 22 19 ....................................................................................18 Financial Eng wom en, on average, live longer than m ines 2003 Americans Having Non en. Fift37 31 12 16 y percent of both -Retirement Savings Segal Co men and women providin mpany g this information this ty supplement was added to th pe of income admit that the e sam y expe ple for the first time in ct to receive the benefit from 2008. Start a future e ing with t mploy he 2001 wave of t er—a scenario that is he RCS, all 1992 10 28 39 17 Overall Retirement Confidence....................................................................................................5 ® percentage worked very confident in having enough m 7 oney to take care of basic expenses decreased from 2 seven to 10 Confidence in Social Security’ (40 percent in pieces of detail 2007). ed inform s ability to m ation and gives an an aintain the value of benefits paid to swer to fit their personal situation to one that asks retirees, which in the Fill out a worksheet or form with prepayment for $25 each 4 (for printed copies). 9 Change of Address: EBRI, 1100 13th St. 0 76 percent of Source: Employworkers without retirement savi ee Benefit Research Institute and Mathe ngs say w Green w their assets to ald & Associates, tal less than $10,000. Inc., 2008 Retirement Confidence Survey. O2006 rders/ Very 6 Somewhat 27 33 34 Not Too Not at All ® 1998 1998 18 44 21 15 31 42 14 12 Financial Ind Workers expecting benefits from ustry Regulator Wo y Authority a defin ed benefit (prkers Society ension) plan are for Human Resource Management Retirees more apt than those not expecting beco expect to live until at least age 85, and ming increasingly unlikely as com25 percent exp panies cut back ect to live until at least age on their defined benefit offerings. 90 (both men and women). data are weighted by age, sex, and education to reflect the actual proportions in the adult population. Data Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1992–2008 Retirement Confidence Surveys. As would be expected, worker confiden Confidence in Other Financial Aspects ce in of Retirem having e ent noug ................................................................. h money for a comfortable retirement 7 Figure 18, Don’t kno Confidence in Doing a Good w Job of Preparing Financiall 7 y for Retirement 3 ....................19 NW, Suite 878, Washington, DC, 20005-4051; (202) 659-0670; fax number, (202) 775-6312; Base o for only a few pieces of basic infor n40 percent in current expen 2007 to 34 pe ses or desirercent in 2008 d mation and for work gives mo ers and from re generic answer 48 percent to 34 percent for retirees. s (31 percent). Likewise, workers RCS has never been high, shows a slight decline. Twenty-six percent of workers report they are very or 2005 Confid8 ent There’s lots more! Confid23 33 35 3 ent Confident Confident 1993 1993 21 33 23 20 30 32 19 12 • Workers may2008 51% be waking up to the lack of health insurance in ret46% irement—The RCS finds that Genworth Financial Ten percent each think the such benefits to think the y will live until age 95. y will have retiree health c According to t overage. Others who m State Street Corp. he 2007 OASDI Trustees ore often say they will receive Report, a 65- ® for waves of the RCS conducted before 2001 have been weighted to allow for consistent comparisons; increase Confidence in Entitlem s with household income. Worker confidence al ent Programs............................................................................................ so increases with savings and investments and wi 7 th e-mail: subscriptions@ebri.org Membership Information: Inquiries regarding EBRI Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2008 Retirement Confidence Survey. retirement lifestyle 2 <0.5 3 somewhat say the Am y ong workers, there was an increase i prefer a tool that confident that the Social Security gives a range of answers ba sn y those stem will conti not sed on different scenarios (72 percent) to one that gives confident nue abo to provide be ut having en nefits of at least equal value to ough money for 2004 2008 7 18% 43% 21% 16% 28 31 32 1992 1992 18 36 29 15 26 32 25 14 Retirement Savings Needs subscriptions 2007 54 49 Figure 19, Worker Preferences for Retir 34 percent of all workers now expect to have acce ement Calculator ............................................................... ss to employer-paid health insurance in retire 20 ment, Goldman, Sachs & Co. year-old m this type of c an toda overage include workers expecting to y can expect to live unt Visit EBRI on-line today: il age 81, whi re le a 65- ceive retirement incom Towers Perri year-old wom n www an can expect to li e from .ebri.org a defined ve until age contribution consequently, some data in the 200 membership and/or contributions to EBRI-ERF 8 RCS may differ slightly with data publishe should be directed to EBRI President/ASEC d in previous waves of the Not all workers who have saved for retirement are currently saving for this purpose. Sixty-four percent improved health status. Others Preparing—or Not—for Retirement more often confident ............................................................................................... are men (compared with women), married workers 11 Other 4 2 6 2003 medical expenses (fro7 m 32 percent in 2007 to 26 35 31 43 percent in 2008) and for long-term care expenses the benefits received by a single answ Having e 2007 Having e er based on the nou nou gh mon gh mon retirees today 27 em y to pay for o est likely y to pay for , co scenario (23 mpared with 31 43 percent) (Figure 19). Younger workers (co percent in 2007. At the 19 same ti10 me, 71 percent are mpared Working for Pay in Retirement 4 2004 51 48 Preserving Retirement Assets One reason for the modest totals of savings and investments may be that many workers do not know how down 8 percentage points f Chairman Dallas rom last y Salisbur ear (42 pe y at the rcent in 2007). Although above address, (202) 659-0670; 41 percent of retirees say e-mail: salisbury@ebri.org plan (compared with those who are not), those employed in the public sector (compared with private-sector ® 85. RCS. Data presented in tables in this report may not total to 100 due to rounding and/or missing categories. of workers report that they and/or their spouse are currently saving for retirement. This percentage has (compared wi Saving for Re th those not tirement married), those who expec .......................................................................................................... t to receive retirement benefits from both a defined .......11 Source: Emplo Figure 20, yee Benefit Resea Worker Interest in Roth rch Institute and 401( Mathe k), by w Green Age Gr wald & Associates, oup............................................................... Inc., 2008 Retirement Confidence Surve20 y. 1998 2006 6 24 44 17 14 16 31 44 with older workers) and college gra (from long 44 percent to 54 percent). long -term care -term care duates (compared with those having less education) are especially likely not too (34 percent) or 2003 not at all (37 percent) confident that fut 51 ure So 40 cial Security benefits will match or A majority of workers expect to supplement their income by working for pay in retirement. The RCS much they need to save for retirement. Only 47 percent of workers report they and/or their spouse have tried Many Workers who are not confi workers do not preserve all of the they currently have access t dent about t o health insur retire heir financial secu ment sa ance through vings the rity a for y i ac n retirem cu mer em mulate in defined contribution ent plan to retire later, on average, ployer, many employers are plans workers), those with income of at least $35,000 (com ASEC Charter Partners pared with lower-inco me workers), and those who are In theory, the weighted sample of 1,322 yields a statistical precision of plus or minus 3 percentage points benefit pension and a defi fluctuated very slightl Retirement Savings Needs yned contri since the RCS fi ....................................................................................................... bution retirement plan (com rst measured it in 2001, reaching a low of 58 percent i pared with those who do not), and those wh ... n 2004 and a 13 o 1993 4 19 41 33 Editorial Boar 2005 d: Dallas L. Salisbury, publisher; Steve Blakely, 2008 25 13% editor 40 31% . Any views expressed in t 27% 17 his publication an27% d those o 17 f the authors should 2008 24% 24% 22% 28% exceed the value of toda to prefer the m • Retirees’ loss of confidenc ore com2002 48 ple y’x calculators. s benefits. Worker confid e is reflected in several ence that Social Security attitudes the38 y hold about will continue to their retirement finances. provide has consistently found that approximately two-thirds of workers plan to work for pay after they retire when they move from Figure 21, to calculate how m Likelihood of S one em uch money eeking Advice fro ploy the er to a y will nother. F need to have m Selected Sources orty-six percent of workers report the saved by the t .................................................... ime they retire so that the y participated in a y can live 21 than those who express confidence. Others planning to eliminating health care coverage for future retiree retire later include workers not expecting benefits s. married (compared with unmarried workers). (with 95 perc not be ascribed to the officers, ent certainty trust ) of what the results would be ees, members, or other sponsors of the E if all A mploye meri e Benefit Research cans age 25 and older were Institute, the EBRI Educ survey ation and ed with high of 64 percent in 2006 and 2008. expect to have acc1992 Retirement Age2004 ess to e ................................................................................................................. mploy3 24 44 18 13 er-provided retiree h27 44 24 ealth insurance (compared with those who do not). ..........15 2007 2007 17 27 36 33 23 15 21 24 2001 40 37 AARP benefits that are at lea Retirees are less likely st equal to today’ than in 2007 to s value incr believe they eases sharply can alway with age, and re s cut back on their tirees ar lifesty e mlo e if it l re likely ooks than (63 percent in 2008). While large majorities of these workers say they will work because they want to stay retirement savings plan wi Resear co Overall, the am mfch Fund, ortably or in retire their ounts that workers think the staffs. m Nothin ent. The percentage of workers a th one or g herein is to be co more of their prev nstrued as an attem y need ious em to accu ptte t to aid or m m ployers. About 40 percent of t p uting a needs calcula lat hi ender for a com the adoption fortable retirem of ation is higher ny pending le hese workers ent gislat appear to than the ion, regulation, say from a defined benefit pension plan (compared with those who expect these benefits), private-sector workers Retcoiremes p lete accuracy. There are other possible sources of error in all surveys, however, that may be more The RCS provides some evidence that concerns a • Some worker Retirement p 2003 2006 2006 s are also faili lanning up, but still not hi 21 ng to15 com 22 pensate for a dec 45 gh— bout 34 Less tha 33 the present may rease in e n half of workers (47 percent) say m 17 26 pl 25 be lim oyer-provided retire iting Americans’ 23 16 16 ment abilit the benefits. y y to and/or Length of Retirement..................................................................................................................16 Expectations About Income and Spending in Retirement 2000 44 35 Fidelity Investments or interpretative workers to be confident about the fut like theru y m le, or as ight use up all legal, accounting, of their savin actuarial, o ure value of So r other such prof gs (61 percen ci essional advice. al Security t, down from benefits. Never 70 percent). theless, 2008 At the same time, retirees are active and involved ( Enhancing Employer Plans 87 percent) or they enjoy working (79 percent), similar proportions admit to financial 42 percent measured from 2004–2006, but is statistically unchanged from 2007’s 43 percent (Figure 11). they left some or all of the be rather low. Twenty (compared with public-sect -five percent of workers say money or workers), and those w in the plan (43 per thcent) or rolled eyith less than $75,000 i need to save less than $250,000, and another 16 per some or all of the m n household i oney ncom into an IRA e (compared - serious than theoretical cal 2008 2002 14% culations of sa23 47 19 10 mp 36% ling error. These include refusals to be interviewe 31% 16% d and other their spouse have tried to calculate how m 2005 2005 Source: Employee Benefit Resea 17 23 rch Institute and uch 30 30 mone Mathe y they will need for a com w Green 25 19 wald & 26 f24 ortable retirement, up think about Expectations About Incom As in the 200 or plan for their future situation in retirem 7 RCS, 17 percent of workers report the leve e and Spending in Retirement ent. When asked what they think is the .............................................................. l of retirement benefits offered by m their or their ost pressing 16 InCharge Education Foundation less likely 39 percent of than 2007 retirees to describe the retirees now think they are likel mselvey s as to li very ve l or ong enough t somewhat confide o use up all of their savings (up nt (50 percent in 2008 vs. reasons: wanting money to make ends meet (78 percent), wanting money to buy extras (78 percent), and EBR I Issu Workers are e Brief is register moed in the U. re likelyS. to save in a tax-qualified retir Patent and Trademark Office. ISSN: 0887 em -ent plan at work than they 137X/90 ® 0887 -137X/90 $ .50+.50 are on their own. cent (38 percent) when they terminated their e Income Nee meThe likelihood of doing a retirement savings ntion a goal of $2 ds in Retire 50 ment ,000–$499,999. Twent mployment yneeds calculation incr -t . Twenty hree percent think t -nine percent indicate they heases with household income, ey need $500,0 rolle 00–$ d m 999, oney 999, over Sources of Retirement Income with those with higher income). 2007 17 43 18 18 2001 2004 2004 22 16 30 41 35 23 18 26 18 22 27 17 forms of nonresponse, the effects of question wordi Associates, Inc., 2000–2008 Retirement Confidenc ng and question e Surveys.order, and screening. Whil e attempts are spouse’s em from p the 42 percent loyer has decreased in the measured in 2004–2006 and past two years. Of these, about considerably higher than th one-quarter state they e low point are try of 29 ing to percent financial issue facing Income Needs in Retirement most Americans t ..................................................................................................... oday, just 5 percent of workers and 4 percent of retirees cited savin .16 g 5 MetLife 60 percent in from 29 percent in 20 2007) (Figure 07). 6). keeping health insurance or other benefits (77 percent). Moreover, all but 5 percent of workers expecting to Forty-six percent of all workers (77 percent of eligible workers ) say they participate in an employer- while about 10 percent each believe they need to into a plan wi education, an Another reason for t Consistent with the fact that expected age of re th their new em d the am hount of savings an e app ploy arently er. Ho inadequate levels wever, 30 per d investm save $1 m etirem cent report spending som nts. of savings reported by In additi illion–$1.9 m ent has contin on, married workers are illion ( ued to creep upwards, 18 workers is that some e 11 percent) or $2 m or all of the mm ore likel oney percent of illion or or usi may y than ng 2006 Workers expect to cobble t 2000 19 25 47 18 10 ogether their retiremen 44 t income fro 22 m a variety of sources. Although 80 13 per- 2003 2003 14 21 34 31 26 17 24 27 made to minimize these factors, it is impossible to quantify the errors that may result from them. or planni compensate b ng f recorded in 1 or retirem y saving m ent. Instead, m 996. As befor ore on their ow o e, the 200 st mention: n (17 8 RCS finds that percent) or in an emplo doing a retirement savings calculation is yer’s plan (7 percent), although small Sources of Retirement Income ...................................................................................................17 Nationwide Financial Services • Worker concern about Me Both workers (26 percent, dicare’s level of benefits h down from 31 percent) and retirees (50 percent, down from as been relatively stable. Four percent 60 percent) of workers work for pa sponsored retirem y in retireent savin ment identified at gs plan, bleast one financial ut just 40 percent ha mve an IRA to which the otive for doing so. y can contribute outside of unm 2005 arried workers to have tried to do 21 one. Work 37 ers age 45 and old 26 er (compared with 12 younger workers), m underestim it to pa or workers state e Many (7 percent). However, savings goal y off debt and 26 percent put it into personal sav Am ate their spending needs in re 1999 ericans have little m that in the pas 1998 22 t year they oney put a 12 tirem s have changed tend to incr w ent. Fift ay in savings and investments. Am 47 y ease ings or inve -33 eig the age at whic h as household i t percent of workers stme21 h the nts, there 28 ncom y expect e rb think t iong RCS workers y ses (Figure 13). sacrificing some of their to retire (down from h26 eir po 9 st-retirement a high cent report they 1998 expect to receive at least some inco 19 me 28 from Social Security 24 , personal savings will also play 24 Did you read this as a pass-along? Stay ahead of employee benefit issues with your own subscription to EBRI The RCS was co-sponsored by the Employee Benefit Research Institute (EBRI), a private, nonprofit, particularly effective at changing worker behavior: 44 percent who calculated a goal changed their proporti Working for ons sayPay the i yn are Retirement making greater use of financia .................................................................................................. l planning or investment information (7 percent), 18 • Making ends meet or the cost of living (17 percent of workers, 19 percent of retirees). Prudential Retirement are very confident that the Medicare system will continue to provide benefits of at least equal value to the are less likely than in 2007 to express confidence that the Social Security system will continue to work (33 2004 percent of workers report havi 1998 18 22 45 18 13 ng an IRA 39 opened with m 26 oney rolled over fro11 m an employer’s spending will providi savings in early withdrawal penalties. retirement savers (co Younger wor ng t Issue Brief his be lower than their pre-retirem type of inf 1993 k for ers think the 1993 only m $89/ opared rmye ation, 49 p y ar will need more with nonsa electroNA n eNA rcent report icav lly ers), and participants in a de ent spen e-maile money d to that the total ding. NA in yo NA retirement: Workers age 55 and u Twenty-four percent say or $199/ value of their year pr NA fined contri NA inted an household d mai their spending in the bution led NA . F NA ’ plan (c s s older or more i avings and are om nm formatio pared with ore n of 32 a large role. Roughl At the sa percent in 2003). Of me time, the RCS y 70 percent of workers each say these, 79 percent say has also found consistent they postponed retir ly that far fewe they anticipate receiving retirem r retirees a ement. Am ctually ong the reasons given for work for ent income fro pay at m an nonpartisan public policy research organization; and Mathew Greenwald & Associates, Inc., a Washington, looking for a retirement planning n employer with better benefits, or , and of those almost two-thirds working longer hours or a second job ( (59 percent) started saving or i 4 percent). nvesting more. Improving Retirement Preparation ............................................................................................... ..19 • Paying for health insurance or medical expenses (16 percent of workers, 25 percent of retirees). benefits recei 2003 about subscri ved by ptions, visit our retirees toda 27 Web site at y, while 30 percent are www 36 .ebri.org or compl somewhat ete the for 22 confident i m belown and r the sy eturn it to EBRI. 11 stem’s benefit levels. provide 1997 1992 benefits of at least 1992 24 equal value to the NA NA 41 benefits received by NA NA 19 NA NA retirees today.NA While worker NA 15 retirement plan.) The likelihood of participating in either an employer-sponsored plan or an IRA opened likel first five y invest nonparticipan In addition, 55 percent of y than ments, excluding t ear younger worker s of retirem ts and those n hen e value of their s to think t will be m workers do not receive a ot offered a p the uch lower than y prim need to accum lan) m ary home ore often report tr in ny advice when the the five and any ulate less t def years before retirem hiy an ned benefit plan ing to $500,000 for retirem y leave t do a calculation. heir em ent and 34 percent s, is less than $25,000. ploy ent, while those er about what som postponi em e time during their reti ployer-spo ng retirem nsored retirement savings plan (74 ent are: rement (25 percent in 2008). Those who worked m percent), an individual retirem ost often say ent account (I they enjoy RA) (69 per- ed DC-based market research firm. The 2008 RCS data collection was funded by grants from 40 public and Nevertheless, nearly half (46 percent) indicate they have done nothing as a result of the changes. Moving Workers to Action.........................................................................................................19 • •Making m Most savings levels are ortgage payments or pa modest— ying f The percentage of or housing (16 percent of workers, 10 per workers (72 percent) saying the cent of retirees). y have saved for 1998 1996 Source: Emplo Source: Emplo y19 ee Benefit Resea yee Benefit Resea19 41 23 16 rch Institute and rch Institute and 34 Mathe Mathe w Green w Green wa 31 w ld & Associates, ald & Associates, Inc., 1992–2008 Inc., 1992–2008 11 However, 64 percent are confidence about the fut not too ure of Medicare bene (35 percent) or not a fits remained fairl t all (29 percent) confident y stable (4 percent that Medicare’s benefits will very confident, with money saved outside of work increases as household income rises. Instead of doing a retirement needs calculation, 43 percent of workers guess at how much they will need indicate their spending will under age 35 The percentages of workers reporting ot to do with the working (93 Name percent) or wanted to stay are money mo re apt than older wor they accu be a little lower. Anothe mulated in their retir active and invol her categories kers to belie ement savings plans. Those r 31 percent think their post ve they of total savin ved (91 pe will need $1 m rcent), but 75 percent also identif gs and invest illion or m -retirement spending will that do receive advice ments vary ore. Similarly in a narrow y at least , be cent), and other personal savings and investments (73 percent). Fifty-nine percent indicate they will receive private organi • The need to pay zations, with staff tim bills or to make new purchases (28 percent). e donated b ® ® y EBRI and Greenwald. RCS materials and a list of Enhancing E Not surprisin mploy gly, the li er Plans keli ....................................................................................................... hood of having saved for retirement among both workers and retirees is ..19 1993 14 36 34 6 • Payretirement has returned to ing down 1995 Retirement Co Retirement Co debt or loans nfidence Surve nfidence Surve 21 (13 percen 2001 ys.ys. –20 t of workers, 5 percent of retirees). 06 le51 vels after a slight dip in 19 2007 (66 percent). Fort 8 y-nine continue to equal or exceed the benefits received by beneficiaries today. Again, worker confidence about the 30 percent somewhat confident), the percentage of retirees very confident about Medicare benefits about the same as pre-retir wo range just above 10 generally m to accu en are report getting advice fro m more likely ulate. Nineteen percent each re percent: $2 thaement. In cont n me5,00 n to think the m0– a professional financ $49,9 rast, current 99 (1 port asking a y will ne 2 percent), $50,0 retirees ed savings of fina ial advisor (74 ncial advisor and doing their own esti are less likely 00–$9 less than $100,000, but less likely 9,9 percent). Sm 99 (1 than 2 percent), $1 workers to say their aller proportions also 00,000– mate. Other to s one financial reason for having worked income froOrganizmation an em ployer-sponsored traditional pensi . on or cash balance plan. In contrast, retirees more underwriters may be accessed at the EBRI Web site: www.ebri.org/rcs strongly related to household income. The proportion saying they have saved for retirement also increases as Preserving Retirement Assets • Wanting to make sure they ................................................................................................... have enough money (17 percent). ..20 1992 1994 13 20 45 17 17 33 35 15 percent of workers report total savings and investments (not including the value of their primary future value of Medicare be • Fuel or energy costs (9 percent of workers and retiree nefits increases with age, and retirees ar s). e more likely than workers to be dropped by nearly one-half (from 15 percent in 2007 to 8 percent). think t spending in the first five years of retire $249 sayread or hear how m the ,99 h ye 9 received advice from y (15 wil percent), and $25 l need at least uch is needed (9 percent), use an $2 m their retir 0,00 illion. 0 or m e m Am ent is lower m oent plan provider (50 pe re (12 per ong those with household incom (46 percent) cent). Retirees provide so online calculator (7 percent), fill out and m rcent), another financial ser ore likely to sa e of $50,000 or mewhat lower estim y it is a worksheet or m higher (19 o vices co re, worker ates of m pe pan s r-y often say they receive income from Social Security (94 percent) and are less likely to rely on any form of Address ® education levels rise or health status improves. In addition, married workers and retirees are more likely than RCS Methodology 1993 ................................................................................................................ 18 55 19 .......... 6 21 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007–2008 Retirement Confidence Surveys. residence or any defined benefit plans) of less than $50,000. Twenty-two percent of workers and • The cost of living is higher than expected (15 percent). confident. E • Job uncertainty (6 percent ven so, retirees are of workers, 8 about half as likely percent of retirees). as in 2007 to report they are very confident in the value cent) (Figure 15). form (4 percent), or base an estimate on their current expenses or their desired retirement lifestyle (2 percent) who do a retire (39 percent), total household savings. In particular, they The percentage of workers say or a relative, friend or co- ment needs calculation are ing the worker (25 p ym are m ho are likely ve saved fo ore er lik cent). Nine than ely r retirement has returned to those who do to say their total household savings are les percent indicate they not to estimate that they 2001 cons –20 ulted an online 06 le need vels s than higher personal savings (Figure 17). City/State/ZIP Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1993–2008 Retirement those not married to have set money aside. Other groups of workers more likely to have saved for retirement Endnotes .........................................................................................................................................22 28 percent of retirees ® say they have no savings of any kind. of the future benefits paid by Medicare (8 percent, down from 15 percent in 2007) (Figure 7). • The poor economy (15 percent). am professional financial advice service. $10,000 ( ounts. (Figure 12). 51 Confidence Surv percent of retirees, up from eys. 32 percent in 2007) (Figure 10). (72 percent) after a slight dip in 2007 (66 percent). Forty-six percent of workers saving for retirement report Mail to: EBRI, 1100 13th St. NW, Suite 878, Washington, DC, 20005-4051 or Fax to: (202) 775-6312 16 10 18 20 12 14 22 4 2 8 6 17 13 15 21 19 11 5 3 9 7 EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI EBRI Iss Iss Iss Iss Iss Iss Iss Iss Iss Iss Issu u u u u u u u u u uIss Iss Iss Iss Iss Iss Iss Iss Iss Iss e B e B e B e B e B e B e B e B e B e B e B u u u u u u u u u ur r r r r r r r r r r e B e B e B e B e B e B e B e B e B e B ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. r r r r r r r r r rief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. ief No. © 2008, Emplo 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 316 • • • • • • • • • • • Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap • • • • • • • • • • ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap yril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ee B 8 8 8 8 8 8 8 8 8 8 8 e • • • • • • • • • • • nefit 8 8 8 8 8 8 8 8 8 8 www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb • • • • • • • • • • Research Institute www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb www.eb ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org ri.org -Education and Research Fund. All rights reserved. EBRI Issue Brief No. 316 • April 2008 • www.ebri.org