A large percentage of American workers recognize the U.S. retirement system is undergoing major changes, but many are not adapting in ways that are likely to leave them well-positioned for a comfortable retirement, according to the 17th annual Retirement Confidence Survey (RCS).

• Workers slow to see or adapt to a changing U.S. retirement system: The 17th annual wave of the Retirement Confidence Survey (RCS) suggests that American workers may be slow to recognize how the U.S. retirement system is changing, and those who are aware of these changes may not be adapting to them in ways that are likely to secure them a comfortable retirement.

• Half of workers less confident about pension benefits: The RCS finds pension-plan changes by employers have left nearly half of workers less confident about the benefits they will receive from a traditional pension plan, but that those experiencing a decline in retirement benefits often fail to react constructively. Moreover, although Americans will rely increasingly on 401(k) retirement savings plans and other personal savings and investments to fund their retirement security, data suggest that many may not follow professional investment advice when it is offered to them.

• Many workers counting on benefits that won’t be there: Many workers are counting on employer-provided benefits in retirement that are increasingly unavailable. Only 41 percent of workers indicate they or their spouse currently have a defined benefit pension plan, yet 62 percent say they are expecting to receive income from such a plan in retirement. Likewise, workers are as likely to expect as retirees are to receive retiree health insurance through an employer, even though the number of employers offering this benefit to future retirees is declining.

• Many workers unlikely to heed investment advice even if they get it: More than half of workers indicate they would be likely to take advantage of professional investment advice offered by companies that manage employer-sponsored retirement plans. However, two-thirds of these workers say they would probably implement only some of the recommendations they receive and 1 in 10 think they would implement none of them.

• Americans overestimate long-term care coverage: One-quarter of workers and more than one-third of retirees report they have long-term care insurance (separate from health insurance, Medicare, and Medicaid) to help pay for care they might need in a nursing home, assisted living facility, or at home. But only 10 percent of Americans age 65 and older are estimated to have had private long-term care insurance in 2002, suggesting that many are counting on coverage they do not actually have.

• Most savings levels are modest: Almost half of workers saving for retirement report total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $25,000. The majority of workers who have not put money aside for retirement have little in savings at all: Seven in 10 of these workers say their assets total less than $10,000.

• Continued ignorance about Social Security coverage: Despite the longstanding increase in the eligibility age for Social Security, only a small minority of workers are aware of the age at which they can receive full retirement benefits from Social Security without a reduction for early retirement.

expenses (48 percent) and m standard of li retirement (5 percent), cover these costs in retirement (12 percent) and 2 in public-sector workers), women (co Regardless of While questions asking inte As would be expected, worker confiden Current workers anticipate percentage w ving as how the ques adeq mho report au ka ing greater use of financia te or or etion is phrased, the st than one-third are nt ofte struggl having attem using sim n produce unreliable data, these r mpar inge inclu p d with men), a le ce in p strategies in ted d Figure 10 e workers age 55 and older (co somewhat to calcu having e ated likelihood of Figure 14 Figure 17 Figure 24 l planning Figure 8 10 each think the nd those wit order to achieve these goals. late their accu confident (35 noug or i h m nvestm oney for a com purchase is higher for workers under h esults less than $75,000 in y will need $50,000–$99,999 (20 m epercent). Four in nt information (5 p u are rel lation needs for retire mpaa f tively red with youn ortable retirement More than one-third consistent with 10 each are hous ercent), ehold incom m ger ent (43 per-e Ruth Helman is research director for Mathew Greenwald & Associates. Jack VanDerhei, Temple University, Retirement Confidence RCS Methodology EBRI Figures Many Americans have little money put away in savings or investments (Figure 7). Among RCS workers workers), those not expecting to finance their retire age 45 (com planning to very reported behavior from increase (co cent) and $100,000–$249,9 say confident about being m the pared with those with ypercent) remain level. s wit will postpone retirement (4 percent), and seek pared with old h si household income. Worker confidence mply the 2006 RCS. take eable to pa r workers), wo what they 99 (20 percent). Less than one-quarter think t higher incom y for medical ex need to cover th Am m ong workers o ee). n (co Figure 13 m mpa ent using m ing advice from pe red with men), and thos eir expenses (36 percent), and nses (41 percent) and ha ffered professional invest also increas oney from a financial es with savings and investments, and an em hee y expecting a retire ving done a good job of will professional (4 percent). ploy ment advice through thei need at least 3 in 10 will try er-provided retirem m $250,000. ent to leave ent r Confidence That Social Security Will Continue to Provide Benefits Amount of Savings American Workers Think They Need for Largest Expected and Actual Sources of Income in Retirement Retirement Educational Materials Workers Having Tried to Calculate How Used and Found Most Much Money is research director of the EBRI Fellows Program. Craig Copeland is senior research associate at the Figure 5 providi These findings are part of the 17th annual Retire ng this type of information, nearly half report m that the total ent Confidence Surve value of their y (RCS), a survey that gauges household’s savings and Overall Retirement Confidence a plan (com preparing for savings plan t Alm employ im Al their savings untouched Figure 1, Cha ost 4 in 1 m Wo proved health status. Others The average er, 53 ost one-quarter of workers have no idea how m parWorker and Retiree Estimated Likelihood of Living Until Specific Ages e 0 retirement (39 percent). o percent report requesting and receiving d with those indicate they have do help fu nge in Wor age at retirement is nd th for who do), and eir retirement (co ker Confidence Regarding Benefits as long as po mne n ore In addition, roughl likely often confident those not ex othing ssible (31 percent). Fewer m to increase an pared in resp pecting to receive e with those who specific recommendations on how the onse to the reduction i uch are y 4 in 10 the d m married w y will ne a From nyrk each are workers er are not). Lik Ts o ed (23 percent) (Figure 20). One recent anticipate using the com r rkers (co m aditional Pension, by ploy somewhat may n be er-provided retiree health m work until their planned nefits. Work e pared with those not marrie lihood confid Ret of pu iy re ent (36 percent should i eers age 55 and srchasing an p aratively nvest d), Employee Benefit Research Institute (E Retirement Expressed as a Multiple of Curren of at Least Equal Value to Benefits Received by Retirees Today They Need to Save for a Comforta Helpful, Am BRI). This ong Workers Saving for Retiremen Issue Brief was written t Earnings, for All Age ble Retirement with assistance fro t m s the Institut e’s • Almost half of workers saving for retirement report total savings and investments (not including the Americans Having Saved Money for Retirement the views and attitudes of invest EMPLOYEE ments, excluding the value of their working-age and retired Amer primary home and any icans regarding retirement, their preparations for defined benefit plans, is less than $25,000 Despite continuing lack of preparation and employer cutbacks in retiree health benefits, Americans (Expected) (Reported) EBRI Issue Brief about m insurance (com annuit older are their m those who expect to receive retire study retirement age, but ot co Used m yoney Expectation of Receiving Benefits ( p e Very calculated that, assuming Medicare benefits remain lex strategies of taking onl but dical expenses, 41 percent about their retirement mo. re likely not a financial prod However, only 13 pared with those expecting this benefit) than Multiple of Cu hers could fin younger work uct that percent subsequentl y the earnings o rre m nt Earnin d ent benefits the pay ers to report a reduction in Fro m s g selves re m u g ar Traditional Pension s anteed incom fro ny thei tiring soo m im . In additi Somewhat both a define pl rPercentag investments (18 percent) or taking a co preparat emat current levels, couples will need approxim ented all of the recommendations e n) increases as er. T on, ion). Li benefits. e o workers who have saved for retirem ......................................................... d benefit pension and a defined hfe RCS has consistentl Resp Not Too ke workers, retirees are least likely ond health status improves. ents Most No yt at All fo . Instead, Helpful und t nstant hat 5 ent atel y research and editorial staffs. Any views expressed in this report are those of the authors and should not be Introduction value of their primary residence or any defined benefit plans) of less than $25,000 (49 percent). The 2007 RCS Underwriters retirement, their confidence with regard to various aspect Very Somewhat Not Too s of retirement, and related issues. Not at All Don’t Know The survey was / continue to e (49 percent). xpress a fair Approximate degree of confidence about th ly 1 in 10 workers each re 2007 port tota eir financial prospects in l savings and invest 43% retirement. Approxim ments of $25,000–$49,999 ately 7 Workers Retirees Personal savings (net) 50% 24% th Confident Confident Confident Confident to express confidence about having enough m are 57 percent implem $300,000–$550,000 to cover h contribution retire approxim percentage or am Written mate m Many ore likel Am ay than those who have not to describe tel ericans have attitudes that may lead them rial re y 4 in 10 retirees le ented some of the recommenda ount of mone m cei ent plan (com ved from yo 0–up to 5 y ealth expenses in retirement. (10 percent). Equal ave the work force ea ur em pared with those ploye oney r or tions, and 30 to their expected standard of living in retirement as pay fo who do not), those who expect to have acc to be overl proportions of rlier than planned (37 percent in 2007). r long- percent did n y ter confident about t 30% mcurrent retirees report having used these care. More than one- ot implement any. heir abilit quarter say y to manage ess to Many retirees they ascribed to the officers, trustees, or other sponsors of BENEFIT EBRI, EBRI-ERF, or their staffs. Neither EBRI nor majority of workers who have not put money aside for retirement have little in savings at all: Seven The 17 wave of the Retirement Confidence Survey (RCS) suggests that American workers may be slow Likely 2006 42 Likely Likely Likely Refused conducted in (10 percent), Figure 2, Ava $50, January ilabilit 000 2 –$9 007 y of E 9, throu 999 (1 mploy gh 3 percent), $1 2 er-Provided H 1-minute telephone interviews with 1,25 00,ealth Insurance Coverage in Retirem 000–$249,999 (15 percent), and $2 2 individ 50,0 u ent als (1, 00 ...................... o001 workers r more (14 per- 6 one-quarter of workers are very confident they will have enough money to live comfortably through their HaIssue Brief ve Saved Currently Save Have Saved A work-place retirement savings plan, such your employe 2007 r’s retirem 5–up to 10 ent plan p 7% rovider 24% 73% 27 34% 34% 15% are comfortable financial risks to their retire who retired early em approaches. Approxim ve More and m ry ploy confident (27 er-pro and less likely o vided retiree health insurance (co re, retire cite nega percent), while on m a to describe it as tel m ent plan provide ent. More tive reasons for leaving th y one-third each take what they than 8 in e-third are struggling rs are turni 10 msomewhat pared w workers (84 percent) and 7 in 10 retirees (70 percent) . Finall ng e work force before they to the Interne ith those confident (33 y need to c , the expectations about standard of livi who do over their expenses (35 percent) or try t to provide i percent). Again, not), expected, including and those wh nformation and allow confidence has o have consul health ng in to ted Retiree Hea EBRI-ERF lobbies or takes positions lth Insurance on specific policy proposals. EBRI invites comment on this research. to recognize how the U.S. in 10 of these workers say retirement system their asset a is changi s total less than $10,000 (70 pe ng, and those who are aware of these changes rcent). a may not Age 85 2005 42 ADP ELM Income Group and 251 retirees) age 25 and older in the cent). Retirees provide similar estimates of household savings. United States. Random digit dialing was used to obtain a retirement years (27 percent), while more than 4 in 10 describe themselves as somewhat confident (43 per- RESEARCH as a 401(k) Money Money 28 Money 6 The advice of a financial p2006 6 10–u rofession p to 15 al 27 64 15 33 34 40 Figure 3, Goals When Withdrawing Savings in Retirement................................................................... 6 rem retirement i agree that they can alway participants to m problem a professional financial advisor (com leave their sa ained fairly stable over time. s or disability mprove as hous vings untouc anage their own retirement account ( s cut back on t 28 ehold incom hed (33 percent), chan perce e h p or savings goal increase. eir lifesty are nges at their co t). Only d with those le i s. Figure 20 one f The success of this channel is dependent on worker it looks li -quarter of retirees take the who have not). mpanyke , such they m as downsizing or closure ( ight use up all of the earnings on their ir savings. 28 percent), Even though many employers are eliminating health care coverage for future retirees, 4 in 10 workers Workers 32% 2004 42 40% 15% 11% 3% be adapting to them in ways that are likely to secure them a comfortable retirement. No. 304 representativ • The RCS continues to find e cross section of the U.S. that populati one-quarter of workers are on. Starting with the 2001 wave of the RCS, all data are very confident about their financial cent). Three in 10 workers, however, are less confident that they will have enough money to live Other personal savi 2007 ® ngs or in 66% vestments 60% 22 68% 18 The advice of family, friend2005 8 15–u s, or co-wo p to 20 rkers 23 62 8 33 35 18 AIG Investment Company Institute 1 Sim acceptance, but m and having to care for a sp investm Eil Ba Rrly I Em , tw ploye ents (17 percent) o o-thirds of w e Ben ae ny fit R workers—especi eseao rc rkers (66 pe h In ouse or another fa r take a cons stitute Issue B ally older ones—have rcent) and 6 in 10 retirees (59 percent) rief tant percentage or am (ISSm N 08 ily 87 me -13m 7Xb ) is er (25 percent). Others say reserv publi ount (8 percent). shed a mont tions about hly by t agree that they (or their he E using the Inte mployee ot B her work-related enefit R rnet for various esearch Institute, continue to e Savings Needed to Cover the Cost of Health Care, by Total Accumulation Needs xpect they will have access to employer-provided health insurance when they retire (41 per- Retirees 45 2003 43 35 9 6 4 INSTITUTE More than ha The RCS findlf of workers think their post-retire s pension-plan changes by employm ers have left nearly ent spending will be lower than their spendi half of workers less confident about ng pre- weighted by Figure 4, W Social Se security age, sex, and education to reflect the act o cu rker Comfort With Performing Financial rity in retire2006 70 ment (27 percent), while m ual prop or64 eActivities On than 4 in 10 are ortio14 ns in the adul linesomewhat .............................................. t pop68 ulation. confide 40 n Data fro t (43 percent). m 8 co mfortably throughout their retirement years, with 19 percent describing themselves as not too confident Retirement pl 2121 K Street, NW an ben , Su2004 7 ite 60 efit statements 0, Was20–u hington p to 25 , DC 20037-1896, at $300 per ye28 ar or is in61 cluded 7 as par31 t of a membership subs32 cr 5 iption. Figure 7 Worker Total April 2007 Accumulation Needs spouse) are knowledgeable about in financial acti reasons (18 percent) or obsolete skills (13 percent) pl Confidence in Other F Workers vities. More than half say more likely to sa inancial Aspects of Retirement y the2002 38 vestments and investm y will take onl they are veryy or the ear somewhat aye ed a r nt strategies. Approximately nings or a constant percen ole. T comh fortable with the comparatively e consequences of an unpl tage are those 6 in 10 thi anned early nk t who have hat Overconfid Age 95 cent). This is consistent with RCS findings from ence previous y ears and makes worke rs as likely to expect the benefits they Alliance Ber will receive from nstein a traditional pension plan, but Lincoln Financial Distributors that those experiencing a decline in retirement. Two in 10 say Periodicals postage rate paid in Wash their spending in ington, DC, and the first f additional ma ive iling y offi ears of retirement will be ces. POSTMASTER: Send addrmuch lower ess changes to: than in the EBRI Issue A traditional e The 200 However, at l 7 Retirem2005 69 mploy east so er-p ent Confidence Survey was f rome of those who say the vided pension y62 unded b are very y13 confident m grants from 3 ay be overconf 166 organizations and 21 ident: 24 percent of 2005–2007 RCS are also weighted by retiree status due to the oversamples of non-retired Americans. Data and 10 Information a percent say vaila ing t2003 7 ble o hey are ver the Internet 25–u not at p to 30 all confident. There has been little consistent change in these 26 52 3 35 31 6 Reported Total Savings and Investments Among Those Providing Response, by Age Figure 5, Americans Having Saved Money for Retirement.................................................................... 9 people do Worke innocuous activities of obta saved for retire retire All The 200 m rs not ent ca need to be so 7 RCS continues t n be heavy ment (co 7 .m phisticated investors to mana ining i Retiree pared with nonsavers), thos o n find t form2001 44 s who retire earli ation about financia 23 hat worker confiden er than planned a ge their savings in retirement (62 percent of workers e who have calculated how m 33 l products (54 percent) or using cal ce is highest in havin $250,0 re 00– more likely than th 33 g eno uch they ugh m ose who retire on oney 4 culators need to to pay for Brief, 2121 K Street, NW, Suite 600, Washington, DC 20037-1896. Copyright 2007 by Employee Benefit Research Institute. All rights acceGiven the conflicting responses that workers provi ss as current retirees are to receive it (43 percent) (Figure 2). de with respect to confidence and retirement retirement benefits often fail to r five years before retirement (20 percent) eact constructively and one-thir . d Moreover, although Americans will incr indicate their spending will be a little lower easingly (34 per- rely on Employment 11 2004 68 58 65 2 for waves of the RCS conducted before 2001 Newspap very ers or confident workers are Charter Partn mag2002 6 azines 30–u ers with the A p to 35 not currentl have be merican Sa y saving for en weighted to allow for co vings Education Council (ASEC). 25 retirem 49 e 1 nt, 43 p38 ercent have less than $50, nsistent comp30 arisons; 4 000 in proportions in recent years (Figure 21). Allsta reservedte . No. 304. Mass Mutual Financial Group (not including value of primary residence or defined benefit plans) Workers <$250,000 $999,999 $1 million + Retirees Retirees 12 2000 53 23 25 32 6 and 60 (54 percent) online. How accu time or later than planned t basic expenses during retir percent of retirees), and roughl mulate (compared with those who ha ever, fewer em o say ent, and thsay the e y yhalf agree that the are not conf lowest in being y ve not), t are comfortable shifting m id hose expecting to entable to afford medical or long-term about havi y (and their spouse) ar ng a co receive oney m f fortable retirement or about rm om e not likel one one account or y from y t a wor o care live long expenses. k-place preparation, many workers may be overconfident about their retirement security. A general public opinion The sale or refinan2003 71 cing of your home 62 2 64 2 cent). Another third think 401(k) retirement savings plans and oth their post-retirem er personal savings ent spending will be and inabout the same vestments to fund t as pre-retirement (34 per- heir retirement security, Figure 6, Americans With Savings Information from televi2001 8 sion35–u or rap to 40 dio ............................................................................................... 26 32 1 33 32 2 .......... 9 consequentlsavings, and y, some data in the 200 37 percent ha The com 7 RCS may plet ve not d e list of underw one a retirement needs calculatio differ slightl riters appears on page 25 y with data publishe n. d in previ . ous waves of the Figure 2 Source: The Retirement System in Transition: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Retirement Confidence Survey. Less than $50,000 for emplo 12% 1999 48 y 23% ee benefits r 9% esearch 7% 31% enough investm savings plan, having en Four in e to use nt to another onli 10 w oug up all of t oh m such as a 401(k) (com rkers each a oney heir savings (47 for ne (43 percent), obtaini re basic expenses in retirem very (40 percent) and pared with those percent of ng workers and 54 ad somewhat en vice fro w t. ho are not), The m y (42 percent) confident the financial professionals (34 per are also m percent of retirees) (Figure 19). and those with ho ore likely to indicate they usehold i y can cent), or meet their ba ncome of at are now sic survey Am such as the RCS cannot erican Express provi Wo de a definitive answer to whether workers are preparing adequately rker Merrill Lynch Age Group for Something else 2002 72 61 3 62 4 data suggest that many Computer software 2000 7 may not follow 40–up to 45 professional investm21 ent advice when it is offered to the 28 1 39 <0.5 33 m. cent). In contrast, current retirees The Em are aplo s likely yee Benefi to sa t Research Institut y their spending in the first five y e (EBRI) was founded in 1978. Its ears of retirem ment is ission is to the RCS. Data presented in tables in this report may not total to 100 due to rounding and/or missing categories. Figure 21 Availability of Employer-Provided Health Insurance Coverage in Retirement $50,000–$99,999 1998 42 20 27 22 12 19 Figure 7, Reported Total Savings and Investm CHECK O ents Am UT ong Those Providing Response, by EBRI’S WEB S Ag ITE e .......... ! 10 purchasing fi least $75,000 m expenses in retire ore concern nancial produ e (co d about their m mpared wi ent. Slightly cts online (29 financial future th lower-income workers). fewer are confident th percent) (Figure 4). than they were right after they at the The likelihood of y are doing a good job preparing planning to use these approaches retired. financially for All Don’t know/Refuse2001 69 d Ages 61 Ages 5 Ages 61 Ages 5 All retirement; however, the RCS does provide some contribute to, to encourag strong indications. First, workers who are e, and to enhance the development of sound empl very confident oyee benefit Information from semi1999 7 nars 45–up to 50 21 21 1 38 33 1 same Findings in this y (42 percent) as they ear’s RCS are to say include: it is lower (45 percent) (Figure 16). Am In theor eriprise Financia y, each sample of 1,252 l, Inc. yields a statistical precision of plus Northrup Grumm or minus 3 percentage points (with an Wo $100,000–$249,999 Worker Co1997 33 20 22 27 nfidence in Having Enough Money rkers to Live 21 Retirees 14 The 2007 Retirement Confidence Survey Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Retirement Confidence Survey. programs and sound public policy through objective research and education. EBRI is the only also increas their retirem es ent, with one-quarter as their retire2000 78 Wo mrk ent savings goal increase ers very co 25–3 nfident (2 4 Figure 19 6 pNA 35–4 e s. rcent) and 45 percent 4 45–54 somewhat59 55+ confident. Fewer Retirees about their re Online profe tirem ssion ent financial prospects appear to 1998 6 al investment ad 50 or mo vice se re rvices be better prepared, on averag 16 19 6 31 e, than those who are 44 1 Figure 8, W The Retirement System in Transition • Nearly half of workers report that recent changes orkers Having Tried to Calculate How Much Mone to the emy ploy They er pension s Need to ® Save for a ystem ® have made them 95 percent certainty) of what the results would be if Established in 1978, the E all Americ (Exp ans a ecte gd) e 25 and mployee B older were enefit R (R survey epo esear rted ed with ch ) $250,000–$499,999 11 1996 29 6 17 12 2 Women are more likely Comfortabl than men to sa y Throughout Their Retirement Years y they are likely to live until each of the target ages. The Note: The electronic version of this publication was created using version 6.0 of Adobe Acrobat. Those having private, nonprofit, nonpartisan, Washington, DC-based organization committed exclusively to Barclays Global Investors Who we are1999 73 NA Princip al Financia67 l Group Less than $ Source: Employee Benefit Resea 10,000 Source: Employee Benefit Resea 35% rch Institute and 50% Mathew rch Institute an Figure 4 Greenw d ald & Asso 36% Mathew Green ciates w , 24% Inc., 20 ald & Asso 07 Retire ciates 26% ,ment Confiden Inc., ce 32% Survey. workers are confident t1997 5 hey will have enough m Agreement With Statements About Risk oney to meet 17 medical expenses (20 percent 36 ver39 y confident, somewhat Length of Retir by Ruth Helman, Mathew Greenwald & Associat confident. In turn, those who are ement somewhat confident appear to be better prepared overall than es; Jack VanDerhei, Temple University and ® ® Co Not surprisingly less confident about the m mfortable Retirement , workers ......................................................................................................... with highe oney they can r household income or higher levels expect to receive from a defined benefit of assets are (or “traditional”) more li .......... kely than 11 com Employer-Provided Retirement Plans p Yes (n lete ac$500,0 et) c00– uracy$9. There are other possible sources of 99,999 EBRI’1995 32 8 4 9 s Web site is easy to use and packed error in all surve 41% ys, however, that m16 43% ay be mor1 e trouble opening the pdf document will n publice poli ed toc y r upgrad esearch e thand eir co edu mcat puion on ter to Adob econeom Reade ic securi r t 6 y .0and em , which c ploy aee n be benefit issues. likelihood of indicating the 2007 Retiremen y will live until each age t Confidence Survey. also increases as household income or education $10,00 Eligibility Age for Social Security 0–$24,999 1998 59 13 18 Figure 16 NA 16 10 59 5 13 2007 Institute (EBRI) is the only nonpr 17 43 18 ofit, nonpartisan 18 46 percent somewhat Worker Co confident) or long-ter mfort With Performing m care expenses (17 percent, 36 percent) in retirement. As with Financial Activities Online those who are not confi Very The length of retirement is a key d ent. Somewhat component of retir Not Too ement planning, and m No at at All ny Americans report taking it EBRI Fellow; and Craig Copeland, EBRI Buck Consultants, An ACS Company lower-income workers to cite savings as their largest share of retire Procter & Gam ment inco ble me, but many of these workers Employer $1 pension plan million + paid (45 percent). EBRI’s member Seventeen percent of 1994 31 5 2 2 ship includes a workers have personall cross-section of 18 pension funds; businesses; trade associations; y experi19 enced a reduction in 14 1 serious than theoretical cal Over the past few yculations of sa ears, a number of cha m Str pling error. ongly nges have These include refusals to be interviewe Somewha been made to the e t Somewha mploy t er pension s Strongly d and other ystem. Thes Don’t e downloaded for free at www.adobe.com/products/acrobat/readstep2.html increase s or as health status improves. $25,00 Figure 9, Amount 0–$49,999 1997 66 of Savings Needed for Retirement, by 10 9 NA 10 Househol d Incom11 9 10 e ....................................... 50 11 It was 24 yea 2006 rs ago, in 1983, that Congress pas Post-Retirem 19 ent vs. Pre-Retirement Spending sed le 44 gislation gradually increasing the Social 22 13 Security Confident with useful information! Confident VeryConfid ent Somewhat Confid Not Too ent Not at All overall confidence, confidence about each of these speci fic aspects of retirement has remained relatively into consider For example, ation when they the reported to do their fi tal of saving nancial planning. s and investments increases along with c Six in 10 workers (60 percent) and m onfidence in o having re than 4 in Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Retiree paid labor unions; health care providers and insur 8 ers; government organizations; 10 and service firms. mayNo not the retireidebe saving at rates necess a ment benefits offered by23 17 13 ary organization committed to original public policy to their e provide the inco mployer wm ithin the past two e needed to maintain their lifesty years. Of these, only12 le in retire one-third 31 ment. Agree Agree Disagree Disagree Know forms of nonr changes have caused nearly half of wor esponse, the effects of question wordi kers to feel le ng and question ss confident about t order, and screening. Whil he amount of money e attem they can expect pts are Younger workers think they will need more money in retirement: Workers age 55 and older are more $50,000–$99,999 1996 60 13 10 NA 14 15 52 11 12 CitiStreet Rockefeller Foundation normal retirement age. N 2005 onetheless, only 21 a small minority 37 of workers are a 26 ware of the age at which the 12 y can 2007 The likelihood of finding a financial professional 27% Inc., 1994–2007 Retirement Co 43% nfidence Su Comfortab mos rve 19% le ty helpful i s. Comfor ntab creases as household incom le Comfor 10% table Comfor e or assets table Informing individuals of the probability of reaching these ages may have only a limited effect on savings stable. Howe ver, workers are more likely than in 2006 to say they are very confident about having enough enough m 10 retirees (43 percent) say the Source: oney to li Employee Benefit Resea ve comfortablyy th rch In consider the num rostitute an ughout retirement increases. Also, not surprisingl d Mathew be Green r of y wears they (and their spouse) will spend in ald & Associates, Inc., 2007 Retirement Confiden y, confidence ce Survey. Costs shared by employer and retiree 13 17 Figure 10, Am Wo ount of Savings Needed for Retirement Expressedrkers as a Multiple of Current Earnings, thRetirees You can always cut back Workers em report the ploy y are saving m ed in a on your the private sector ore as a result (32 percent). are also more apt than those in the public sector to be counting on made to to receive from minimize thes an em e fa ployer-provided traditional ctors, it is impossible to quantify the errors that may pension plan: Almost 2 in r 10 re esult from port the them y are . Question much less $100,0 likely than 00–$1 younger worker 49,999 1995 58 s to think 8 7 they need to accumNA ulat7 9 e less than $100,000 for retirem 48 11 ent, while those 8 • Workers slo 2004 w to see or adapt t The addition of the phra o 18 a changing U.S. retirement syst se “and/or your spou 39 se” to the question wording for married em: 26 The 17 annual 11 wave of the research and education on economic security and Shifting2006 24 increase receive full Social Security retirement benefits without mone and is higher am y from one account or ong workers participating in EBRI’s work advances knowledge and unders investmen44 t a retirement savings plan a reduction f17 or early tanding of emplo retire at work than 14 ment. Half of workers yee benefits and their among rates. Few money to cover basic expe er than 2 in 10 workers say nses (40 percent in they would 2007, be very up from likely 35 percent in 2006) to save more knowing that pe (Figure 23). ople in their increases alo retirement. Those with a b Uncertai ng with the li n who pays kelihood of having m achelors’ degree are oney esp sav ecially ed for retirem likel 3 y to t ent; an individual retir ake this factor into account em 1 ent account . Deere & Company (Expecte Russell Investm d) ent Group (Actual) lifestyle in retirement if it looks like savings. At the sa for All Ages................................................................................................................... me time, public-sector workers are depending on pension income more ofte ................... n than those in 12 respondents st Look for these special features: arting in 1999 is responsible for approximately 4 to 5 percentage points wording and individual que $150,0 confident tha00–$249,999 n the1994 57 y were five y stion sa7 ears ago ( mple size ar 18 1 e avail percent), able on requeNA while 9 10 9 12 more than one-quarter are a st. 52 little less confident • Many workers are counting on employer-provided benefits in retirement that are increasingly under age 35 Retirement Confidence Sur are mo 2003 re apt than older wor veyk (RCS) su 27 ers to belie ggests that ve they 36 will American workers need $1 million or m 22 may be sl ore. Similarly ow to recogni 11 , ze how 2005 25 to another online importance to 40 the nation’s econo 23% my17 among policy 20% makers, the news 1517 % media, and 40 the public. It % nonparticipan believe they will be eligibl ts. On the other hand, wor e for unreduced benefits sooner than the kers with less than $35,000 y in ho actually usehold will (51 percent) income (com . Three in 10 pared with age group had about a 25 percent chance of living to age 90 (if male) or 92 (if female). More than one-third No 53 Retirees tend to express higher levels of confidence than workers about each of these financial57 aspects of (IRA) opened with m Much lower than befo Although individual worke oney of the increase re saved outside an em you retire rs bm etween 1998 d ay signifi ploy cantly and 1999. er’s underest retirement plan; and savings in additi 20% imate how long they will spend in retir 20% on to those ement, it you might use up all your savings employ ee benefits. Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., the private sector—also not surprising, given the higher level of defined benefit pension sponsorship in the $250,000–$499,999 7 1 4 12 11 5 Diversified Investm (27 percent). The RCS was co-sponsored Twenty 2002 -eight percent say ent Advisors b does this b y the Em 27 yplo their c conducting yee Benefit onfiden and p ce is unchanged and 16 Research Institute (EBRI), a private, non ublishing policy re 31 Segal Compsear any 30 ch, analysis, percent indicate their and special reports on 8 profit, women are unavailable. more likely Only 41 than mpercent of workers indicate en to think they will need savings of they or their sp less than $100,000, but less likely ouse currently have a defined to Using calculators online 2004 24 the U.S. retire to m assist you wit ent system is changing, h44 and those who are awar 18 e of these changes 13 may not be Figure 11, Planned and Actual Retirement Age ..................................................................................... 12 incorrectly think they will be eligible for unreduced benefits at age 65 (30 percent of all workers), and 2 in 10 higher-income workers) or less than $25,000 in assets (compared with higher-asset workers) are more likely say this inf Don’t kno orm w ation would make them somewhat likely to save m 5 ore (36 percent), while nearly half indicate 0 retirement. Nearly A little lower Regardless of Worker 1994–2007 R whether so half of c etirement Confiden urrent retirees are me workers are underestimat 47 ce Surve % vey ry s. confident about 37 34 ing the cost of health care i % having eno 10% ugh money n retirem 24 4% to pa ent, many y for basic 1% earmarked for retire appears that workers, on average, have reasonable ex ment. Similarly, the tendency to perform pectations about the leng a retirement savings needs calc th of their retirement. The ulation increases • EBRI’s entire library of research publications starts at $500,000 or more 7 4 4 9 17 9 public sector. In addition, lower-inco employee benef me workers are its issues; holding educational br more likely than those with higher hous iefings for EBRI members, congressional and ehold income to nonpartisan public polic confidence has increas What we do a 2001 y resear ed (Figure 1). ch organization; and 28 Mathew Greenwald & Associates, Inc., a Washington, 38 20 7 financial decisions, such as how much to think the2003 21 benefit pension plan, y will need at least $1 m yet 62 percent say illion. 45 Those who EBRI’ they are do not expect to receive defined benefit (pension) s ovexpecting to receive incom erall goal is to pr 17 omote soundly con- 16 e from such a plan in adapting to them in ways that are likely to secure them a comfortable retirement. Source: Employee Benefit Resea The addition of t rch In he phra stitute an se “and/o d Mathew r your spou Green se” to wald & Asso the question wording for married responde ciates, Inc., 2007 Retirement Confiden nts ce Survey. think t to report fin hey wil dil be eligible even before age 65 (21 ng advice from family and a friends m pe ost helpful in m rcent). Two in aking t 10 workers say the heir retirement savings and y do not know when Financial Engines About the same 34 Society for Human Resource Managem 42 ent they would Retire bee 35 not too (25 percent) or not at all (20 percent) likely35 to save mo11 re. Workers m14 ore likely to 5 with confidence, and retire workers appear to be giving these costs so typical RCS worker expects to retire at age 65 and spe ment savings goals also te me considera nd to rise with nd 20 tion when thinking about how years in retire confidence. Perhaps so ment. One-quarter expect to be mu m ch they e of the will need to Source: Employee Benefit Research Institute an federal agen d Mathew cy staff, and th Greenwald & Asso e news media; ciates and sponsoring public opinion survey , Inc., 2007 Retirement Confidence Surve s on emplo y. yee Figure 12, Calculated Life Expectancy for Workers, by Gender.......................................................... 13 say that their largest share 2000 will come fro 26 m Social Securit 33 y or employment. 27 9 the main Web page. Click on EBRI Issue Briefs and DC-based 2002 23 save, how market resear much you can afford starting in 199 ch firm 9 is re . The 2007 RCS data co spon to borrow sible for 47 , approximately 4 llection was funded by grants fro to 5 percentage 19 points of the in10 crease bet m 30 organizations ween retirement. Likewise, workers are as likely to expect (41 percent) as retirees are to receive (43 per- income are more likely than those who do to say they will need at least $1 million. Among those with You they will be eligible to receive full invest A little higher (or your me s nt decisions. pouse) are benefits from Social Security 8 (20 percent). (In reality, the 7 Social Security increase their • Half of workers less confi savings based on tbenefit issues. his infor dent about mation include EBRI’s Ed pension benefits: Figure 23 Figure 1 uc wo ation and Re men (com The RCS finds pension- sear par che F d with men) and those under age und (EBRI-ERF) performs plan changes b the charitable y , accu Overall, the am mulate for retire ount that workers think t ment. Those who ceived emplo have obtained hey need yee benefit programs. EBRI does not to a investment a ccumulate for a co dvice from m a fortable retirement appears to professional financial advisor increased pre retired for 20–24 paration am years (24 percent), 1 in 10 thi ong the more-confident workers is nk they will due to be retired for 25–29 the fact that theyyears (11 percent), and are generally more likely 1998 and 199 1999 9. 17 34 33 12 Genworth Financial which A m loan ajority you shou of workers expect to work fo ld choose, etc. r pay in 22 retirement to suppl State Street Corp. 31 ement their inco 12 me. In 200 32 7, two- 2001 22 41 18 17 and Charter Partners with the American Savings Educ EBRI Notes for our in-depth and nonpartisan periodicals. ation Council (ASEC) (see next page), with staff time household cent) retiree h income of $50, ealth insurance throug 000 or more, workers who do a retirem h an employer even tho ent needs calculation are more likel ugh the number of employers offering y than Workers expecting benefits from a defined benefit plan are more apt than those not expecting such Figure 13, Worker and Retiree Estimated Likelihood of Living Until Specific Ages............................ 14 norm Much high knowledgeab al retire er than befo m le abo ent age vari ut inves re yo es fro tments u retire educa m tiona age 6 d l, and 5 to age 67, by scientific functiy ons of the Instit ear of birth.) 2 ute. EBRI-ERF is a tax-ex 6 empt organization 45 (com be rather low (Figure 9). O pared employ with older w ers have left nearly Worker Co orkers). The likelihoo ne-quarter of workers say half of workers less c nfidence in Financial Aspects of Retirement d of acting on this inform they onfident about the need to save less than ation also increas benefits they $250,000, and another 2 will receive f es as current rom in a are less likely than those w Change in Worker Co ho have not t nfidence Regarding Benefits From Traditional Pension, o report they will need less than $50,000 and more likely to say they Tabl than less-confident workers to participat 17 percent thi e of Contents nk the 1998 y will l ive in retirement for 30 e in an em 19 ployment-based r years 34 or more. At the sam etirement plan. 31 e time, 7 percent 11 think they will Three in 10 workers report they have sought investment advice from a professional financial advisor Obta2000 25 ining information about financial prod47 ucts 18 10 thirds of workers say they expect to work for pay after they retire (66 percent). While the 2007 RCS did not donated by EBRI and Greenwald. RCS materi lobby or endorse specific appr als may be accessed at the EBRI Web site: oaches. Rather ww , it pro- w.ebri.org/rcs those who do Source: this benefit to future Employee Benefit Resea not to estimate that the retirees is declining. rsupported b ch Institute an y need higher am y co d Mathew ntributions Green and g ounts. wald & Asso rants. ciates, Inc., 2007 Retirement Confidence Survey. benefits to think the y will have retiree health coverage. Others who more often say they will receive this Hewitt and investment strategies Towers Perrin Only 18 percent of workers are able to give the correct age at which they will be eligible for full Very traditional pension plan, but that those experiencing a Somewhat decline in retiremNot Too ent benefits often fail to react Not at All health status im 10 mention a goal of $ proves. 250,000–$499,999 (18 percent). Two in 10 think they need to save $500,000– live less than 10 will need $75,000 Workers who are These findings are si 1997 yby Expectation of Receiving Benefits From Traditional Pension ears in retirem or m momilar t st con ore. In additi fident about t o som ent, 22 percent think t e other on, 14 workers, on av hesti eir financial secu mates of h Am erage, provi ey 34 will eri rity can household assets. Quantifiable data fro in ret live de higher estimates of the am 10–19 ireme33 y nt also t ears, and 19 end to expect percent say 9 to get the ount needed theym do Figure 14, within the pa Retirem st year (29 ent Educational Materials Used and percent). The propensity to have consulted a professional advisor increase Found Most Helpful, Among Workers Saving s as 1999 22 online 47 20 34 21 14 30 9 ask about reasons for working in retirement, the 2004 • To get answers to many frequently asked questions about RCS documented that all but 3 in 10 workers expecting Worker 23 43 18 14 2 type of coverage include workers e Introduction................................................................................................................... mployed in the public sector (compared with private-secto .................... r workers), 4 • More than half of workers indicate they would be likely to take advantage of professional investment retirement benefits, and 9 percent be vides balanced analysis of alternativ lieve they Confid will be eligible later than the ent Confident y actuall es based on the Confidy ent will be. The Confident Source: Employee Benefit Resea constructively. Moreover, alt rch Institute an hough Americans will r d Mathew Green wald & Asso ely ciate increasingly on s, Inc., 19 Expe 97ct Benef -2007 401( Retirement Co its From k) retirement savings nfidence Surveys. $999,999 (20 percent), while 1 in 10 each believe than do retirees. they need to save $1 million–$1.9 million (11 percent) or Purchasin the 200 mo1998 22 st out of re not know how long the 4 Sur g fin vancial pro tire ey of Consu ment. Workers who are ducts online m y er Finances (conducted b will live. 45 very confident that the y10 the U.S. Fe18 y w deral Reserve Board) foun ill 19 have enough m13 21 oney to l d the m ive 49 edian household inc IBM for Retirem ome, financial assets, or ed ent................................................................................................................. ucation increase and is higher am Vanguard Group ong those participating in a .................. 15 EBRI Issue Brief is a periodical providing expert evaluations of employee benefit issues and to work for married to have set pay in retire money me n aside. Other groups of t identified at least one wo financial rkers mm ore likely to have s otive for doing so. aved for retirem However, only ent include 37 percent employee bene? ts, click on Bene? t FAQs. Retiree 21 39 18 19 4 those plannin Retire The Retirement S ment Age g to retire at age 65 or ystem in Transition befo............................................................................................ re (compared with those pl 3 anning to retire later), those under age 5 ...5 5 percentage respondin advice offered b Having enough mon y g com correy to take ectly panies that is uncha ma nged from nage em pl when oyer-sponsored retir the question was first asked in 20 ement plans (54 percent). 00. Another Traditional Pension? $2 million or plans and oth more (8 percent). The am er personal savings and i ount te nnds t vestments to o increase as household income increases. fund their retirement security, data suggest that Obta (midpoint) le1997 24 ining One reason people may advvel of household assets of Am ice from financial pro un trends, as well fderestimate the am essionals 41 eri as cr cans is itical analy ount of $172,900. ses of m19 emplo oney This includes the value of the primary y needed to cover he ee benefit policies an15 d proposals. alth-related costs is that EBRI Notes is a com fortably Workers planning t throughout the oir retirem retire at earlier ages tend to exp ent years are more likely ect the than t yhose who are less confident to plan t will spend longer in retirement than those o retirement savings plan (compared with nonparticipants). facts. Through its activities, EBRI is able to fulfill its of current retirees (up fro those age 45 and older (com m 27 percent in 2006) report pared with younger workers) having actually worked for pay at som , workers currently participating in a e t work-place ime during Peop le don’t need to be sophisticated Informatio Workers under age 45 are m n Sources for Retirement Planning ore likely than older workers to say their spending in retirement will be Employer-Provided Retirement Plans............................................................................................. Figure 25 ............ 5 (co m Figure 15, The age at which workers say pared with older work care of Standard of Living in basic expe ers), those who have saved nses the Fi yrst Fi plan ve Years of Retirement to retire has slowly crept u for retirement ........................................................... (co pward, from mpared with nonsavers), and those a midpoint of 62 in 19 15 96 However, two-thirds of these workers say they would probably implement only some of the Endnotes consistent finding is t A hat knowledge periodical providing curr increases sharplll Wor ent ke y am inrs formation ong workers age 55 and ol on a varietyYes of employder, who are ee benefit toNo pics. moEBRI’s re than onlin Source:e 9 Employee Benefit Resea many may not follow profe rch Institute an ssional investment advice d Mathew Greenwald & Asso when it is off ciate25 s, Inc., 19 e97 red to them -200724 Retirement . 42 hom retire before who plan to many e, which worker age 65 and le had a median value of $1 re s do not tire at older ages. Men and women pr think the ss likelyy t will ever need long-te o expect that they w 60,000 for those who owned a ovide roughl ill work for rm nursing care. Alm pay after they retire. At the same ti y hom similar esti e. ost 2 in 10 wor mates of the length of tim kers state they me,e are their retirem retirement savings plan (c ent. Again, th om e 2007 RCS pared with those not • EBRI’ did not ask about retirees’ s reliable health and retirement surveys are just a participating), workers havi reasons for working i ng attempn ted a retirement retirement; investors to manage their savings 1 higher than Retiree Health pre-retirement Insurance and less likely to sa ....................................................................................................... y their spending will be about the same. Although those ...................... 6 Confidence Su 2007 rveys. Confidence That Medicare Will Continue to Provide Benefits of 40% 42% 11% 7% with incom Source: to age 65 i Employee Benefit Resea ne 2006 and 2007. About of at least $35,000 (c rch Institute an Pension Investment Report om 4 in mission to adv pared with lower-income wor d 10 workers pl Mathew Greenwald & Asso an ance the public prto retire before reaching age 65, 17 pe ovides det ciate ail sk ,ed fi Inc., 20 ers). nanci ’s, the media 07 Retire al information on th ment Confiden ’s, and e univ cercent say Surve erse of defin y. thee yd reco Much less co mmendatnfident ions they receive (66 percent) and 1 in 18% 10 think the 12% y would implement none of 29% them In the twice as likely as youn O On average, A RCS, t ur he term m eri retiree can wo ger workers to respond correctly. refers rkers spent 19 hours—e to an individual who is quivalent to about two and retired or who is age 65 or oldone-half business day er and not employed fulsl— time. not at all likely to need long-term care at some point i Figure 9 n their lives (17 percent). Another 3 in 10 say they are very Figure 16, they will spend in retirement, but wom confident workers are Post-Retirement vs more likely . Pre-Retirem than those who en plan to reti ent Spending are less con re slightl ...................................................................... y lat fident to look forward to a retire er than men. Half of both men and women ment 16 in r •etirem Many workers counting on benefits that won’t be there: ent Many workers are c ounting on em ployer- nevertheless, savings needs calculation (co the 2006 RCS found that mpared with those who while those who have worked m not), ano d those who e st often said xpect to retire at age 65 or they wanted to stay active Older workers tend to report higher am Managing Savings in Retirement................................................................................................. ounts of assets. While nearly 7 in 10 workers under age 35 have ............... 6 describing their health as 2006 excellent, very benefit, defin click away through the topic boxes at the top of the page. good ed contribution , or go35 od are , and 401(k) plans. more likely 47 than those EBRI Fundamentals of Employe describing it 9 as fair e or 9 Benefit poor will retire before age 60, and 21 percent plan to retire at Least Equal Value to Benefits Received by Retirees Today between the ages of 60 and 64. More than one-quarter Worker re A little less co fers to any indinfident vidual who is not defined as a ret 27 iree, regardless of empl 31 oyment status. 22 planning for retire The Social Security Adm (11 percent). ment last year. This was inistration has mailed indi ASEC Charter Partners more than the average of 11 hours spent planning for vacations vidual benefit statements to the U.S. population not too likely to need such care (30 perc Amount of Savings American Workers Think ent) and 4 in 10 say it is somewhat likely (39 percent). Only 1 in 10 standard of li providing this inform ving that is ation comfortable expect to live until at least policymakers or well off. ’ kno age 83 (m wledge and understanding of em- en) or 85 (women), and one-quarter expect to Worker 23 provided benefits in retirement that are increasingly39 unavailable. Only 41 22 percent of workers indicate 15 2 and involved (96 percent) or enjoy Programs ed w offers a straigh orking (79 per tforward, basic explan cent), more than 6 in 10 also identified ation of employee benefit progr at least one ams in the total savings earlier (co Eligibility Age and investm mpared with those who expec for Social Sec ents of less than $25,000 (6 urity............................................................................................ t to retire la 8 percent vs. ter). Workers say 42 percent of ing they older workers), 3 in consulted a professional .................. 7 10 2005 35 42 11 11 to say Expectations About Income and Spending in Retirement their spending will be lower in retirement, 41 percent of those in fair or poor health expect their Figure 17, Largest Expected and Actual Sources of Inco Ju Very st as confident 28 Somewhat me in Retirem 34 ent Not Too ........................................... No 18 t at All 17 of workers say they will retire at age 65 (27 percent), while one-quarter intend to retire at age 66 or even later Managing Savings in Retirement 2 and equal to t annuall publications y for t he am he past eight ount of time workers years, specifying in spent plannin dividg u al for the h s’ normo al retirem lidays (19 h ent age and estimating their annual ours). Workers who have done • One-quarter of workers (24 percent) and more than one-third of retirees (35 percent) report they have live until at le think it Nevertheless,Retire is vere 24 yast age 90 (Figure 12). there is considerable room likely that tThey Need for Retirem hey will need long-term According to for improvement in prepari nursing car the ent, by Household Income 2006 OASDI Trustees Rep36 e at some point in ng for retirement am26 their lives (10 percent). ort, a 65-y10 ong at least ear-old man 4 The question wordi The likelihood of being comfortable doing each of ng did not specify private and public sectors. a cost in specific dollars for the EBR these activities I Databook o service. online is strongly n Employee Benefits related to age and is a statistical reference Investm they or their s ent Advice .............................................................................................................. pouse currently have a defined benefit pension plan, yet 62 percent say ........................ they7 are financial reason for financial advisor for investment advice i 2002 having worked (63 • Instantly get e-mail noti? pn e the past rcent). 38 year are also m46 o rcations of the latest EBRI data, e likely than those who did not consult an 10 6 workers age 55 and older cite assets of $250,000 or more (28 percent vs. 11 percent of younger workers). AARP expenses to be lower. Moreover, it appears that Perhaps beca A little more confident use they are alreadyplo living Confid yee benefits and their impor in retire ent antici 10 men pated spending am Confid t, retirees ar ent e considerably ong workers is unrelated to 13 Confid tance to our nation ent more likely Confid 5 than workers ent ’s (24 percent). Retirement Spending Although the retirement age of the typical retiree has increased from 60 in 1996 to 62 i 6 n 2006 Social Security benefits. However, As defined benefit pension plans become less ava more than 2 in ilabl 10 workers do not reme e, personal savings and invest mber receiving a state ments will beco ment in the me a retirement needs calculation (compared with those who have not) or are participating in a retirement volume on employee benefit programs and work force related issues. You Retirees resp (and long-term your spouse) ond sim care insurance (separat aren ilarly ’t likely . Studies have to e fro found that 30–40 m health insurance, Medicare, percent of those reaching age 65 wil and Medicaid) to help l use nursing pay for som Figure 18, toda e of those who say y can expect to live unt Likelihood of they are Workers Purchasing an Annuit il age 81, whi very confident. One-quarter of le a 65-year-old wom y ..................................................................... very an can expect to li confident workers are not currently ve until age 84. 17 falls sharply 3 as age increases. It increases as household income or education increases. Men, more often Preparing—or Not—for Retirement expecting to receive inco 1997 me fro ................................................................................................ m such a plan in re 43 tirement. Likewise, workers ar 41 10 e as likely .8 6 to expect As one advisor to report the might suspect, total savings and i y are currently saving for retirement. nvestments increase sharpl y with household income and with Much more confident surveys, publications, and meetings and seminars by 5 7 3 expectations about receiving em Brian K. Bucks, Arthur 2007 B. Kennickell, and Kevi ployer-pr 6% ovided health insurance in retirem n B. Moore, “Recent 30% ChangesHou in sehold U.S. ent. 33% In Family Financcome 28% es: Evidence to be confident that they will have enough money to live comfortably throughout their retirement years. Four and 2007, a gap remains between worker 8 expectations and the experience of current retirees (Figure 11). an increasingly im When workers envision the portant component of retirement funding ir standard of living in retir . It will ement, be critical for retirees to most see themselves comfortable manage their or well savings plan past year (22 at work (compared with no percent). Larger shares of those under nparticipants) ara e espe ge 35 than ol cially likely der workers say to report having spent 10 or m they did not receive a ore Fidelity Investments live lo care they ng enou m gh ig to h use t need in a nursing hom up all of economy e, .assisted living facility, or at home. Estimates of private home care before they die. than wom saving for ret Saving f Doin en, o irem say r g a goo Reti the ent (24 percent), 43 percent have less rem y are com de job of prep nt.......................................................................................................... fortable sh aring for ifting money or purchasing than $50,000 financial pro in savings, 38 percent do ducts online. ....................... not have an 8 as retirees are to receive retiree health insurance through an employer, even though the number of education. W Never expe orkers who h cted ben2006 5 ave done a retirem efits ent savin 6 gs needs calculation (com 29 1 36 pared with tho 16 28 se who have from Total the 2001 and 2004 Survey of Consumer Finances,” Fed<$3 era5,000 l Reserve Bu$35,00 lletin, V0–$ ol. 974, 2 000 (February 20$75,00 06): A1–0+ A38. in 10 retirees are Figure 19, Agreem very confident (41 ent With Statem percent), and one- ents About Riskthird are ............................................................................... somewhat confident (38 percent). Retiree 18 Contact EBRI clicking on the Sign Up for Updates box at the top of our Publications, (202) 659-0670; fax publication orders to (202) 775-6312. off. Half expect their stan Roughly 4 in 10 workers (45 percent) and retirees (41 dard of living in the first fi ve years of re percent) report other savings or investments in tirement will be comfortable (52 percent) nest egg so that it produces income throughout their retirement. However, workers tend to think of the hours on benefit statement. The likelihood of r your savings Many the t retirees are facing financial pressur ask of planning for retirement. eporting t es. Four in hey did not receive a statement 10 say they are now much more in the past (13 percent) or year goes up as Managing Risk Workers with a college degree are long-term care insurance policy use sho more l w ikely than that 10 per those with less education to cent of Americans age 65 and ol think the der had y will private need IRA opened with m Retirem retire ent Savi ment oney ngs Nee saved outside ds ....................................................................................................... of an employer’s retirement plan, and 37 percent have not d ................. 10 one a Don’t kno employw ers offering this benefit to future retirees is de 5 clining. 3 7 Less than $250,000 2005 7 26% InCharge Education Foundation 43% 30 28% 33 28 13% not) tend to have higher levels of saving Subscriptions to s. In additi S EBRI ince its inception, EBRI’ Issue Bri on, workers who have saved for retire efs are included as part of s membership has EBRI membership, or as part of ment report much a 4 confidence has also remained relatively stable over the past few y Figure 12 ears (Figure 22). addition to the money they have set aside for retirement (Figure 6). Nevertheless, one-quarter of workers and and 6 percent think they will be well off. home page. However, one-third think t Figure 11 heir standard of living will be merely decision about how m No household inc assuWorker mptions ho ame or education goes down. Others m ve bu een mad ch money e abo to withdraw each year ut wage gr17 owth when calcu fro ore m lating 30 likely their th savings and invest to state they e multiples. 24 Th did not receive a benefit erefo m re, th ents as ey are m 23 a balancing ore 6 somewhat more (27 percent) concerned about their financial future than they were right after they retired. Retirement Age......................................................................................................................................... 12 long-term Figure 20, Lifetime In long-term 2007 nursing care. In addition, Savings Needed to Cover the come care insurance in 200 m 2, sug enCost of are gesting mo Health Care, by Total Accu re apt 26 that m than wom any are countin e45 n to indicate they are g on co mulation Needs verage they 15 not at do .............. al not l likel 13 19 y to retirement needs calculatio Source: Employee Benefit Research n. In addition, 14 percent Institute and Mathew of those offered a retirement savings pla Greenwald & Associates, Inc., 2007 Retirement Con n by fiden th ce Surve eir y. Workers use a wide variet2004 6 y of sources for inform $199 annual subscription to ation when m EBRI Notes 31 a and aki EBR ng retirement savings and invest I Issue Brie35 fs. Individual cop26 ies are av mail ent able $250,000–$499,999 18 14 24 14 higher levels of savings and investments than those who say they have not set money aside for retirement. • Many workers unlikely to heed investment advice even if they get it: More than half of workers Calculated Life Expectancy for Workers, by Gender retirees indicate they Retiree have no savings at ING Direct Kids Foundation all (25 per 24 cent of workers and 24 percent of retirees). Am 30 13 16 ong both 16 mean act. Three-quarters say adequate ingful fo (32 r work percent), while 1 in 10 expect to ers ap the proach y will tr ing retiremen Planned and Actual Retirement Ag y to strike a balance between t than for struggl younge er work (10 percent). These worker expectatio ers. making t he eir savings last as long as possibl ns appear e The 2007 RCS did not explore reasons f statement are those not saving for retirement (com gro own to r r this increased eprp esent a cr are concern, but retirees in the 2006 RCS m d with savers) and those who have n oss section of pension funds; ot d oone a savings st often Length of 2006 Retirement........................................................................................................... 25 50 14 ..................... 13 12 Preparing—or Not—for Retirement actually have. need such car Few workers e. appear interested in obtaini with prepayment for $25 each (fo ng lifetime g r printed cop uaranteed income by ies) or for $7.50 (as an e-m purchasing an annuity or ailed electronic file) decisions. Depending employer are not contri2003 5 on t buti hng. e specific source, this means that many34 may be using 36 unprofessional or unreliable 25 $500,0 Orders/ 00–$999,999 20 13 23 26 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2007 Retirement Confidence Survey. Figure 21, indicate they Worker Confide Men would be like nce in Having Eno ly to take advantage of professional invest ugh M Figure 22 oney to Live Comfortably m T ent advice hrougWom houten offered by Their Workers Retirees si groups, t milar to the experiences r he likelihood of having no savings decreases eported by retirees (Figure 15). as household income increases, education increases, or 5 and m Inform aintaini ation Sources ng their standard of living for Retirement Planning during the fir .................................................................................... st few years of retirement (74 percent). Al ...... mo14 st 2 in 10 mentioned th needs calcula 2005 at this was due to higher-th tion (compared with t by calling EBRI or from hose an-expected ge who have do 26 www. neral expenses or inflation ne a calculation). ebri.org. Change of Address: 46 (48 percent). EB12 RI, 2121 K Street, NW, Suite Fewer cite 16 Some Americans Workers who do not expect to receive re 2002 5 may also underestimate the am tirement in ount of come fro28 money m a de needed for retiree health expenses due to fined benefit 40 pension plan 26 (compared Jack choosing an a $1 million–$1.49 million VanDerhei, “Meas nnuityuri opti ng Retirem on froment Incom a retirement plan. Onl 7 e Adequacy: Calcu MetLif 5 y 1 i e latin n 1g0 Realistic In say they are 8 come Rep very likely lacem to purchase a ent Rates,” 10 EBRI information in developing their plan for There’ retirement. s lots more! More than 7 in 10 workers saving for retirement use • Three-quarters of workers say businesses; trade associations; labor unions; health car that when it comes to withdrawing money from their savings and e Retirement Years 75% expe ............................................................................................................... ct to live until age: 78 80 ............... 20 companies that Retirement A Retiree Co manage employ ge nfidence in Having Enough Money er-sponsored retirem (Planned) ent plans. However, two-thirds of these workers (Actual to Live ) Saving for Retire health status improves. ment 2002 600, Washington, DC 20037, (202) 659-0670; 23 49 fax number, (202) 775-6 18 312; e-mail: 10 unexpected or rising m sayExpectations About Incom they will strive to make their savings last as long edical expenses ( e and Spendi 13 percent), ng in Retirement not saving enough m as possible, even if it m .............................................................. oney ean (8s their standard of livi percent), underesti 15 m ating ng 2001 7 32 31 26 Issue Retirement Savings Needs a $1.5 million–$1.9 million with those who d financial product or select a retiremen Brief mistaken belief that the no. 297, Seo pt ) and t ember 20 h yose not savin have private coverage for 06. 3 t plan option that g for retirement (c long-term 2 will pay the ompar care. One-quarter of workers (24 percent) and ed with savers) a m guaranteed 2 re incom more likel e for li y to report they 7 fe when they Confidence in Entitlement Progra written subscriptions m investm aterial received at work (73 ents in retirem ent, they will tr percent). R ms y tooughly strike a balance between 6 in 10 savers have making their savings last as long consulted a financial 50% expect to live until age: 83 85 say the Before 55 y would probably Publications Subscr V im isit EBRI on-line today: www pleNationwide Financia ment only som iptions@ebr 7% e of th i.org. e reco Membe l Services mmenda rship Information: tions the 14% .ebri.org y receive and 1 in Inquiries regarding EBRI 10 think Investmen Retirem 1997 ent tSpendi Advice ng............................................................................................................ Comfortabl pry Throughout Their Retirement Years oviders and insur 31 ers; government organizations; and 43 14 ..................... 15 11 slowly declines (18 percent). Just 3 percent state they Figure 15 will maintain their standard of living, even if it means Social Security or pension benefits (6 percent), misjudging how long their savings would last (5 percent), or $2 million or more Higher-income workers 2000 6 are more likel 8 y than those with 6 29 lower income to agree that 3 38 they can cut back on 27 16 Figure 22, Although the Retiree Confidence in Having Eno majority of Americans appear to be pe ugh Morsuaded about t ney to Live Com he need to set aside fortably Throughout money Their to prepare 6 m retire (11 percent). Another 4 in 10 say the have One reason f ore one-third of retirees (35 percent) report the much less or the m confidence in the am odest totals of savings and inv ount of benefits t y will be y ha est somewhat ve long-term hey me will receive. Lower-inco nts may likely care insurance be that the maj to do so (39 percent). o (separat rity me worker of workers have e from It is worth no s are health more ting professional (64 percent) or family, friends, or co-workers (62 percent). Six in 10 have referenced retirement Although confidence about both Social Security as possible and maintaining their standard of livi and ng ( Medicare has increased over the past 10 74 percent). Most will use relatively si years, mple 25% expect to live until ag membership and/or contributions to EBRI-ERF e: 90 should be directed to EBRI President/ASEC 90 2006 OASDI Trustees Report, Assumptions and Methods Underlying Actuarial Estimates, 55–59 10 a 21 Very Ha they would i ving enough mon mplement no ey to take ne of them Somewhat . Not Too Not at All Sources In 2006, Congress enact of Retirement Incom ed a law allowi e................................................................................................... ng companies that manage employer-sponsored retirement plans ............... 16 they eventually run out of m1999 7 Standard of Living in First Five Years of Retirement oney. Retirees report similar goals (24 Figure 3). 38 30 invest Don’t kno ments not doing as well as expecte w/Don’t remember 18 d (3 percent). 16 13 13 for retirem their lifesty Retirement Years ent, the 20 le and are knowledgeable about investm 07 RC ............................................................................................................... S finds a slight decline in t Prudential R enth s. Others e proport etirem ion ment o of workers say re apt to consider themselv ing they and/or their ............... es 20 not calculated how m insurance, Medicare, and Medicaid) to help pa likely than those with higher uch they need to save for retire income to say they y for c are ment less are (Figure 8) they confident, while higher-income workers are might need in a nursing hom . Only 43 percent of workers report the e, assisted living more y that this question illustrates how the wor service firms, including actuarial firms, emplo ding of a question can affect responses: The likelihood of purchase yee concern abou plan benefit statements (61 percent) t the future of both Chairman Dallas progra , and approxim ms is high. F Salisbur ately half have us e ywer than 1 in 10 wor at the above addred ess, ( inform 202) 659-0670; kers say ation found over the Internet the e-mail: salisbur y are very confident y@ebri.org strategies to do this, taking 10% expect to live until ag what they e: need to cover their expenses (36 percent) or 95 95 leaving their www.ssa.gov/OAC60–6 T/TR1 10 /TR06/V_demographic.html#wp172303 7 care of mediConfid cal exp ent enses Confident Confident Confident Managing Risk................................................................................................................................17 Source: (such as 401(k) plans) to Employee Benefit Resea offer invest rch Institute an me d nt advice to Mathew Greene w m ald & Asso ployees. Two in 10 workers state they would ciates, Inc., 2007 Retirement Confidence Surveybe . very 1998 4 24 34 36 • Americans overestimate long-term care coverage: One-quarter of workers and more than one-third knowledgeab le about investments are retirement savers (compared with nonsavers) and retirement savings spouses have saved money for retirement (66 percent, down from 70 percent in 2006) (Figure 5). While the and/or their s facility aapt to say their confidence is unchanged. appears to be lower when the word “annuit , orpouse have tr at hom Source: e. Estimates of private long-term Employee Benefit Resea ied to calculate how m rch In y” is incl ustitute an ch m care insurance uded in the oney d Ma the thew y will need to have saved by Green question, as opp polic wald & Asso y use show that 10 ciate osed to the phase “inco s, Inc., 20 07 Retire the time they percent of ment me (52 percent) or in newspapers or magazines (49 percent). Fewer report having used information from that the Social Security savings unto Wo uched for as long as possibl system will continue to provi e (31 percent). rkerde benefits of at least equal s Retirees value to the benefits 62–64 11 25 2 7 11% of respond 2007 ents did not report their incom State Farm e. They are in I20 46 18 14 clude nsurance Co d in the total colu mpanies mn but not in the income groups. Figure 23, 2007 Worker Confide 41% nce in Financial Aspects of Retirement 38% 10% ....................................................... 11% 21 Lifetime Income................................................................................................................ benefit consulting firms, law firms, accounting firms, Figure 3 ........................ 17 Editorial Board: Dallas L. Salisbury, publisher; Steve Blakely, 1997 3 editor Figure 6 . Any views expr21 essed in this p37 ublication and those o34 f the authors should See Pa likely ul Fronstin, “Sa to take advantage of vings Neesuch a servic ded to Fund Health e if it In were av surance a ailable at a nd Health Care modest cost (19 percent). Expenses in Retiremen More than one- t.” EBRI Issue Confidence Survey. of retirees report they have long-term care insurance (separate from health insurance, Medicare, and plan participants (compared with nonparticipants). Larger shares of women than men agree they can cut proportion of workers having saved for retirement increased from 1994–2000, it declined significantly in retire so that they Am each ericans ag Some worker month for the rest of e 65 and o can li s appear to be expecting to ve com lder had private l your life”—which is what an incom fortably in retiremen ong-term (Exp rely ecte t. This proporti on em care d) insurance in 2002 ployer-provided e ann on increased from u(Actual ity pr benefits they , suggest ovides ) (Figure 18). 1994–2000, ing that m are unlikely any are counting declined in to receive. television or radio (32 65 27 percent), computer software (28 percent), seminars (21 percent), or online professional 13 received by retirees today a (7 percent), and one-quarter are somewhat confident (24 percent). At the same not be2006 ascribed to the officers, 2006 40 trustees, members, or other sponsors of the E33 12 13 19 42 20 17 mployee Benefit Research Institute, the EBRI Education and Sources of Retirement Income • Health E Despite the longstanding increase in the eligibilit xpenses................................................................................................................ y age for Social Security, onl ........................ y a small minority of 18 Life expecta 2007 Goals When Withdrawing Savings in Retirement ncy for workers i15 s calculated by adding 44 expected age at retirement a 22 nd expected length 13 of Brief third report t no. 295 (Emh pey loyee Ben would be efit Research somewhat In likely to take advantage of the service (35 percent), while stitu 9 Americans With Savings te, July 2006). Medicaid) to help pay for care they might need in a nursing home, assisted living facility, or at home. 2001 and remained fairly back on their Figure 24, Confidence That Social Security Will Continue spending an c d onstant that people d from and investment management firms. 2001–2006. o not need to In contrast, the be sophisticated investors to m to Provide Benefits of proportion of retirees having saved for at Least Equal Value anage their savings, 2001 on coverage t Workers are , and has rem as likely hey ained statistically Well off do not actuall to expect that y unc have. they will receive r hanged since that time. 6% etirement income 8% from a defined benefit pension plan Research Fund, or66 and ol their staffs. Nothin der g herein is to be construed as an attem 24 pt to aid or hinder the adoption 15 of any pending legislation, regulation, time, two-thirds are advice services (19 percent) to help with these decisi not too (34 percent) or not at all (34 percent) confident that future Social Security ons (Figure 14). 2005 40 2005 retirement for workers providing both piece40 20 38 21 20 s of information. 12 7 Retirement Confidence workers are a 2006 ware of the a .......................................................................................................... ge at which they 12 can r Figure 18 eceive full retirement benefits 50 26 from Social ......... 10 20 Security Workers Retirees Workers Retirees 8 approximately 2 in 10 each would be not too (21 percent) or not at all (22 percent) likely. Workers more or interpretative But onl rule, or as y 10 legal, percent of Americans age 6 accounting, actuarial, or other such prof 5 and ol essional advice. der are estimated to have had private long-term care while While 6 in m to Benefits Received by en are m 10 retirees cit ore likely to thin e guaranteed sources, such Rk the etirees Today y are not likel ......................................................................................... y to live lo as Social Security (40 ng enough to use up all of t percent) or an em heir savings. ployer-. 23 retirement has increased very For example, see P. Kem NeveComfo r retire/n per rtable 52 and C.M. M grad everuall worked y u,rt from augh, “Lifetime use roughly half 6 in 1 of nursing 994–1997 hom to m e care,” 50 ore than two-thir 3 The New Englan ds in 20 d Journal 06 an of d (62 percent) as current retirees ar Workers in fair or poor health are e to rec me oive it (63 per re likely than t cent). At the sa hose in better health to report me time, only 4 in 10 workers report having private long- 2002 20 45 21 14 benefits will match or exceed the value of toda 2004 42 27 16 13 y’s benefits. Worker confidence that Social Security will The amount of savings needed for retirement can be expressed as a multiple of current earnings (Figure The likelihood of doing a retirement savings Overall Retiremen 2005 t Confidence .................................................................................................. 20 Today needs calculation incr , EBRI is r 42 (Expecte ecogniz d) eases with household income, ed as one of the most 24 (Actual .............. ) 9 20 Perhaps not surprisingl without a reduction for ear y, am Likelihood of Workers Purchasing an Annuity ong the sources of retirem ly retirement (18 percent). ent information identified in the RCS, savers most Retirement savings only 21% 27% often saying they would be likely to use the service are those who consulted a professional advisor in the past insurance in 2002Adequate 32 , suggesting that many are counting on coverage t29 hey do not actually have. Medicine, provided Finally EBRI Issu , 4 agreement with ea defined benefit p Vo e Brief l. 32 is Don’t kno 4 ( reF gister ebru ed in the U. arw y e ch of these state 18 nsi , on (21 19 S. Patent and T 91): 595– percent), as thei 600 rm adem ents . ark tends to increase Office. r largest source of income I5 SSN: 0887 -13as retire 7X/90 0887 m - ent 137X/90 $ . 0 in retire confidence increas 50+. ment, 50 half of workers es. 2007 they and/or t (68 percent). heir spouse currently have this type of plan (41 percent). This means that up to 20 percent of ter2003 m care coverage. Also, those expecting to receive 1997 39 35 12 11 24 36 23 15 employer-provided retiree health insurance are more continue to provide benefits that are at least equal to today’s value increases sharply with age, and retirees Confidence in Othe 2004 r Financial Aspects of 16 Retirement............................................................................ 37 31 11 .. 21 Maki 10). ng your Amsa ong workers of all ages, 3 in 10 vings last as long as possible, e have a savings ven goal that is l ess than five times their cur rent education, an Figure 25, Confidence That Medicare Wi How likely d the am do ount of savings an you think you d investm ll Continue to e Very nts. In additi Provide Benefits of at Least Equal Value to Somewha on, married workers are t Not Too mo Not at re likel All y than Don’t often say they find advice from Other saving a financial professional to be s only 9 most helpful (40 percent). Less often, the 8 y year (compared with those who did not), women (compared with men), and workers under age 55 (compared • Many wor Source: kers, particularly older workers, continue Employee Benefit Research Institute and Mathew to be uncom Greenwald & Asso fortable using the Internet to help ciates, Inc., 2007 Struggling 10 authoritative and objective resources in the world on 12 are planning to rely on their own savings for their largest source. Almost 3 in 10 workers say they expect 9 Having enough money to pay for workers are counting on ge likel2002 y than those who do n40 otting this benefit from t to report having pri32 16 11 v ate long-term a future employ care coverage. er—a scenario that is becoming are mOve o • re likely than worker Workers rcMost savings levels are onfidem nca ey ................................................................................................................. 2003 have less of a grasp on the s to be confid modest: ent about the 19 Alm variability ost half of workers saving for future value o 44 of life expectancy f Social Security benefits (Figure 24). . Many 26 retirement report total savi ........................ may be planning for a 8 22 ngs and Rihousehold char Not all workers who if it means/meant yo d Johns inc on a on me (30 percent), 27 d Joshur ua have sta Wi saved for retire nda enerrd of livin , “A Pr percent nam ofig slo le of m Frail Older Am ent ar wly e a goal e currently that is 5.0–9.9 tim ericans saving for this pur and Their es their income, and 15 percent Caregive pose. Six in 1 rs,” The Retirement 0 workers unmarried workers to have tried to do Did you and your read Both 45 this as a spouse will be pass-alo : ng? a calculati Stay ahea on. Likely d of Workers age 45 and employee be Likely nefit issues older ( w41 ith Likely c your ompared with own subscr Likely yipti ounger on to EBRI Know Benefits Received by Retirees Today............................................................................................... 23 report findi ng advice from Retirement Co nfidence Su family, friends, or co-workers rvey. (18 percent) or written material received from work Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., with older workers). The likelihood of using the manage their finances. Workers appear to be service also increases as hou most comfortable using the Interne sehold incom t to obtain e increases. that m2001 ost of their m long-term care oney in retirement will come fro 37 37 10 11 m a work-place retirement savings plan, such as a 401(k) Health Expenses increasingly Confide Although nce i unlikely one n Entitle might expect workers in as com ment Program panies cut back s ............................................................................................. fair on their defined benefit offerings. or poor health to predict higher health care cost ...........s in 22 decli Issue Brief nes for 2002 only $89/year electronica 18 lly e-mailed to you 38 or $1 18% 99/year printed 26 and mai 15% led. For more i 16 nformation Proj retirement that lasts for as l ect Sim Occ ilarly invest asi,on 6 al percent of workers are m P ea nts ( per not including (Urban In ong as the stituemplo te, Feb the value of their prim very y th r u confident that ink the y aee benefit issues—health car ry 2006): y will www liv the Medicare sy .a e and failing to consider urrba y residence or a n.org/publicat stem in ons/ y will continue t defined e, pensions, and 311that the 284.h benefit plans) of less tmy l coul o provide d easily live report that they To p have a goal 1 urchase a and/or their spouse are c fin 0.0– 2007 ancia No savi 14.9 Retiremen l pro tim ng duct or es their income. Another s t Confidence selecu t rrently a Survey. saving for retirement (60 1525 percent cite a goal 15. percent). This percentage has 24 0–24.9 times their income, workers), reti rement savers (compared with nonsavers), participants in a defined contribution plan (compared (15 percent) most helpful. One in 10 or fewer indicate that their most helpful sources of information are the However, the 200 information about fi 7 RCS finds that th nancial products (5 ose who c 4 percent hoose t veryo or take advant somewhatage of the op comfortable) portunit or to use on y to receiv line e 2007 17 36 23 21 (28 percent), 2000 and more than 2 in 10 sa34 y it will come from41 14 11 other personal savings or investments (22 percent). about subscriptions, visit our Web site at www.ebri.org or complete the form below and return it to EBRI. As ac A ces minority of s to employ 2001 workers have personally er-provided retiree health 14 experienced a insurance declines 49 reduction in t and potential he retirement benefits offered by 16 Medicare ben 13 efits their Maintaini RCS Methodology retirem ng your ent, this is not the c stand Source: ................................................................................................................ ard Employee Benefit Resea of living, even ase. In fact, those describing their health as if it rch Institute and Mathew Greenwald & Asso fair or pciate oor are s, Inc., mo .......... re than twice as 24 benefits of at least equal va beyond retirem that anticipated age. One ent plan option lue to the benefits that will pa in 10 y you workers think received by the retirees today y are not at , while 30 percent are all likely to live until age 85 (11 somewhat per- than $25,000. The majority of workers who have not put money aside for retirement have little in fluctuated very slightl while 13 percent name a goal of at least y since the RCS first m 25 tim easured es thei it in 2001, reaching a low of 58 percent i r current household income. Ballpark E$timate Monte n 2004 and a with non participants and those not offered a plan), and those who consulted a financial advisor for Internet (6 percent), retirement plan benefit statements (5 percent), and newspapers or magazines (4 percent). invest financial calc ment advice u m lators (54 pe ight not benefit from it because they rcent) and least co economic security mfortable purchasing . may decide to not act on the recommendations. O financial products online (29 per- f 1999 31 2006 39 15 20 34 26 8 23 2007 Retirement Confidence Survey. In contrast to current retirees, fewer than 3 in 10 workers expect their largest share of income will come from means/meant you e 2000 ventually run out of mone 22 y 40 3 23 5 7 decrease (given the progra Endnotes (or their spouse’ likely as thos ....................................................................................................................... e in better health to thi s) employ m’se projected r within the past two y nk t fundi heyng shor will need ear tfall), new ret s (17 percent). less than $50,000 t irees ar Of these, fe e likely to find the o cover w say health expenses. And while .................. them y ha selves ve taken 24 guaranteed income each month for the confident in the sy cent) and 15 Nam savings at all: Seven in 10 e percent believe the stem . Many more, however, are y are of these work not too likely not to ers say to reach that age. o (33 their assets total less than $10,000. percent) or Only not at 32 all percent say (28 percent) confident they are very likely high Carlo si of 64 pe mu rcent in 200 lations suggest t 6. hat target multiples (to obtain a 90 percent chance of having adequate retirement investment advice (compared with those who did not) more often report trying to do a calculation. Workers who are not confident about their financial security in retirement plan to retire later, on average, No more than 2 percent of workers who have saved for retirement find any of the other tested sources of those indicating the1998 cent). 2005 y are likely to seek this advice, 19 28 24 24 17 only 2 in 10 sa30 y they would im25 plement all of the 26 1999 12 39 36 12 Maintaini Social Security (14 ng a balance bet percent) or an em ween the two plo yer-provided pension (13 percent). Few 74 er say the largest share of 65 increasingly Workers who expect to retire before age 65 are m responsible for the cost of their own health care, nursing care, prescription ore likely than those planning tdrugs, and health o retire later to say they 2007 RCS Underwriters significant steps to im they are rest ofm yo our re apt than their life prove their retire .......................................................................................................... counterparts to say ment security t 11 he% y are in the face of these reductions. One-third report the very likely 39% to need long-ter 25% m nursing care, they 21 ........ % 25 4% are y that Medicare’ to live that l Organiza s benefits will continue to otion ng. On t he other hand, app equal or exceed roximately 1 in 10 wor the benefits received by kers say they are beneficiaries very likely to toda live until at y. Again, income to cover basic expenses plus non-covered health care costs throughout retirement) for someone than those who express confidence. Others planning to retire later include workers in excellent, very good, or information to be most helpful in their retirement savings and investment decisions. • Continued ignorance about Social Security coverag 2002 13 e: Despite the longstandi 36 28 ng increase in the 22 reco Not surprisin1997 mmendations the gly, the li y33 receive as long as the kelihood of having34 18 11 saved y trusted t for retirem he source (21 percent). Two-thirds indicate they ent among both workers and retirees is 1998 12 35 39 11 Won’t/Don’t withd their retirement incom raw mo e will come fro ney m employment (11 percent), t 1 he sale or refinancing of t 8 heir home To p • urchase The percentage of workers who report t an income annuity or select an hey have saved money for retirement remains level at 66 per- insurance in retire will be are saving well off more, either on m in retirement, while thos ent. However, so their own (24 percent) or in an me workers e expecting to retire may not be adequately emafter ployer’s plan ( age 65 are factoring these costs into their 8more apt than t percent). More than 1 in heir counterp 10 s arts ay ASEC Charter Partners also more likely to report t .......................................................................................................... hey have private long-term care insurance. .........25 worker confidence about t least age 95 (7 percent) and he future value of Medicare one-quarter think they are benefits increases with age, and retirees are somewhat likely to live that long (23 percent) (Figure more Address retiring at age 65 would be 11.9 for high-income males, 13.9 for high-income females, 42.0 for low-income good Source: health ( Employee Benefit Resea compared with those in rch Institute an poorer health), d Mathew Green those not expe wald & Associate cting benefits from s, Inc., 1997 -2007 Retirement a defined benefit 1998 12 33 28 26 eligibility age for Social Security, only a small minority of workers are aware of the age at which they strongl would im y relatple ed to household incom ment only 1997 those reco emmen . Th10 e proport dations that ion say were ing the 31 in line with their own ideas (66 pe y have saved for 34 retirement also increases 17 rcent), and 1 in as Don’t kno w 3 8 (2 percent), o annuity cent. Likewis op r some other source (3 percent) (Figure 17). tion from a e, the percentage of workers curre retirement plan 5 7 ntly saving f 32 or retirement (60 percent) and the 29 27 5 retirement planning. Appr to describe their expected s they are trying to stay healthy oxim tandard of living as at (12 percent). Ot ely 1 in 10 workers thi her actions reported i adequnk t ate or heystruggli will need to accum nngclude planni . Others describing their retire ulng o ate less than $50,000 n working in ment to Confidence Surveys. likely 13). than workers to be confident (Figure 25). Source: males, and 54.2 for low-inc Employee Benefit Researo ch In me females. stitute and Mathew Greenwald & Associates, Inc., 1997 -2007 Retirement Confidence Surveys. City/State/ZIP pension plan (compared with those who expect these benefits), private-sector workers (compared with Source: Source: Employee Benefit Resea Employee Benefit Resea can receive full retire rch In rch In stitute an ment stitute an benefits from d Mathew d Mathew Green Green Soci wald & Asso w al Se ald & Asso cu ciate rity ciate s without , Inc., 20 s, Inc., 19 07 Retire a reduction for early 97 -2007 ment Confiden Retirement C ce Surve retirement. onfidence Surve y. ys. education levels rise or health status improves. In addition, married workers are more likely than those not Source: 10 woul Employee Benefit Resea d likely implement none of rch Institute an the reco d Mathew mmendations (11 percent). Greenwald & Associates, Inc., 2007 Retirement Confidence Survey. Mail to: EBRI, 2121 K Street, NW, Suite 600, Washington, DC 20037 or Fax to: (202) 775-6312 Employee Benefit Research Institute 22 10 16 24 18 12 20 14 6 2 8 4 11 19 17 21 25 15 13 23 3 9 7 5 EBRI EBRI EBRI 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 Iss Issu u u u u u u u u u u uIss Iss Iss 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 e B u u u u u u u u u u u ur r 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 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. ief No. r r 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. ief No. ief No. 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 304 • • • • • • • • • • • • Ap 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 ril 200 Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap Ap April 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 ril 200 7 7 7 7 7 7 7 7 7 7 7 7 • • • • • • • • • • • • 7 7 7 7 7 7 7 7 7 7 7 7 w w w w w w w w w w w w • • • • • • • • • • • •ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org w w w w w w w w w w w www.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org ww.ebri.org © 2007, Employee Be 2121 K S nefit Rese trar eet, NW ch Institute
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20037 rights reserved. EBRI Issue Brief No. 304 • April 2007 • © 2007 EBRI • www.ebri.org phone (202) 659-0670
Fax (202) 775-6312 EBRI Notes • October 2003 15 www.ebri.org Retirees Workers Retirees Workers The premier organization

Volume 304

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EBRI Issue Brief

Ruth Helman

Jack VanDerhei

Craig Copeland

Retirement