V Jan. August 1998 Feb. EBRI Issue Brief (ISSN 0887-137X) is published monthly at $300 per year or is included as part of a membership EBRI Tables and Charts Mar. Chart 9 Table 2 Table 3 subscription by the Employee Benefit Research Institute, 2121 K Street, NW, Suite 600, Washington, DC 20037- Chart 6 Chart 3 Chart 4 Chart 11 Chart 5 Table 6 Table 5 Chart 1 Chart 10 Chart 2 Table 7 retirement savings. Examples of such efforts Key Outreach Initiatives Nearly all Planners developed “Money Smarts,” a comprehensive EMPLOYEE Confidence You Will Have Enough Money 1896. Periodicals postage rate paid in Washington, DC. POSTMASTER: Send address changes to: Impact of Saving Another $20 per Week Expected Most Important Sources of EBRI Issue Brief, Motivational Factors in Saving for Retirement—Workers Forms of Employer-Provided What Is Your Savings Personality? Percentage Who Have Personally Saved Workers’ Confidence in Their Overall Retirement Workers Personally Saving for Retirement Actions Resulting from Employer-Provided Information Sources for Retirement At least one-half or Personality Types among Americans Confidence in Having Enough Money to Live Comfortably in Retirement, by Personality Type Worker Confidence in Having Enough Money to Live Comfortably in Retirement Table of Most Important Expected Source of Retirement Income, by Race/Ethnicity Table 1, Expected Major Sources of Retirement include Senator Charles Grassley (R-IA) and 2121 K Street, NW, Suite 600, Washington, DC 20037-1896. Copyright 1998 by Employee Benefit Research personal finance project and resource guide for Apr. for a Comfortable Retirement Retirement Income among Current Workers Income Prospects, by Race/Ethnicity Retirement Planning Information BENEFIT for Retirement, by Personality Type Savings Investment Decisions Information on Retirement Saving and Planning believe a comfortable Institute. All rights reserved, No. 200. $600,000 Among workers who have saved for retirement Income, by Personality Type....................................... 6 more of individuals Numerous public and private agencies have joined Representative Earl Pomeroy (D-ND), each of whom girls. the nonprofit American Savings Education Council Have you personally saved any money for retirement, not including Retiring Savers $506,300 RESEARCH African- Hispanic- Asian- Planners 100 Pre- 18% Older Younger Generation 100 9% Used Most Helpful 1997 Received 1998Most Useful May Contents 100 17% Among workers who were provided information Table 2, Confidence You Will Have Enough Money Social Security taxes or employer-provided money? forces to help Americans prepare financially for hosted retirement savings workshops in their retirement is achiev- White Girls Inc., American84% is developing a money manage- American American 14% 100 23% INSTITUTE 5% Annual Real Rate of Return (ASEC) (see above). $500,000 ® Retirees Boomers Boomers X 18% 81% across all ethnic groups22% The 1998 Retirement Confidence respective states. for a Comfortable Retirement ment curriculum for girls. 13% ..................................... 8 retirement. These diverse partners have created and 19% Input from spouse/partner Brochures Personal Savings 80% The Department of Labor sponsored a 18% 51% 45%39% 30% 22% 90 80 19% Jun. Money personally saved (in a work-related plan or outside work) 80 21% 42% 32% 19% 21% 69% 41% 100 able, if they just plan 22% 70 64% 27% 63% $400,000 10% Annual Real Rate of Return 24%62% 23% Deniers Very Confident 50 43% 25% 18% 43% 22% 32% 25% Table 3, Expected Most Important Sources of 80 Seminars Employer-Funded Plans 25% 61% 24 32 26 22 The Employee Benefit Research Institute (EBRI) was founded in 1978; its mission is to contribute to, to Advice of financial professional 56 28 15% The Pension Benefit Guaranty Corpo- choose “too many The Cooperative State Research, field-tested many of the resources that will be 41% Working Women’s Summit in 1996. The 61% Money from an employer, like a pension or contribution to a 17% 18% A Lot of Somewhat Confident 40 46 31% 47 44 10% Written material through a plan at work 25% Newsletters/magazines Social Security 61 15 12 25 13 13 60 encourage, and to enhance the development of sound employee benefit programs and sound public policy through 80 33% Introduction retirement account ..................................................................... 3 Retirement Income among Current Workers 25 31 14 21 ............ 8 needed to make saving a national priority in the ration publishes Your Guaranteed Pension 33% 50% . Education and Extension Service 37% , U.S. Depart- Motivation and save (91 percent 51% 40 $300,000 37% 60 Department’s brochure, “Women and Pensions— Jul. Not Too Confident 48% 19 25 17 11 80 Very Confident 60 Other written material Workbooks/worksheets Employment 63 13 9 17 10 9 current financial 60 objective research and education. EBRI is the only private, nonprofit, nonpartisan, Washington, DC-based $188,200 Social Security 24 32 25 14 Survey 28% Retirement Personalities ................................................. 3 50 Not At All Confident The Consumer’s Almanac 15 10 11 , developed by 13 Table 4, Prospects for Retirement ment of Agriculture offers educational programs in 41% ................................. 10 40% years ahead. 39% One-on-one counseling Sale of Home or Business a 15 4 11 Advice of family or friends What Women Need to Know and Do,” provides a 47 50% 10 34% Part- or full-time employment 70 6 4 17 7 organization committed exclusively to public policy research and education on all economic security and 29% 38% 38% 30 $200,000 versus 71 percent $131,900 Some 36% (chart 1) Information from television or radio Table 5, Information Sources for Retirement Telephone access to financial information Inheritance 41 4 41% Somewhat Confident a 12 2 2 40 Aug. the American Financial Services Association, is a personal finance, with an emphasis on saving for 40 Very Very 60 The American Savings Education responsibilities” as a checklist of questions and answers women should 34% Money from the sale of your home or business 3265 employee benefits. Through its activities, EBRI is able to advance the public’s, the media’s, and policymakers’ 32% 40 $72,600 40 52% 31% Source: 1998 Retirement Confidence Survey. Motivation $65,500 Videos Support from Children/Family 1 5 1 2 Information from seminars 38% 21 2 a Deniers: “Retirement is so far away.” Other government income programs, such as SSI 60 ........................ or veterans’ benefits 3 43% Savings Investment Decisions 2471 27% .................................. 11 Council (ASEC) 32-page booklet designed to help individuals 20 is a coalition of over 250 private- $36,100 retirement, through partner universities and $100,000 knowledge and understanding of employee benefits and their importance to the nation’s economy. EBRI’s 56% $18,200 of all Americans). consider concerning their retirement savings. The 30 22% $13,700 39% Computer software Computer software/Internet/on-line services Other Government Programs 19 0 a 4 1 1 Not Confident by Paul Yakoboski and Pamela Ostuw, EBRI, 45% An inheritance 52% major reason why they2204 Somewhat Somewhat Strugglers Sep. 42% 20 20% 40 47% 44% No Strugglers: “Save?! If I have $5 left over after organize their finances, incorporate long-range membership represents a cross section of pension funds; businesses; trade associations; labor unions; health care Table 6, Forms of Employer-Provided Retirement county offices nationwide. 24% 55% 20 and public-sector institutions and is a part of the Internet or on-line services 23 5 brochure is part of a kit that also includes a fact 20 40% Support from your children or other family The eighth 1134 20 43% 9% 10 50 52% Retir away (95 percent versus 19 percent of indicate that they are they will work for pay after they retire. For most, helpful? The most helpful ement Confidence by Race These same two motivators also 36% 0 financial setbacks are common inflation and unemployment, are too than they are currently saving. people who did not Motivation Source: The Retirement Confidence Survey (1997 and 1998). providers and insurers; government organizations; and service firms. Source: 1998 Retirement Confidence Survey. Cautious Savers paying bills, Ill save it.” At the same time, it appears that the number of .......................................... 4 Planning Information................................................ 13 goals such as financing retirement or paying for The Internal Revenue Service 26% 22% has Education and Research Fund (ERF) of the Em- sheet spelling out issues women face in planning for 52% 19% have not begun to a Not Too At All and Jennifer Hicks, Mathew Gr 10 Years 20 Years eenwald & Associates 30 Years 15% 40 Years Not Too are the major factors that influence very confident, the all Americans). Members of this group also believe that financial need does not appear to be a primary motiva- sources of information are the annual (78 percent versus 51 percent of all Americans) and 16% Not asked in 1997. uncertain. The uncertainty of Among nonsavers, essentially 43%Impulsives prepare for retirement Oct. 0 Source: 1998 Retirement Confidence Survey. 10 21% 11% 20 42% 0 0 Source: 1998 Retirement Confidence Survey. older boomers who are not confident in their retirement Implusives: “I should plan and save, but … Oh, I need National Summit on Retir Table 7, Most Important Expected Source of ement Savings ployee Benefit Research Institute (EBRI). ASEC, children’s education into family budgets, and 40 many resources to help taxpayers understand 0 retirement. 31% 20% Deniers Strugglers Impulsives Cautious Planners Retiring When asked whether Americans in general are saving Source: Emplo a yee Benefit Research Institute calculations. The Employee Benefit Research Institute Education and Research Fund (EBRI-ERF) performs the charitable, 28% Hispanic-Americans, Asian-Americans, preparing for retirement takes too much time and effort highest proportion advice of a financial professional, tor. Forty-six percent say having money to buy extras Retirement impulse purchasing occurs frequently (39 percent versus economic events is one of the major the same percentages of males and are struggling as a Changed Allocation Changed Amount Began to Contribute White African- Hispanic- Asian- Supplemental Security Income. 21% save for retirement. 0 15% Deniers Strugglers Impulsives Cautious Planners Retiring Not At All Not At All income prospects is increasing, while the number of to buy a new suit!” manage credit wisely. .................................................. 4 Retirement Income, by Race/Ethnicity financial issues facing them in retirement. .................... 15 through its coalition of institutional partners, Savers Savers Through partnerships with the Small Nov. of Money in a Plan educational, and scientific functions of the Institute. EBRI-ERF is a tax-exempt organization supported by Contributed to a Plan enough for retirement, Asian-Americans and Hispanic- Source: 1998 Retirement Confidence Survey. American American American 0 Confidence 1994 1995 1996 1997 1998 and whites. Fifty-one percent of His- among any of the (40 percent versus 13 percent of all Americans). Deniers followed by input from a spouse, and 38 percent say having money to make ends meet are 30 25 percent of all Americans). Impulsives tend to be reasons that Hispanic-Americans and females—59 percent of result. Savers Savers changed? One possibility is that, as more people focus on Generation Xers who are not confident about their Cautious Savers: “I put a set amount into savings The Jump$tart Coalition Realized • This Availability Issue Brief , a group of presents the findings of the 1998 Retirement Confidence Survey Family Professional The General Services Administration Things Read in undertakes initiatives to raise public awareness Have Seen contributions and grants. Personality Type Business Administration and the National Associa- Advice Introduction 35 percent of those who have not received information Americans express the most confidence that Americans 23% 17% Survey panic-Americans respond that seeing tend to be older Americans; a significant portion have personality types. major reasons for working during retirement. Sixty written material provided through a work-based retire- younger Americans—three out of five are younger than males and 53 percent of females—say that they could have not started to save for retire- Planners and Personality Type The first National Summit on Retirement Savings, called for by the Savings Are Vital to Everyone’s Retire- Time Was of a Event retirement, determine what they will need, and consider Financial 17% Newspaper/ People 19%from Friend prospects is decreasing. Thirty-five percent of older Source: 1998 Retirement Confidence Survey. each month and hope it will be enough.” Source: 1998 Retirement Confidence Survey. Saving even .............. 4 Chart 1, Personality Types among Americans Very ............... 3 Dec. about what is needed to ensure long-term personal about 20 federal agencies, universities, and non- offers many free and low-cost publications about Somewhat Not Too 20 (RCS). The survey tracks Americans’ retirement planning and saving behavior and Not At All Source: 1998 Retirement Confidence Survey. 1 tion of Women Business Owners, the Labor from their employer. No Yes most are not working for the money. Fifty-six percent are saving enough to live comfortably throughout their Running Out Retirement Plan Advisor Magazine people unprepared for retirement Nearly as many are already retired (42 percent); just one-quarter (28 per- percent say that enjoying work and wanting to stay money personally saved as their most important source ment plan, and other written material (table 5). Both Not Prepared 18% (RCS) age 45 (60 percent). While most are married (60 percent), save $20 per week. The same holds true among those ment (39 percent cite this as a or Family Retiring Savers are whites to have received any employer-provided educa- ment Act of 1997 (SAVER Act) was held on June 4–5, 1998, in Washington, DC. The Summit was co-hosted 17% what they have already put aside, their confidence in Confident Confident The American Savings Education Council (ASEC) is a part of EBRI-ERF. ASEC is a coalition of over 250 private- Confident Confident boomers are not confident in their retirement income Planners: “I am saving, investing, and planning profit associations, seeks to improve understanding seemingly Chart 2, Confidence in Having Enough Money to retirement planning. financial independence. ASEC works to build their confidence regarding various aspects of their retirement. It also categorizes Department has provided thousands of small EBRI report that a major reason for working is that they enjoy retirement years (19 percent and 15 percent, respec- provides provided them with a lot of motivation to start saving for somewhat confident cent) are working full-time. The experiences of Deniers involved is a major reason for working during retire- of income in retirement (41 percent) (table 7). This is males and females cite a financial professional most and public-sector institutions. ASEC’s goal is to make saving and retirement planning a vital concern of all a significant proportion are divorced or separated reason). Thirty-five percent of Asian-Americans report already saving for retirement: 55 percent of males and tional materials or have been provided the opportunity to twice as likely as Analysis of 10 1998 One in Five Is by the President and the congressional leadership in the House and Senate. The SAVER Act calls for a their ability to save enough for retirement decreases. prospects in 1998, compared with 26 percent in 1997. for a secure future.” ................................................ 4 Live Comfortably in Retirement, Source: Retirement Confidence Survey (1994–1998). Source: 1998 Retirement Confidence Survey. 16% of personal finance among young adults. workers and retirees into six distinct groups, based on their very different views on small 14% The U.S. Federal Trade Commission individual and employer awareness of the basic businesses with helpful materials about the new 13% 12% it and want to stay involved, and 44 percent say a major Workers were also asked about the form of the tively). Respondents were also asked about their Americans. 7% followed by money from an employer (21 percent) and 71 percent of all Americans). Similar proportions say they evidence that progress is being made in the quest for 8% than expected (48 percent). While nearly all in this group their own retirement, and about one-third (32 percent) who have retired show that retirement may not be (38 percent). Just one ment; more than one-half (56 percent) say that having a often as their most helpful source of information, and (20 percent)—more than in any other group. Among that a major reason for not saving is that they have lots Source: 1998 Retirement Confidence Survey. 59 percent of females say that they could save an addi- attend any seminars about retirement planning and Deniers or Strugglers to workers’ and second Summit in 2001 and a third in 2005. Only 13 percent of workers expect Social Secu- change the amount they contribute to a retirement Twenty-four percent of Generation Xers are not confi- Retiring Savers: “I’ve been sacrificing and saving amounts over by Personality Type..................................................... 5 E principles of saving and retirement planning, MPLOYEE The American Bankers Association offers advice on how to guard against fraudulent retirement, retirement planning, and saving. 0 st SIMPLE plans, SEP/IRAs and other savings ve- educational material they received from their employer reason is that it provides a satisfying way to spend their Retirement confidence in their own retirement preparations. African- are disciplined savers (90 percent versus 68 percent of all retirement income security in the 21 century. However, have graduated from high school (93 percent), a signifi- were motivated by the feeling that time was running out Planner out of six (16 percent) is not confident. Retiring “golden years” for this group. In fact, retired Deniers are Social Security (14 percent). women are significantly more likely to do so. Across satisfying way to spend their time is a major reason. have personally saved money for retirement. Indeed, Impulsives, three out of five (61 percent) are financially of time until retirement. tional $20 per week. saving in the last 12 months. Sixty-nine percent of retirees’ rity to be their most important source of retirement 1993 1994 1995 1996 1997 1998 savings plan, and 43 percent say that it led them to dent in their retirement income prospects in 1998, Disappointed for years, now I am enjoying it.” sponsors an annual “National Teach Children to ............................ time may be5 Chart 3, Percentage Who Have Personally Saved investment schemes. including all potential sources of economic security. EBRI Issue Briefs are monthly topical periodicals providing expert evaluations of employee benefit issues and hicles. and what they found to be the most useful (table 6). Americans are the least confident that they will have BENEFIT time. Thirty-four percent say a major reason is to have challenges remain. The RCS tracks Americans’ retire- Americans). More than members of any other group, cant proportion have also graduated from college to prepare. Savers are not quite as secure as Planners about their most likely to report that they are having a worse time in generations, savers cite a financial professional most Whites respond that money personally saved will more than four out of five in each group have personal responsible for children, and two-thirds (66 percent) are Hispanic-Americans, 64 percent of Asian-Americans, While $20 per week may not seem like a lot of responses to Thirty-seven percent say this provides a lot of motiva- mind. Rather, they are flying blind and in some sense reallocate the money in their retirement savings plan. In The purpose of the Summit was to increase public awareness of the importance of retirement planning and • The six personality types identified in the RCS are Deniers (10 percent of the income. This compares with 42 percent of current least confident (38 percent are very confident). Genera- compared with 32 percent in 1997. Personality Types Save for Retirement Differently, for Retirement, by Personality Type .......................... 6 trends, including critical analyses of employee benefit policies and proposals. Each issue, ranging in length from Save Day,” in which bankers around the country crucial to ASEC’s goal is to make saving and retirement The Retirement Savings Campaign’s Source: Retirement Confidence Survey (1993–1998). money to buy extras, and 28 percent say it is to make Forty-five percent received information through bro- enough money to live comfortably in retirement: ment planning and saving behavior and their confidence be their most important source of income in retirement Planners are financial risk-takers (45 percent versus Additionally, Hispanic-Americans are less likely to have (31 percent). This group is middle- to high-income, Personalities retirement income; however, one out of five (22 percent) retirement than they expected. This group has the lowest often as the most helpful source. Among Asian-Americans, 37 percent said that According to money set aside for retirement (81 percent of Planners, in dual-income households. While nearly all Impulsives money, it is more than $1,000 per year, and over the 62 percent of African-Americans, and 61 percent of There are no questions in hoping that they save enough. Furthermore, many RESEARCH to identify ways to promote greater retirement savings by all Americans. The Summit was a great resource 16–28 pages, thoroughly explores one topic. Subscriptions to retirees who say that Social Security is their most tion Xers are the most likely to report enjoying making tion, and 42 percent say it provides some motivation. EBRI Issue Briefs are included as part of EBRI addition, 41 percent say employer-provided information population), Strugglers (9 percent), Impulsives (20 percent), Cautious Savers Have Different Expectations .................................. avoiding the5 Chart 4, Worker Confidence in Having Enough Money planning a vital concern of all Americans. visit elementary schools to teach children about the For more information, visit the Web site of the signature brochure, “Top Ten Ways to Beat the chures, and 30 percent found this to be the most useful ends meet. 13 percent are very confident of this, and 49 percent are regarding various aspects of their retirement. It also 30 percent of all Americans). They have also taken the received any employer-provided educational materials reporting between $25,000 and $50,000 (30 percent) or seeing others struggle in retirement provided them with is very confident, and another 50 percent are somewhat levels of educational achievement and household in- (32 percent), followed by money from an employer the 1998 84 percent of Retiring Savers). Planners indicate they (91 percent) have graduated from high school, slightly years this savings could make a real difference for an quick fixes or membership or as part of an annual subscription to EBRI Notes and/or EBRI Issue Briefs. Individual copies of While fear is often a great motivator, and it is true that a whites had not been provided any materials or seminar the 1998 RCS retirement savers think that they are investing their for sharing ideas to advance the public’s knowledge and understanding of retirement savings. As called for in important source. In addition, 21 percent of workers do investment decisions concerning their retirement income (21 percent), Planners (23 percent), and Retiring Savers (17 percent). led them to begin contributing to a retirement savings Confidence by Gender very real risk of disappointment in retirement. (chart 2, chart 3, table 1) importance of saving money. Between to Live Comfortably in Retirement National Summit on Retirement Savings, located at ............................ 7 INSTITUTE EBRI and ASEC have developed ® Choose to Clock and Save for Retirement,” describes basic to them. Thirty-two percent received information not confident (chart 11). As for income sources in retirement, 42 percent categorizes workers and retirees into distinct groups, time to determine how much money they will need to Notes and Issue Briefs are available for $25 each, prepaid, by calling EBRI or on-line for $7.50 at www.ebri.org. about retirement planning and saving; this could also more than $50,000 (30 percent). a lot of motivation to begin saving, and 39 percent said comes. Among them, three out of five (61 percent) have confident. One-quarter (26 percent) are not confident. (25 percent) and Social Security (24 percent) (table 7). Can W Individual e Do More? RCS, were motivated to begin saving for retirement by a more than one in five (22 percent) are college graduates individual. The power of compound interest will help a opportunities. “silver reveals six significant minority of current retirees are experiencing saving wisely, but they are not really sure. It is not plan. the SAVER Act, this Summit was a public/private partnership planned by the U.S. Department of Labor and TM not expect Social Security to be an income source at all in (72 percent, compared with about 60 percent for the Confidence Check............................................................. 7 Chart 5, Workers Personally Saving for Retirement ..... 9 one-fifth and one-quarter of retirees say that their who report that they will rely on their own personal a media campaign for spreading the word The Girl Scouts of the U.S.A. has the issue. Some may find this puzzling, but the reason http://www.saversummit.org/backgrnd.pdf. Save, steps individuals should take to ensure their finan- of current retirees say that Social Security is their most through seminars, and 22 percent found this to be most the realization that time was running out provided a lot no education beyond a high school diploma, while nearly based on their very different views on retirement, save for their retirement (65 percent versus 45 percent of The personality types with the lowest levels of financial planner. For Retiring Savers, major motiva- affect their confidence levels. (22 percent). Most (57 percent) report annual household 25-year-old saving $20 a week, assuming a 5 percent • The survey shows that working Americans have become more focused on retire- 63 percent of distinct groups of Americans with very different atti- bullets” that surprising then that their confidence is not higher. While males appear to be somewhat more confident than the American Savings Education Council in consultation with the Administration and Congress. This other three generations of workers). retirement. As a savings motivator, it may be good that financial challenges (see section below), these findings Furthermore, a comparison of workers who retirement has in some way fallen short of expectations. (chart 4) Chart 6, Motivational Factors in Saving for savings—one-half (48 percent) say their contributions to about retirement savings. In its inaugural effort, may simply be that as more Americans focus on retire- Other EBRI publications include: EBRI Notes is a monthly periodical providing up-to-date information on cial security. useful. Twenty-five percent received information from important source, 22 percent cite money from an em- 2 confidence about retirement income prospects are also Specific Areas of Concern retirement planning, and saving. all Americans). About one-half of Planners expect to The 1998 RCS reveals room for improvement. Specifi- —African-Americans and of motivation. three out of four (72 percent) report household incomes of Retirement Preparations—African-Americans and Americans tional factors include realizing that time was running incomes between $25,000 and $75,000. Personality T annual real rate of return over 40 years, accumulate a ypes Save for Retir will ensure ement ment; 45 percent have tried to determine how much they need to save before they signal that more needs to be done to help nonsavers Motivators to Begin Saving tudes toward retirement and financial matters. —African-Americans report females, the differences are not statistically significant. Saving bipartisan Summit was presided over equally by representatives of the executive and legislative branches. most workers do not expect Social Security to be their What information sources do retirement savers receive retirement savings education at work with those a variety of employee benefit topics. EBRI’s Washington Bulletin Conclusion , provides sponsors with short, timely This should serve as a wakeup call for many current Confidence across Generations ................................... 7 Retirement—Workers ............................................... 10 a 401(k)-type plan will be a major source of retirement EBRI and ASEC joined forces with one television ment and try to determine how much money they really newsletters and/or magazines, and 13 percent found this During the last three years, the Labor Hispanic-Americans are less confident about many the groups with the smallest proportions saving for cally, it indicates that most working Americans could do ployer-funded plan, and 19 percent cite personal savings. retire at age 60 or earlier. For the most part, Planners Americans have become more focused on retire- Investment Confidence—Among those saving for retire- less than $50,000 annually. Hispanic-Americans are less likely than whites and Among white respondents, 42 percent received a retire, up from 32 percent in 1996. have begun out to save or seeing others who did not prepare struggle $132,000 nest egg. With a 10 percent annual real rate of that they were motivated to begin saving for retirement According to the responses to 12 questions about finan- retirement realize the advantages of beginning to save early with updates on major developments in Washington in employee benefits. EBRI Fundamentals of Employee Retir Twenty-seven percent of males are very confident in who do not reveals significant differences in their ement Investing most important source of retirement income. (Social use when making their investment decisions? The most Differently, Have Different Expectations (table 2) Chart 7, Workers’ Confidence in Investing workers. Even though most retirees are not having a income, and just slightly fewer (44 percent) say other station and three radio stations in Washington, DC, need to save, the answer has them worried and it has Department has distributed several different print to be the most useful. Seventeen percent received retirement (chart 3). Majorities of Deniers and specific retirement-related issues. Specifically, more in terms of saving for retirement (chart 8). Fifty- Cautious Savers: “I put a set amount into lot of motivation from seeing people who were unpre- ment planning. As evidence, 45 percent have tried to are married (69 percent), and some are financially Asian-Americans to have personally saved any money for to save on during their retirement years. ment, individuals’ confidence that they are investing return, $20 per week for 40 years will compound into income Benefit Programs offers a straightforward, basic explanation of employee benefit programs in the private and by seeing people who were unprepared struggle in cial behavior, saving for retirement, and planning for the their retirement income prospects, as are 21 percent of The National Summit on Retirement Savings called for a broad-based effort to educate Americans about the Security was always intended to be a floor or base to frequently used source is input from a spouse (table 5). even seemingly small amounts of money. The third- confidence concerning where they stand today and what negative experience, would current workers like 1 in Confidence by Gender ................................................. 8 Retirement Savings Wisely....................................... 10 personal savings and investments will be a major source. to air a series of public service announcements rattled their confidence. This is probably a good thing, as public service announcements, in both English and workbooks and/or worksheets, 15 percent received one- • Americans’ growing attention to their retirement has not increased their retire- The 1998 RCS Underwriters 3 Strugglers report they are not personally saving for 43 percent of African-Americans and 51 percent of determine how much they need to save by retirement, up responsible for children (40 percent). Planners are high five percent of those not saving for retirement say it is public sectors. EBRI Databook on Employee Benefits their retirement savings wisely does not differ signifi- The two groups with the least confidence that they will The personality types differ significantly on their is a statistical reference volume providing tables and pared struggle in retirement. About one-third retirement (excluding Social Security taxes and em- their own for retirement. While this is good news in the security for today’s workers. The good news is that over $500,000 (chart 9). The message is clear that Strugglers: “Save?! If I have $5 left over Among retirement savers, men express more confidence savings each month and hope it will be ranked motivator is the availability of a retirement plan retirement; 6 in 10 (60 percent) say that this gave them a future, the survey categorizes respondents into six females. In addition, 28 percent of males are not confi- need to plan and save more for retirement. Primary recommendations of the delegates included: build on, rather than a significant source of income in Most retirement savers also use written material pro- they think of their future prospects. Among those 5 odds that their retirement will be financially troubled Sources of Income ............................................................ 8 Chart 8, Could You Save $20 per Week More Retiring Savers are counting on Social Security urging people to save for retirement. a reality check is the first step toward positive action. Spanish, encouraging individuals to save for retire- on-one counseling, and 12 percent received information charts on private and public employee benefit programs and work force related issues. ment income confidence. Since 1993, the portion of working Americans who are Hispanic-Americans are not confident that they will have retirement—just two out of five in each group have reasonably possible for them to save $20 per week for expected sources of financial support during retirement RCS findings from 32 percent in 1996 and 36 percent in 1997. The achievers. Slightly less than one-half (46 percent) have cantly among ethnic groups. Ninety-two percent of have enough money to live comfortably in retirement are (32 percent) said that realizing time was running out to about investing their retirement savings, and they are ployer-provided money). Just over one-half of sense that the majority of Americans are saving for Americans are increasingly focused on savings and seemingly small amounts of money saved on a regular lot of motivation to start saving. Almost one-half personality types: Deniers (10 percent), Strugglers at work. after paying bills, I’ll save it.” dent in their prospects, and 34 percent of females are receiving retirement education materials in the past vided through a work-based plan, other written material, retirement.) However, many people apparently are (table 3) for Retirement?.......................................................... 11 enough.” and/or disappointing? (40 percent) and pensions (46 percent) as major sources WJLA-7, the local ABC affiliate, produced Education As further evidence in support of this hypoth- The 1998 Retirement Confidence Survey was underwritten by grants from the following organizations: Aid ment. very confident that they will have enough money to live comfortably throughout via telephone access to financial information. Computer demonstrate enough money for leisure activities. In terms of having started saving (39 percent of Deniers, 40 percent of this purpose. In addition, 57 percent of workers who (table 1). The groups who are not yet saving are looking Deniers and Strugglers—a majority of whom are not prepare for retirement provided a lot of motivation for increase is being driven by baby boomers (those born graduated from college, and a similar proportion African-Americans (52 percent) and 62 percent of retirement, the finding also means that one-third are whites are confident they are investing wisely, along retirement planning. This focus has not led to increased basis over long periods of time can accumulate into a more likely to report enjoying making investment (48 percent) of African-Americans say they received a lot (9 percent), Impulsives (20 percent), Cautious Savers not. Furthermore, there were no significant changes in • The federal government should expand on educational efforts such as the Department of Labor’s Retire- overly pessimistic about Social Security, expecting to and the advice of a financial professional. Only one-fifth It is not surprising that there are dramatic year: Other activities undertaken by EBRI include educational briefings for EBRI members, congressional and federal Individual Saving In 1998, 20 percent of retirees report that their ............................................................ 9 Chart 9, Impact of Saving Another $20 per Week ....... 12 of income; however, they are more likely than other the television announcements. The campaign also esis, the 1998 RCS indicates that workers’ confidence in Association for Lutherans, American Bankers Association, American Compensation Association, American software/on-line services/Internet access and videos were Spearheaded by the Securities and retirement has consistently ranged from 20 percent to 25 percent. the continu- Strugglers). Deniers give many reasons for not saving, enough money to support themselves in retirement no between 1946 and 1964). One-half of older boomers (47 percent) have annual household incomes of $50,000 or have begun to save for their retirement say that it is with 90 percent of Asian-Americans, 88 percent of to the government and employers to provide retirement confident (56 percent of Deniers and 52 percent of them to begin saving. not. These savings figures have remained essentially Hispanic-Americans have not begun saving for their confidence, however, probably because more individuals nest egg that would make a difference in retirement. decisions. Fifty-two percent of men say that they are Among Strugglers, three out of four say that just when differences in retirement confidence between workers of motivation from the realization that time was running (21 percent), Planners (23 percent) or Retiring Savers male or female confidence levels in the past year. ment Savings Campaign. agency staff, and the media; public opinion surveys on employee benefits issues; special reports; and policy receive nothing from the system. And the younger they of retirement savers currently use computer software Cautious Savers are conservative with their finances; (chart 5, chart 6, table 4, chart 7) overall standard of living has been worse than they Chart 10, Actions Resulting from Employer-Provided groups (excluding Planners) to indicate that personal highlighted the Council of Life Insurance, American Express Financial Services, American General Retirement Services/ Ballpark Estimate, a one-page form their financial preparations for retirement dropped Exchange Commission (SEC) the least frequently cited means of receiving information. , a broad coalition of including that they just do not think about it or that they matter how long they live, 43 percent of both African- reasonably possible for them to save $20 per week more income, while those who are saving are looking to to the Rescue? ing need for (those born between 1946 and 1953) have now tried to more. This group has the highest proportion of men Hispanic-Americans, and 83 percent of African-Ameri- Strugglers). Despite this, nearly one out of four Deniers very confident that they are investing their retirement retirement. Among whites and Asian-Americans, unchanged since the question was first asked in 1994 studies. are developing an appreciation for the magnitude of the out to prepare for retirement. (17 percent) (chart 1). they think they have a handle on their finances, some- who have saved for retirement and those who have not. • Seventy-three percent have begun to save for their It appears that confidence in personal financial and Internet/on-line services. What do savers find most are, the more likely they are to feel this way (44 percent nine out of 10 consider themselves to be more savers Retirement Investing ................................................ 10 Information on Retirement Saving and Planning .. 13 expected at the time they retired, 40 percent say better, savings and investments will be a major source of developed by ASEC that enables individuals to make • Sixty-three percent of Americans have begun to save for retirement. Fifty-five during the past year. In 1998, only 25 percent of workers VALIC, Aon Consulting, AT&T, Barclays Global Investors, CIGNA Corporation, Citibank N.A., Diversified government, business, and consumer organizations broad-based expect retirement to work itself out. Strugglers are not Americans and Hispanic-Americans say they are not themselves as a major source of income. Deniers and is optimistic that he or she will have enough money for a determine what they will need, up 12 percentage points (chart 5). We also know that this one-third tends to 33 percent and 36 percent, respectively, have not yet (55 percent). cans. task before them. Therefore, now is the opportune time savings wisely, compared with 38 percent of females, and Why Not Save? thing happens that sets them back (74 percent versus preparation for retirement is slipping among both males • State and local governments should launch their own initiatives, such as those being undertaken in of Generation Xers do not expect to receive income from Thirty-one percent of savers are very confident about retirement, compared with 57 percent of those who than investors (90 percent versus 57 percent of all and 38 percent say about the same. Furthermore, (table 5) Chart 11, Workers’ Confidence in Their Overall retirement income (35 percent). quick and easy estimates of what they will need to percent of those not saving for retirement say it is reasonably possible for them to are very confident that they are doing a good job of Investment Advisors, Ernst & Young, LLP, Fidelity Institutional Retirement Services Co., Investment Editorial Board has launched a grassroots education project called The 1998 educational confident. Additionally, 26 percent of African-Americans saving because they have too many current financial from last year, while among younger boomers (born Strugglers are relying on Social Security more than any consist of younger workers and workers with lower begun to save (chart 12). to reach out to American workers with more and better comfortable retirement (18 percent are very confident) 70 percent of men say that they enjoy making invest- 51 percent of all Americans). They are more likely than their overall retirement income prospects, compared Deniers: “Retirement is so far away.” and females. Thirty-six percent of males were very Oregon, to make citizens more aware of retirement-savings issues. Social Security once they retire.) Americans). More than many of the other groups, they Can We Do More? have not received information from their employer. ...................................................... 11 22 percent say their actual experience has been worse Retirement Income Prospects, by Race/Ethnicity ... 14 Publisher: Dallas L. Salisbury Managing Editor: Steve Blakely Layout and Distribution: Cindy O’Connor save $20 per week (over $1,000 per year). In addition, 57 percent of workers who save and invest each year to meet their retirement Company Institute, John Hancock Mutual Life Insurance Co., Lucent Technologies, ManuLife Financial, preparing financially for retirement, compared with the Facts on Saving and Investing Campaign, with RCS sur- and 37 percent of Hispanic-Americans are not confident At least one-half or more of individuals across all ethnic responsibilities. other groups. In fact, more than one-half of Deniers efforts designed to make retirement savings a priority for Chart 7 between 1954 and 1964) the number is up 15 percentage Retiring Savers: “I’ve been sacrificing and Retirement Expectations and Planning ment decisions about retirement savings, compared with incomes, often one in the same. Sixty-nine percent of pre- When asked if it would be reasonably possible to education about retirement planning and saving. (chart 2). most others to believe that if they just save some money with 13 percent of nonsavers. Forty-nine percent of Chart 8 confident in their personal financial preparation in 1997, say that they always research and plan for a big pur- The sources of expected retirement income vary (chart 8, chart 9) Chart 12, Americans Who Have Not Personally than expected in terms of having enough money to cover objectives. have begun to save say that it is reasonably possible for them to save an additional While 32 percent in 1997. Over the past year, the percentage of Massachusetts Mutual Life Insurance Co., Milliman & Robertson, Inc., Money Education Services, National the slogan: “Get the facts. It’s your money. It’s your Workers’ Confidence in Investing Retirement individuals. Calls for “more and better education” may Chart 12 veyed that they will have enough money for basic expenses in groups choose “too many current financial responsibili- About one-half of Impulsives are saving for (58 percent) and nearly as many Strugglers (49 percent) points, from 1997 to 47 percent in 1998. (The percentage save an additional $20 per week for retirement, Asian- retirees have begun to save for their retirement, Nearly all Deniers say that it is pointless to plan for Much remains to be done. One-third of workers 53 percent of females. Pre-retirees appear to be the most Could You Save $20 per Week More for Retirement? The Impulsives and Cautious Savers are a little each month, they will be fine in retirement (46 percent • Fifty-six percent—more than one-half—have at- compared with 29 percent in 1998, and 22 percent were • The media should provide more coverage to retirement-savings issues, as WJLA-TV has done in Washing- Subscriptions/Orders: Direct subscription inquiries to EBRI Publications, (202) 659-0670; fax publication notably across generations. While 30 percent of pre- nonsavers are not confident in their retirement income saving for years, now I am enjoying it.” chase (84 percent) and that they are disciplined savers medical expenses; 26 percent say it has been worse in One in Five Is Disappointed .......................................... 12 Saved for Retirement, by Race/Ethnicity ................. 15 WJLA-7 also prepared its own weekly news $20 per week. Americans those who said they were somewhat confident in their Americans Who Have Not Personally Saved Savings Wisely Council of La Raza, National Federation of Independent Business, Nationwide Life Insurance Co., future.” additional seem trivial to some, but the reality is that retirement Sources of Income—Almost two-thirds of African-Ameri- ties” as a major reason why they have not begun to save retirement. African-Americans are less confident that of pre-retirees (born 1945 and earlier) and Generation X report that Social Security will be a major source of retirement because they feel (or, in the case of retirees, retirement. Those who are saving indicate they were Americans are most likely to agree. Eighty-seven percent compared with 55 percent of Generation Xers. Eighty- TM have not yet begun to save for retirement. More than orders to (202) 775-6312. A complete list of EBRI publications are available on the World Wide Web at http:// more confident about their income prospects for their confident generation when it comes to retirement versus 39 percent). Typically, Strugglers are middle-aged tempted to determine how much they need to save for prospects, compared with 20 percent of savers. When not confident in 1997, compared with 24 percent in 1998. ton, DC, with the Choose to Save campaign. retirees and 29 percent of older boomers expect personal (73 percent). Cautious Savers do think about their Education to the Rescue? .............................................. 12 for Retirement, by Race/Ethnicity terms of having enough money to pay for most of the stories on the retirement-savings issue, hosted a PaineWebber Retirement Plans, The Principal Financial Group, Prudential Investments, Scudder Kemper have become financial preparations increased from 44 percent to Confidence Minorities The campaign published “The Facts on respondents they will have enough money to pay for long-term care if www.ebri.org. income security is a long-term challenge that requires cans expect their most important source of income in for retirement. Sixty-six percent of whites, 53 percent of young adults (born between 1965 and 1973) who have felt when they were younger) that retirement is too far Among those who have saved for retirement investments (53 percent are very confident that they are motivated to start by their peers or by the realization of Asian-Americans said they could save the money each four percent of those earning $75,000 or more have Retiring Savers are older Americans who are already retirement income. Impulsives believe that they will one-half admit they could save more, whether or not they golden years; however, they are still concerned. One-half (35–54 years old), middle-income ($25,000–$50,000) retirement, compared with 38 percent of those who asked about specific aspects of retirement, confidence Among females, 27 percent were very confident in 1997, Among workers who have saved for retirement • The findings demonstrate the continuing need for broad-based educational efforts savings to be their most important source of retirement retirement; they have a more meticulous approach to Among workers who have not saved for retirement (chart 10, table 6) recreational, entertainment, or travel pursuits they town meeting, and aired a one-hour Choose to more focused 47 percent, and the percentage who were not confident in Investments, Society for Human Resource Management, State Street Global Advisors, TIAA-CREF, T. Rowe Saving and Investing,” which explains the need for personal discipline and action, and education must be a in three they need it. Fifty-nine percent of African-Americans Asian-Americans, 52 percent of Hispanic-Americans, and retirement to be either Social Security (32 percent) or that time is running tried to determine what they will need was essentially begun to save, compared with 31 percent of those earn- week; 69 percent of whites, 68 percent of African- are already saving. And many retirement savers do not have two major sources 62% investing wisely), and younger boomers appear to be the retired or are planning to retire. This portion of the (50 percent) of Impulsives are somewhat confident about families raising children. A vast majority (88 percent) have not received information from their employer. compared with 22 percent in 1998, and 25 percent were • Private-sector organizations should actively support such education campaigns, as Fidelity Investments designed to make retirement savings a priority for individuals. The good news is the income, 47 percent of younger boomers and 52 percent of among savers is always significantly higher than that of TM retirement than do Deniers, Strugglers, or Impulsives, desire; and 27 percent say it has been worse in terms of Minorities ....................................................................... 13 Save prime-time news special on June 12, 1998. Change of Address: EBRI, 2121 K Street, N.W., Suite 600, Washington, DC 20037; (202) 775-9132; fax number: on their their preparation increased from 23 percent to 47% 46% Price, Union Labor Life Insurance Co., and The Vanguard Group. increased financial literacy. The campaign also has minority major part of our efforts. The good news in the current money from an employer, such as a pension or contribu- 50 were not confident of this aspect of retirement, compared 49 percent of African-Americans also cited this reason. unchanged in the past year.) The increase is occurring Paul Yakoboski and Pamela Ostuw of EBRI and out. Impulsives who are ing under $25,000. As for a gender differential, Americans, and 67 percent of Hispanic-Americans said Check appear to be very confident in their investment decisions. TM of retirement income: population has been saving for retirement and is now their financial security, while 4 out of 10, or 40 percent, have graduated from high school, and one-quarter nonsavers (table 4). 1 not confident in 1997, compared with 32 percent in 1998. did in its partnership with WJLA on the Don’t Know 2% Choose to Save Generation Xers expect it to be most important. Older campaign.Don’t Know 5% 52% evidence that education can have a real impact at the individual level. TM but are not as meticulous as Planners. Cautious Savers Retirement Confidence by Race (202) 775-6312; e-mail: publications@ebri.org. ................................ 14 The Retirement Confidence Survey (RCS) is sponsored by the Employee 60 having enough money to help out their children and/or The Washington-area Choose to Save retirement, 28 percent. assembled a “Financial Facts Tool Kit,” which groups (African-Americans, Hispanic-Americans, and with 48 percent of whites. Hispanic-Americans are less survey is the evidence that education can have a real tion to a retirement account (31 percent) (table 7). The among both men and women. In 1998, 49 percent of © 1998. Another major reason selected by African- Jennifer Hicks of Mathew Greenwald & Associ- • Thirty-one percent are very confident in their finan- not saving say they they could. poised to reap the rewards. 69 percent of male workers say they have begun to save But evidence shows education can have a real impact on indicate they are not confident. A large proportion of Benefit Research Institute (EBRI), the American Savings Education Council pensions (53 percent) (26 percent) of Strugglers have completed a four-year However, even savers do not appear to be Table 1 boomers are the most likely (35 percent) to expect an tend to be younger baby boomers (ages 35–44). About 40 (chart 11) grandchildren. In addition, 45 percent are not confident project was underwritten by Fidelity Investments. this focus has includes a variety of educational materials on how to impact at the individual level (chart 10). Asian-Americans), as called for by the organizers of the (ASEC), and Mathew Greenwald and Associates (MGA). It was underwritten confident than whites that they are doing a good job of Americans is that they expect to have a pension Table 4 third most likely source is money personally saved in a ates wrote this Issue Brief with assistance from have too many current males and 40 percent of females have attempted such a for retirement, compared with 57 percent of female Employee cial preparations for retirement, compared with Hispanic-Americans are less likely than whites Information: • For the first time, the 1998 RCS examined retirement planning, saving, and Expected Major Sources of Retirement Income, Inquiries regarding EBRI membership, ASEC partnership, and/or contributions to EBRI-ERF behavior at the individual level. While calls for “more and work-based savings Retiring Savers say they are more savers than Cautious Savers are not confident, either (47 percent). college. About one-half (49 percent) are working full 36% • Employers of all sizes should undertake extensive retirement savings efforts, such as those undertaken by When employer-funded plan to be their most important income extremely confident. In no aspect of retirement are more one-quarter (27 percent) of this group have a college Yes 55% that they will have enough money to cover long-term Specific Areas of Concern ..................................... 14 by 33 public and private organizations; the Minority Special Report was 33% not translated into increased confidence about their The public service announcements are available for Confidence across Generations Prospects for Retirement get started in developing a financial plan, how to 1998 National Summit on Retirement Savings. (For more 40 work-related plan or outside work (19 percent). Among workers who have received educational should be directed to EBRI President/ASEC Chairman Dallas Salisbury, 2121 K Street, N.W., Suite 600, by Personality Type 30 preparing financially for retirement (48 percent and (34 percent). Similarly, 26 percent of whites also say that calculation, compared with 39 percent of males and the Institute’s research and editorial staffs. Any financial responsibili- and Asian-Americans to have made an attempt to workers. Benefit 22 percent of those who have not received information attitudes across ethnic groups (African-Americans, Hispanic-Americans, Asian- and better education” may seem mundane and trite to plans they use to save investors (91 percent versus 57 percent of all Americans), However, Cautious Savers say they are more optimistic time. than 50 percent of savers “very confident.” Why isn’t underwritten by 14 public and private organizations. IBM and Hard Rock Cafe. workers are source, compared with 20 percent to 23 percent of pre- degree. One-third have middle incomes (33 percent earn Investment Confidence ......................................... 14 care, should it be needed. retirement income adequacy. Since 1993, a consistent use in other media markets. Washington, DC 20037, (202) 659-0670; e-mail: salisbury@ebri.org. understand investment choices, how to manage information on the Summit, see box on p.17). This survey 26 percent, respectively). Hispanic-Americans and Asian- material or attended seminars about retirement plan- The most important expected source of retire- a major reason they are not saving for retirement is that 32 percent of females in 1997. views expressed in this report are those of the Research from their employer. Americans, and whites). African-Americans are the least confident that they will ties. Slightly more and that they are disciplined in their savings (86 percent determine how much money they will need to have saved What motivates individuals to begin saving for some, if we view retirement income security as a long- 2 about their retirement income prospects than their own money Sources Savers Nonsavers confidence higher among retirement savers? A possible Minority Special Repor asked what retirees, younger boomers, and Generation Xers. between $25,000 and $50,000), but Cautious Savers are This analysis is modeled on a segmentation analysis done by Public Agenda t Under 20 writers Retirement Expectations and Planning ................... 14 Among workers, those belonging to Generation X are Cautious Retiring 19 percent to 25 percent of working Americans have been Current workers should also note that The U.S. Department of Labor, along with money and investments, and how to get more ning and savings through their employer in the past of retirement confidence, expectations, and planning for they expect to have a pension. Twenty-six percent of Americans are less confident that they will have enough ment income identified most often by Hispanic- author and should not be ascribed to the officers, Cautious Savers are retirement? Unfortunately, the reality is that the top two by the time they retire in order to live comfortably in Institute- The growing attention given to retirement, have enough money to live comfortably in retirement. African-Americans and term challenge, education must be the central focus of and EBRI in the 1994 report, Promises to Keep (45 percent). Cautious (New York, NY: Public versus 68 percent of all Americans). This group is averse Deniers Strugglers Impulsives Impulsives: About one in five (18 percent) is very Savers 20 Planners Savers Impulsives: “I should plan and save, No 41% they expect Twenty-three percent of pre-retirees, 16 percent of older explanation is that only 57 percent have tried to deter- No 40% Any views expressed in this publication and those of the authors should not be ascribed to the officers, representative of all income levels. 43 percent of current retirees retired earlier than they Percentage Very Confident In: Sources of Income ................................................. 14 more confident than the members of any other genera- very confident that they will have enough money to live the U.S. Department of Treasury and 65 public and 4 5% information on saving and investing. retirement reveals interesting similarities and differ- Agenda, 1994). Four of the six groups were originally identified in that study. year, Americans is Social Security (25 percent) (table 7). 43 percent report that the material led them to 10 money for medical expenses in retirement: one-half of whites respond that a major reason they have not begun retirement planning, and saving by the media, employ- • Fifty-one percent of savers are very confident that trustees, members, or other sponsors of EBRI, 2% putting money away for retirement. Almost three-quarters (72 percent) of motivators are negative in nature (chart 6). First is Education Hispanic-Americans are less likely than whites and Asian-Americans to have our efforts. Savers indicate that to taking financial risks (52 percent versus 38 percent of confident, and one-third (33 percent) are somewhat The 1998 Minority Special Report was underwritten by grants from the following organizations: American trustees, members, or other sponsors of the Employee Benefit Research Institute, the EBRI Education and mine how much they need to save for retirement, and Having enough money for basic living expenses 49% to be their 21% boomers, 9 percent of younger boomers, and 3 percent of of Income but . . . Oh, I need to buy a new suit!” had planned. We know from previous RCS surveys that (table 7) Yes 57% tion about their retirement income prospects (table 2). comfortably through their retirement years (chart 4). In private organizations, launched a Retirement Social Security 58% 49% 29% 3 37% 22% 40% ences in attitudes and expectations among these ethnic Hispanic-Americans and 41 percent of Asian-Americans Another one-fifth (21 percent) cited money personally The segmentation was accomplished through the use of K-Means Cluster to save for retirement is that economic events, such as ers, policymakers, and partnerships such as the Their financial preparations for retirement they are investing wisely, compared with 41 percent of 35 10 EBRI-ERF, or their staffs. Neither EBRI nor Research Fund, or their staffs. Nothing herein is to be construed as an attempt to aid or hinder the adoption saved any money for retirement. Among those saving for retirement, individuals’ retirement having observed someone not prepare and then struggle all Americans). Virtually all of the Retiring Savers report Hispanic-Americans have not completed a savings needs and Bankers Association, American Express Financial Services, AT&T, CIGNA Corporation, Diversified Invest- confident. they will rely on a Planners: “I am saving, investing, and 46 percent are very confident that they are investing Pension most impor- 36 36 53 Generation Xers expect Social Security to be their most 043 47 46 Retirement Preparations ...................................... 15 Thirty-two percent of Generation Xers are very confident 0 individuals often retire early as a result of negative 1998, 24 percent of workers say they are very confident Analysis. In this method, each respondent is assigned to a group based on the Savings Education Campaign in July 1996. Through Other Outreach Activities Having enough money for medical expenses 27 7 groups. While analysis indicates that these findings are were not confident, compared with 29 percent of whites. of any pending legislation, regulation, or interpretative rule, or as legal, accounting, actuarial, or other such saved. Seventeen percent of Hispanic-Americans expect EBRI-ERF lobbies or takes positions on specific savers who have not received employer information. (61 percent). Cautious American Savings Education Council (ASEC) is having calculation, compared with 61 percent of African- in retirement. Almost one-half (48 percent) say this confidence that they are investing their retirement savings wisely does not differ mixture of retirement that they pay off their credit cards at the end of each Research ment Advisors, ManuLife Financial, National Council of La Raza, National Federation of Independent 401(k)-Type Plan 20 30 45 36 Not surprisingly, Planners and Retiring Savers Very48 Somewhat 38 Not Too Not At All White African- Hispanic- Asian- tant important income source in retirement. There are no their retirement savings wisely, while 47 percent are distance of their responses to the 12 questions from the cluster center. Cluster Impulsives believe that a comfortable retirement is 4 economic events and not because they wanted to leave Having enough money for travel, recreation, etc. (chart 12) 24 7 planning for a secur All workers, not just workers participating in an employment-based that they will have enough money for a comfortable e future.” that they will have enough money for a comfortable this unique public-private partnership, the Labor professional advice. Members of Congress are also working to educate primarily influenced by educational and income differ- Personal Savings 13 14 20 part- or full-time employment to be their most important 25 44 35 Confident Confident Confident Confident an impact. The need to plan and save for retirement has African-Americans and Hispanic-Americans are center solutions are iteratively estimated from the data. This type of analysis policy proposals. EBRI invites comment on this American American American Savers say they were provides a lot of motivation, and an additional 36 percent Americans, 54 percent of whites, and 51 percent of among ethnic groups. Hispanic-Americans are less likely than whites and Asian- income sources. month (99 percent versus 51 percent of all Americans). Fund. are the groups with the highest proportions of individu- Having enough money for long-term care Business, Nationwide Life Insurance Co., The Principal Financial Group, Prudential Investments, Scudder 17 6 retirement plan, were asked whether an employer had provided them with somewhat confident and 7 percent are not confident retirement income source, the 1998 percentage expecting notable differences between male and female workers in achievable with a little planning and saving (91 percent the work force or felt that they could afford to do so. Motivators to Begin Saving .................................. 15 retirement, compared with 25 percent of pre-retirees, retirement, 44 percent are somewhat confident, and Department served as the catalyst for the creation of is based on nearest centroid sorting, with cases assigned to specific clusters people in their states about the importance of ences across ethnic groups, it also finds that ethnicity is • Twenty-four percent are not confident about their also less likely to have personally begun saving for retirement income source. educational material or seminars about retirement planning and saving in the come into sharper focus on Americans’ radar screens. research. Americans to have made an attempt to determine how much money they will need scared into saving Asian-Americans. say it provides some motivation. Second is the realiza- All rights Source: 1998 Retirement Confidence Survey. Kemper Investments, T. Rowe Price, and Union Labor Life Insurance Co. Those in this group who are already retired are als who are confident about their retirement. In fact, Planners have (chart 7). Therefore, even though most workers are it to be personal savings drops significantly from 1997— versus 71 percent of all Americans), but they cannot EBRI Issue Briefs Source: 1998 Retirement Confidence Survey. is registered in the U.S. Patent and Trademark Office ISSN: 0887-137X 1085-4452/90 expected retirement income sources. Nearly all Planners believe a comfortable retirement is based on their proximity to the cluster’s center. Cases are assigned to the Why Not Save? .......................................................... 16 22 percent of younger boomers, and 18 percent of older Source: 1998 Retirement Confidence Survey. Source: 1998 Retirement Confidence Survey. Source: 1998 Retirement Confidence Survey. Twenty-four percent of retirees have worked since they 31 percent are not confident. This is despite a very past twelve months. Thirty-nine percent responded that they had received such overall retirement prospects, compared with a factor in differing attitudes toward retirement. retirement, which could influence their confidence levels. Asian-Americans are most likely to choose because they have seen tion that time is running out to prepare for retirement. Hispanic-Americans are also less likely than to have saved by the time they retire. cluster whose center they are closest to. the highest proportion truly having golden years—for them retirement is better reserved. among Planners more than 4 out of 10 (42 percent) $ .50 +.50 down to 39 percent from 51 percent (table 3). What achievable, if they just plan and save (91 percent versus material or been offered such a seminar. saving, nearly one-half are not saving with a goal in Sixty-one percent of current workers think that seem to get there themselves. For most Impulsives, retired (6 percent full time and 18 percent part time), but Conclusion ...................................................................... 16 boomers. strong economy and Americans’ increased attention to EBRI Issue Brief Number 200 • August 1998 • © 1998. EBRI 10 14 4 12 8 2 18 16 20 6 Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief Augusst 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief August 1998 • EBRI Issue Brief 11 15 19 13 17 1 5 3 9 7 Percentage Dollars Accumulated Percentage Percentage Percentage Issue Brief Issue Brief Percentage Percentage Percentage Percentage Percentage

Volume 200

Pages 20

EBRI Issue Brief

Paul Yakoboski

Pamela Ostuw

Jennifer Hicks

Retirement