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					Retirement Trends
The Latest Findings on the Attitudes and Behavior of the American Worker Toward Retirement
Dallas L. Salisbury, Employee Benefit Research Institute www.ebri.org for Transamerica, October 30, 2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

1

12th Annual Retirement Confidence Survey 2002

Employee Benefit Research Institute American Savings Education Council 2121 K Street NW, Suite 600 Washington, DC 20037 Phone: (202) 659-0670 Fax: (202) 775-6312

Mathew Greenwald & Associates, Inc. 4201 Connecticut Ave. NW, Suite 620 Washington, DC 20008 Phone: (202) 686-0300 Fax: (202) 686-2512

2

Attitudes About Finances and Saving

3

Worker & Retiree Attitudes about Saving for Retirement
Please tell me how well each of the following statements describes you. Would you say that it describes you very well, well, not too well, or not at all? Workers (n=775) Retirees (n=225)

Very well
I think anyone can have a comfortable retirement, if they just plan and save.

Well 39% 36% 33%
71% 68%

W

32% 32% 21% 37% 14% 16% 6% 10% 15% 4% 10% 8% 25% 31%

R
W R

I am more of a saver than an investor.

54%

29%

66%

(I thought) if I just save(d) some money each month I will/would be fine in my retirement. I feel it is/felt it was pointless to plan for retirement because it is/was too far away to know what I will/would need.

W
R

39% 47%

W R

16%

11%

26%

I think preparing for retirement takes too much time and effort.

W R

13% 21%
4

13%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

Personality Types
Among those providing responses to all segmentation questions (n=988)

Deniers
Disliking financial planning and seldom planning ahead even for more immediate financial concerns, they do not feel that a comfortable retirement is within their reach.

Planners
Disciplined savers and financial risktakers, they enjoy financial planning and believe anyone can have a comfortable retirement if they just plan and save.

15% 23%

Impulsives
They believe a comfortable retirement is possible and many are willing to take financial risks, but they are not disciplined savers. Instead, they are prone to impulse buying and financial setbacks.

24% 19% 18%

Savers
Careful with their money, they are seldom set back by unexpected events. But their risk-averse behavior makes them savers rather than investors.

Strugglers
Sometimes impulse shoppers, they are frequently set back by unexpected events. Many consider themselves disciplined savers, but the struggle this involves makes them cautious with their savings.
Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute 5

Retirement Expectations

6

Planned and Actual Retirement Age
Realistically, at what age do you expect to retire? Workers (n=775) How old were you when you retired? Retirees (n=225)

Workers 29%

Retirees 29%

18% 15% 12% 16% 13% 11% 11% 11% 11%

5%

5%

Before 55

55 - 59

60-61

62-64

65

66 or older

Never retired

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

7

Timing of Retirement
Did you retire earlier than you planned to, retire later than you planned to, or retire about when you planned to? Retirees 2002 (n=225)

Earlier than planned 52% 53% 48% 43% 40% 42% 49%

About when planned

Later than planned 52%

48% 45% 42% 40% 36%

48% 39%

47% 45%

39%

7% 3% 3%

7%

5%

5%

6%

5%

5%

1991

1992

1996

1997

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

8

Change in Expected Retirement Age
In the past year, has the age at which you expect to retire changed? If yes, is it likely you will retire earlier or later than you previously thought? Why has it changed? Workers age 45 and older 2002 (n=304) (multiple responses accepted) Want to make sure am financially secure For health or disability reasons (n=70) 22% 15%

Don’t know/ Refused 4%

Yes, earlier 8% No 73% Yes, later 15%

Will have to work longer to make up for losses in stock market Economy/ cost of living Social Security will not be there for me Company downsizing/ offering early retirement/ closing Eligibility age of Social Security is increasing To spend more time with family Other

8% 7% 7%

5% 4% 3% 36%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

9

Expected Length of Retirement
For how many years do you expect to be retired? Workers planning to retire (n=734) At the time that you retired, how many years did you expect your retirement to last? Retirees (n=225)

Workers 33% 30% 28%

Retirees 33%

20% 16% 16%

20%

Less than 20 years

20 - 29 years

30 years or more

Don't know
10

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

Working in Retirement
Do you think you will do any work for pay after you retire? Workers planning to retire 2002 (n=734) Have you worked for pay since you retired? Retirees 2002 (n=225)

Workers 66% 62% 65%

Retirees 66% 61%

27% 22% 22%

26%

24%

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Major Reasons for Working After Retirement
Is . . . a major reason, a minor reason, or not a reason why you think you will continue working after you retire? Workers planning to work for pay in retirement (n=486) Is . . . a major reason, a minor reason, or not a reason why you worked after you retired? Retirees working for pay in retirement (n=53)
Workers 65% 56% 45% 33% 24% 22% 18% 11% 15% 4% 13% 33% Retirees

You enjoy working and want to stay involved

Keeping health insurance or other benefits

Wanting money to buy extras

Wanting money to make ends meet

Helping support children or other relatives

Trying a different career

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

12

Expected Replacement Needed for Pre-Retirement Income
About what percentage of your pre-retirement household income do you think you (and your spouse) will need to live comfortably in retirement? By pre-retirement income, I mean your household income right before you retire. Workers 2002 (n=775)

2001 24% 25%

2002

19% 17% 13% 14% 12% 10% 7% 8% 9% 18% 16%

2% 2%

3%

Less than 50% - 59% 60% - 69% 70% - 79% 80% - 89% 90% - 99% 50%

At least 100%

Don't know

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Expected Sources of Income in Retirement for Workers
Do you expect it will be a major source of income, a minor source of income, or not a source of income in your (and your spouse’s) retirement? Workers (n=775)

Major source

Minor source

Not a source

Don’t know/Refused

43%

37%

34%

27%

23%

22%

14% 27%

7% 21%

3% 23%

32%

34%

35%

50% 56%

44% 70% 57% 73%

23%

27%

29% 15%

25%

32%

Employee contrib. to retirement plan at work

Employer contrib. to retirement account

Pension

Social Security

Employment

Other personal savings

Sale of home or business

Other government programs

Support from children/ other family

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Actual Sources of Income in Retirement for Retirees
Is it a major source of income, a minor source of income, or not a source of income in your (and your spouse’s) retirement? Retirees (n=225)

Major source

Minor source

Not a source

Don’t know/Refused

19% 41% 62% 22% 33%

17% 16%

15% 16%

9% 13%

7% 10%

3% 15%

1% 6%

62% 29% 7%
Social Security Pension Other personal savings Employee contrib. to retirement plan at work

67%

76%

83%

79%

93%

33%

48%

Employer contrib. to retirement account

Sale of home or business

Other government programs

Employment

Support from children/ other family

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Expected and Actual Largest Share of Income in Retirement
And which source do you think will provide you (and your spouse) with the largest share of income in retirement? Workers (n=775) And which source provides you (and your spouse) with the largest share of income in retirement? Retirees (n=225)
Workers 44% Retirees

30% 24%

14% 6%

14% 11%

13% 9% 1% 7% 2% 6% 5% 5% 1% <.5%
Support from children/ other family

3%

Employee contrib. to retirement plan at work

Pension

Other personal savings

Social Security

Employment

Employer contrib. to retirement account

Sale of home or business

Other government programs

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Reality vs. Expectations for Retirement
Has your actual experience in retirement in terms of . . . been better or worse than you expected at the time you retired? Retirees 2002 (n=225)

Better than expected
2001

About the same

Worse than expected

Overall standard of living

37% 51%

40% 26%

18% 19%

2002

Having enough money to cover medical expenses

2001

35% 45%

27% 24%

31% 26%

2002

Having enough money to take care of basic expenses

2001

44% 55%

27% 22%

24% 19%

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Reason Standard of Living Worse than Expected in Retirement
You said your overall standard of living is worse than you expected at the time you retired. Why do you say that? Retirees saying their overall standard of living is worse than expected (n=42)

General expenses were higher than expected Had unexpected medical expenses

38% 26% 14% 10% 3% 3% 18% 7%

Thought Social Security/ pension benefits would be higher Thought Medicare would cover more
Unable to find employment/ lost employment

Investments not doing as well as expected
Other Don’t know

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Planning & Saving for Retirement

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Attempted to Do a Retirement Savings Needs Calculation
Have you tried to figure out how much money you will need to have saved by the time you retire so that you can live comfortably in retirement? If married, has your spouse tried to figure out how much money you will need to have saved by the time you retire so that you can live comfortably in retirement? Workers 2002 (n=775)

Respondent

Respondent and/or spouse 53% 48% 44% 38%

42% 31% 32% 29% 33%

45%

51% 39% 32%

1994

1995

1996

1997

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

20

Method Used to Determine Retirement Savings Needs
How did you determine the amount you would need to save by the time you retire? Workers trying to do a retirement needs calculation (n=291)

Estimated amount based on economy, inflation, earnings Amount calculated by financial advisor Completed worksheet/ did calculation

32%

22%

22%

Guessed Read/ heard that is how much needed

8%

3%

Other

6%

Don’t know

8%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Retirement Savings Calculation Led to Change in Behavior
Did you make any changes in your retirement planning as a result of trying to figure out the amount you will need to have saved by the time you retire? If yes, what changes did you make? Workers trying to do a retirement needs calculation (n=291)

(multiple responses accepted)
Started saving more Changed allocation of money

58%

26%

No 54%

Yes 45%

(n=130)

Researched other savings methods

7%

Started working more

4%

Don't know 1%

Other

11%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

22

Changes in Economy Led to Change in Behavior
Did you make any changes to your retirement planning and preparations as a result of the changes in the economy and financial markets that have occurred during the past year? If yes, what changes did you make? Workers trying to do a retirement needs calculation (n=291)

(multiple responses accepted)
Changed allocation of money Started saving more

52%

22%

No 75%

Yes 24%

(n=69)

Researched other savings methods Started saving less

7%

3%

Don't know 1%

Started working more

2%

Other

18%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

23

Currently Saving for Retirement
Are you (and/or your spouse) currently saving for retirement? Workers having personally saved for retirement 2002 (n=554)

89%

85%

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Employer Contributed to Retirement Savings Account
Last year, did an employer contribute any money to a retirement account in your name (or your spouse’s name)? Workers 2002 (n=775)

52% 49%

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

25

Total Amount Accumulated for Retirement
As of today, how much money in total do you (and your spouse) have accumulated for your retirement? Workers (n=775) At the time you retired, how much money in total did you (and your spouse) have accumulated for your retirement? Retirees (n=225)
33% Workers Retirees 23%

15% 12% 12%

16% 11% 9% 9% 4% 8% 5% 3% 7%

17% 17%

None

$1 - $9999

$10,000 $24,999

$25,000 $49,999

$50,000 $74,999

$75,000 $99,999

$100,000 or Don't know/ more Refused

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Confidence in Retirement Savings Investments
How confident are you that you (and your spouse) are investing your retirement savings wisely? Workers having some retirement savings 2002 (n=662)

Very confident

Somewhat confident

Not confident

1998

45%

47%

8%

2002

29%

51%

19%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Savings or Investments Other Than for Retirement
Besides what you may have put aside for retirement, do you currently have any other savings or investments? Workers 2002 (n=775) Retirees 2002 (n=225)

2001 48% 40%

2002

37%

38%

Workers

Retirees

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Perception of Retirement Planning & Saving Progress
And when it comes to planning and saving for retirement, would you say that you are on track, ahead of schedule, or behind schedule? Is that a little ahead of/behind schedule or a lot ahead of/ behind schedule? Workers (n=775)

34%

33%

25%

2%

3%

A lot ahead of schedule

A little ahead of schedule

On track

A little behind schedule

A lot behind schedule

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Able to Save $20 Per Week (More) for Retirement
Do you think it is reasonably possible for you to save $20 per week (more than you are currently saving) for retirement? Workers (n=775)

Savers (n=554)
No 28%

Nonsavers (n=220)

No 37% Yes 62%

Yes 70% Don't know/ Refused 2%

Don't know/ Refused 1%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

30

Savings Vehicles Used to Save for Retirement
Please tell me whether you have ever used each of the following to save for your retirement. Workers who have saved for retirement 2002 (n=554)

2000

2001

2002
79% 78% 75%

A work-related retirement savings plan NA Other savings or investments set aside for retirement
55%

67% 61%

An IRA
18% 18% 20% 5%

58% 53%

Cash in a safe place at home or safe deposit box

Keogh account

7% 5%
31

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

Availability of & Participation in Retirement Savings Plan at Work
Does your current employer offer you a retirement savings plan that allows you to make before-tax contributions from your salary to an individual account set up in your name? If yes, do you contribute to the plan? Workers employed full or part-time (n=566)

Offered

Participate

No 32% Yes 66%

No 19%

(n=373)

Yes 81%

Don't know 2%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

32

Received Employer-Provided Educational Information on Retirement in Past Year
In the past 12 months, has an employer or work-related retirement plan provider given you educational material or seminars about retirement planning and saving? Workers 2002 (n=775)

41% 38% 37% 35%

41%

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

33

Forms of Information Provided by Employer
Thinking about the educational material or seminars you received in the past 12 months, in which of the following forms did you receive the information? Workers receiving information on retirement planning from an employer 2002 (n=320) Retirement benefit statements Brochures Newsletters/magazines
60% 59% 54%
NA NA NA

82% 82% 85% 82% 68% 62% 66%

Seminars or group meetings
Individual access to a financial planner Workbooks/worksheets

57% 61% 55% 54% 58% 43% 47% 47% 20% 20% 14% 20% 15% 14%

Intranet, Internet, or on-line services
Videos or CD-ROMs Computer software

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

34

Educational Material Led To Change in Behavior
Did you make any changes in your retirement planning as a result of the material you received from your employer? If yes, what changes did you make? Workers receiving educational material or seminars (n=320)

(multiple responses accepted)
Started saving more

34% 33% 23% 3% 2% 2% 1% 6%

Changed allocation of money
Started working more

No 72%

Yes 27%

(n=86)

Started saving for the first time Researched other savings methods Started saving again after having stopped

Don't know 1%

Started saving less Other

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

35

Employer-Provided Access to Investment Advice for Retirement Purposes
In the past 12 months, has an employer provided you with access to investment advice for retirement purposes, that is, specific recommendations about which stocks, bonds and mutual funds you should invest your money in for retirement? If yes, did you request specific recommendations on how you should invest your money? Workers (n=775)

Provided

Requested

No 85%

Yes 37%
Yes 14%

(n=111)
Don't know/ Refused 1%

No 60%

Don't know 3%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

36

Amount of Thought Given to Retirement Financial Needs
When thinking about your financial needs in retirement, how much thought have you given to . . . ? Retirees (n=225)

A lot of thought

A little thought

No thought

The need for health insurance for you (and your spouse)

57%

21%

20%

The possibility of having to pay for health care expenses not covered by Medicare

53%

27%

19%

How to manage your money in retirement so you do not outlive your savings

49%

29%

19%

The need for long-term care insurance

40%

35%

25%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

37

Retirement Confidence

38

Worker Confidence in Having Enough Money to Live Comfortably Throughout Retirement
Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Workers 2002 (n=775)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

18%

20%

21%

19%

24%

22%

22%

25%

22%

23%

55%

45%

41% 51% 41% 45% 47% 47%

41%

47%

17% 19% 17% 6% 1993 1994 19% 8% 1995

23%

19%

18% 18% 13% 1998 21% 9% 1999 18% 17% 10% 2000 2001 10% 2002 19%

16% 1996

15% 1997

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

39

Worker Confidence in Specific Retirement Attributes
Next, I would like to know how confident you (and your spouse) are about certain aspects related to retirement. Workers 2002 (n=775)

Very
You will have enough money to take care of your basic expenses during your retirement. You will do a good job of managing your money in retirement so that you will not outlive your savings. You are doing a good job of preparing financially for your retirement. You will have enough money to take care of your medical expenses during your retirement. You will have enough money to pay for long-term care, should you need it during retirement.

Somewhat

Not too/Not at all

38%

46%

16%

30%

45%

25%

23%

49%

28%

20%

45%

35%

13%

36%

50%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

40

Retiree Confidence in Having Enough Money to Live Comfortably Throughout Retirement
Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Retirees 2002 (n=225)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

27%

27%

26%

26%

19% 33% 28% 31% 34% 37% 40%

45%

37%

47%

42%

34% 24%

39% 41% 37% 32%

21% 16% 7% 5% 1993 13% 1994 18% 6% 1995

20% 8% 1996

18% 24% 11% 5% 1997 1998

20% 8% 1999

14% 11% 2000

10% 11% 5% 2001

16% 11% 2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

41

Retiree Confidence in Specific Retirement Attributes
Next, I would like to know how confident you (and your spouse) are about certain aspects related to retirement. Retirees (n=225)

Very
You will have enough money to take care of your basic expenses during your retirement. You are doing a good job of managing your money in retirement so that you do not outlive your savings. You did a good job of preparing financially for your retirement.

Somewhat

Not too/Not at all

43%

41%

15%

39%

38%

22%

35%

38%

26%

You will have enough money to take care of your medical expenses during your retirement. You will have enough money to pay for long-term care, should you need it during retirement.

35%

37%

27%

22%

30%

47%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

42

Worker Confidence that Social Security Will Continue to Provide Benefits of at Least Equal Value
How confident are you that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today? Workers 2002 (n=775)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

4% 19%

4% 18%

3% 16%

3% 17%

5% 17%

6% 16%

7% 21%

7% 21%

8%

6% 25%

26%

41%

38%

42%

40%

36%

31% 38% 39% 33% 38%

33%

39%

38%

38%

39%

44% 33% 33% 32% 30%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

43

Retiree Confidence that Social Security Will Continue to Provide Benefits of at Least Equal Value
How confident are you that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today? Retirees 2002 (n=225)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

14%

16%

12%

7%

14%

19%

17% 26% 28% 27%

30% 36% 35%

36% 34% 34% 34% 33% 38% 31%

35% 34% 30%

36%

33%

31%

33% 27% 20% 7% 7% 2001 30%

6% 10% 1993

10% 10% 1994

15% 8% 1995

11% 11% 1996

9% 10% 1997

11% 5% 1998

12% 1999

9% 5% 2000

8% 2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

44

Worker Confidence that Medicare Will Continue to Provide Benefits of at Least Equal Value
How confident are you that the Medicare system will continue to provide benefits of at least equal value to the benefits received by retirees today? Workers 2002 (n=775)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

3% 21%

3% 24%

2% 19%

3% 20%

3% 21%

4% 24%

7% 24%

6%

7%

5%

29%

32%

28%

43%

32%

38%

38%

37%

34% 38% 38% 31% 40%

30%

37%

38%

37%

34%

36%

30%

27%

26%

26%

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

45

Retiree Confidence that Medicare Will Continue to Provide Benefits of at Least Equal Value
How confident are you that the Medicare system will continue to provide benefits of at least equal value to the benefits received by retirees today? Retirees 2002 (n=225)

Very

Somewhat

Not too

Not at all

Don’t know/Refused

12%

13%

6%

5%

10%

12%

12% 22%

14%

18%

28% 32% 30%

35%

31%

35%

39% 40% 49% 38%

36% 32% 26% 35% 34% 39% 21% 9% 1994 20% 10% 1995 36% 23% 14% 10% 1993 16% 8% 1996 17% 11% 7% 1997 1998 12% 1999 7% 7% 2000 16% 13% 7% 2001 2002 26%

16%

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

46

Mobility of the Workforce Explains Why Workers Value Defined Contribution Plans

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

47

Mobility is a fact of life at all ages.
18 16 14

Median Years

12 10 8 6 4 2 0 1951 1963 1966 1973 1978 1983 1987 1991 1996 1998 2000 2002 Age 25–34 Age 35–44 Age 45–54 Age 55–64

Source: U.S. Bureau of Labor Statistics
Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute 48

Very Few Workers Remain for the “Gold Watch”
Percentage of Male Wage & Salary Workers with 25+ Years of Tenure, by Cohort Ages 45+ (1983--2002)
35 32.8 31.4 30 29.3 26.6 25 27.3 25.5 25.5 23.4 23.5 20.2 17.0 15 16.8 17.2 21.2 Ages 45 to 54 Ages 55 to 59 16.2 14.8 14.9 Ages 60 to 64 27.6 26.9 24.6

Percentage

20

19.8

10

5

0 1983 1987 1991 1996 1998 2000 2002 Source: EBRI tabulations of data from the Bureau of Labor Statistics

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

49

The Survey Indicates Knowledge that Could Lead to More Savings

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

50

A Better Understanding of Life Expectancy • The GAM 88 table says a man has average life expectancy of 80 – a woman 85 – yet 50% will live longer! • Individuals don’t remember that this is an “average.”

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

51

A Better Understanding of How Long We Will Need to Work to Match The Financial Security of Those Already Retired

76 74 72 70 68 66 64 62 60 58 1935 1970 1990 Age 2010 2030 2050

75.4 74.1 72.8 71.5 69.1

65

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

52

A Better Understanding of the Savings Needed for Retiree Medical Age of Last Life 7% Health Inflation 14% Health Inflation

80 85 90 100

$94,000 $126,000 $160,000 $226,000

$160,000 $261,000 $408,000 $852,000

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

53

The Fact That Social Security Doesn’t Work Alone – Was Not Intended To Do So – and When I Can Get Full Benefits

Source: Social Security Administration (SSA) Office of Research, Evaluation and Statistics, Fast Facts and Figures about Social Security, 1999, p. 1.

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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That SSA Replacement Rates Are Going Down
Median Replacement Rates from Social Security at Age 65 for Participants Turning 65 in the Year Indicated, by Income Quartile at Age 65

50 45 40 35 30 25 20 15 10 5 0 2005-9 Quartile 1 Quartile 2 2020-4 Quartile 3 2035-9 Quartile 4

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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That My Age Makes a Big Difference in What I Can Do
Equity Market Investment Returns Effect on 401(k) Accumulations at Age 65 Among Participants Reaching Age 65 Between 2030 and 2039, by Income Quartile at Age 65 (percent change)
0 -5 -10 -15 -20 -25 -30 Quartile 1 bear, start Quartile 2 Quartile 3 bear, middle Quartile 4 bear, end

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Summary: What Is Needed • Financial Education and Advice as Early as Possible • Saving Early in Life • Saving for Health Expenses as Part of Retirement Savings • Assessment of the Prospects of Living a Long Time • Planning Retirement Ages Accordingly • Teaching and Planning on the Distribution Phase

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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Visit EBRI Online for More

• • • •

www.EBRI.org www.choosetosave.org www.ourhealthbenefits.org www.asec.org

Source: 2002 Retirement Confidence Survey Copyright 2002 Employee Benefit Research Institute

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EBRI
2121 K Street NW Suite 600 Washington, DC 20037 Voice: 202-659-0670 Fax: 202-775-6312

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