2016 Retirement Confidence Survey

Transcription

1 2016 Retirement Confidence Survey A Secondary Analysis of the Findings from Respondents Age 50+ Alicia R. Williams, PhD and Eowna Young Harrison, BS AARP Research

2 About AARP AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million, that helps people turn their goals and dreams into real possibilities, strengthens communities and fights for the issues that matter most to families such as healthcare, employment and income security, retirement planning, affordable utilities and protection from financial abuse. We advocate for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name as well as help our members obtain discounts on a wide range of products, travel, and services. A trusted source for lifestyle tips, news and educational information, AARP produces AARP The Magazine, the world's largest circulation magazine; AARP Bulletin; AARP TV & Radio; AARP Books; and AARP en Español, a Spanish-language website addressing the interests and needs of Hispanics. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. The AARP Foundation is an affiliated charity that provides security, protection, and empowerment to older persons in need with support from thousands of volunteers, donors, and sponsors. AARP has staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Learn more at The views expressed herein are for information, debate, and discussion, and do not necessarily represent official policies of AARP. Acknowledgments The authors would like to thank the Employee Benefit Research Institute (EBRI) and Greenwald & Associates for collecting the data for this study and providing the data to AARP for additional analyses. A special thanks also to Kathi Brown for her thoughtful insights and final review of the report. For additional information about this report, contact Alicia Williams at ARWilliams@aarp.org. 2 2

3 Table of Contents Overview and Key Findings Implications RCS Methodology Detailed Findings Current Financial Situation Retirement Experiences Compared with Expectations Expected and Actual Age of Retirement 25 Levels of Confidence about Retirement and Related Areas Key Predictors of Overall Retirement Confidence Estimations of the Amount Needed for Retirement Saving for Retirement Appendix

4 Overview and Key Findings This study presents the findings of a secondary analysis of the Employee Benefit Research Institute s (EBRI) 2016 Retirement Confidence Survey (RCS), with a special focus on respondents age 50+. The goal of this study is to provide a better understanding of the retirement expectations, preparations, experiences and needs of Americans 50 years of age and older. The key findings from this study are as follows: Retirement Preparations and Estimations The average expected age of retirement among 50+ workers is 67; 9 percent of 50+ workers, however, expect to never retire. Approximately four in 10 (39%) 50+ workers and one in three (33%) 50+ retirees sought investment advice from a professional financial advisor over the past year. Fewer than half (45%) of 50+ workers have tried to calculate how much they will need to live comfortably in retirement; among these workers, the median amount calculated ranges between $250,000 and $499,999. Saving for Retirement Three in four 50+ workers (76%) and two in three 50+ retirees (65%) have personally saved for retirement. However, slightly more than a third of workers (36%) and about half of retirees (49%) have less than $25,000 in savings and investments. Saving for retirement as well as the amount saved tends to increase as household income increases. More than one in four 50+ workers (27%) with a retirement savings plan have taken a loan from the plan.

5 Overview and Key Findings (Continued) Retirement Confidence Seven in 10 (72%) 50+ workers and more than three in four (78%) 50+ retirees feel at least somewhat confident that they are doing or have done a good job of preparing financially for retirement. 50+ workers and retirees are somewhat more confident about their ability to prepare a budget (91% and 90%, respectively) than they are about their ability to choose health insurance on their own (74%, 76%) or plan for retirement (75%, 80%). Eight in workers (80%) and retirees (85%) feel at least somewhat confident they will have enough money to take care of their basic expenses during retirement; but they are less confident that they will have enough money to live comfortably (65% and 74%, respectively) and/or pay for their medical expenses (62%, 78%) during retirement. Just over half (52%) of 50+ workers and more than a third (36%) of 50+ retirees are not confident they will have enough money to pay for long-term care, if they need it during retirement. Nearly half of 50+ workers (48%) and about two in five 50+ retirees (38%) are not confident that Social Security will continue to provide benefits of at least equal value to what retirees receive today. Similar percentages (47% and 43%, respectively) also are not confident that Medicare will continue to provide the level of benefits that retirees currently receive. 5

6 Overview and Key Findings (Continued) Based on composite scoring of the seven areas of retirement confidence 1, more than three in four 50+ workers (78%) and more than eight in ten 50+ retirees (83%) feel at least somewhat confident about their overall future in retirement. Age, self-reported ratings of overall health, total amount of savings and investments, household income, and having other retirement savings invested outside of an IRA or employer-sponsored retirement savings plan are key predictors of overall retirement confidence. Specifically, as the levels of these predictors increase, overall retirement confidence also tends to increase. Sources of Income in Retirement Social Security is the most-often cited major source of retirement income for both 50+ workers (48%) and 50+ retirees (64%). This is followed by employer-sponsored savings plans (41%) among workers and employer-provided pension or cash balance plans (30%) among retirees. Among 50+ workers and retirees, women (62%) are more likely than men (51%) to cite Social Security as a major source of expected or actual retirement income; while men (45%) are more likely than women (35%) to cite employment as a minor expected or actual source of retirement income. 1 Note: Overall Retirement Confidence was computed based on respondents level of agreement with the following statements: they did/are doing a good job of preparing financially for retirement; they have enough money to live comfortably throughout retirement; they will have enough money to take care of basic expenses during retirement; they will have enough money to take care of their medical expenses during retirement; they will have enough money to pay for long-term care, if needed, during retirement; the Social Security system will continue to provide benefits of at least equal value to what retirees receive today; and the Medicare system will continue to provide benefits of at least equal value to what retirees receive today. 6

7 Overview and Key Findings (Continued) Retirement Experiences Nearly three in five (59%) 50+ retirees say their experiences in retirement, with respect to their finances, have not matched their expectations. About one in five (21%) found their expenses to be lower than expected; while about two in five (38%) have found their expenses to be higher than expected. 50+ retirees who retired earlier than planned (46%) were more likely than those who retired when planned or later than planned (33%) to say their finances in retirement are higher than expected. Among 50+retirees who retired earlier than planned, more than half (55%) cited having a health problem or disability as a reason for early retirement. More than a quarter of 50+ retirees (26%) have worked for pay after retiring. Among the various reasons cited for doing so, wanting to stay active and involved (82%) and enjoying working (80%) topped the list. Debt Nearly half of workers and a third of retirees age 50 and older report having a problem with debt; but just 1 in nine 50+ workers and retirees describe their level of debt as a major problem. Among 50+ adults, those who are divorced, partnered or single; those with incomes of less than $25,000; those describing their health as poor or fair; and those with less than a bachelor s degree are more likely than their counterparts to describe their level of debt as a problem. Although the percentage of 50+ workers and retirees describing their level of debt as a major or minor problem increased from 2005 to 2011 (by 10 and 12 percentage points, respectively likely a result of the Great Recession in 2008), both percentages returned to 2005 pre-recession levels in

8 Implications The findings from this study suggests that a majority of workers ages 50 and older may have an unrealistic view of their retirement future. While nearly two in three (65%) 50+ workers are somewhat or very confident that they will have enough money to live comfortably in retirement, the median amount of their current savings and investments is between $50,000 and $99,999. However, the median amount they expect they will need to accumulate for a comfortable retirement is between $250,000 and $499,999. Additionally, although they estimate they will need to save about 27% of their household income, on average, each year in order to have a comfortable retirement, they reported saving an average of just 17% of their household income for retirement in the past year. Notably, more than half of 50+ workers say they have not tried to calculate how much money they will need for a comfortable retirement an important first step in retirement planning. The use of retirement calculators may be a low-cost, beneficial means of helping workers better estimate the amount they will need to save for a comfortable retirement as well as providing tips on how they can work towards a secure retirement given their particular circumstances. The findings from this study also show a positive relationship between self-reported ratings of overall health and financial security. Specifically, 50+ adults who rate their overall health as poor, fair or good are significantly more likely than those who rate their health as very good or excellent to: describe their level of debt as a problem, expect to retire before the age of 60, retire earlier than planned, and have a smaller amount of savings and investments. Thus, when planning for retirement, it is important for adults of all ages to consider and plan for the possibility of declining health and its potential impact on their retirement finances. 8

9 2016 RCS Methodology 2016 Retirement Confidence Survey (RCS): 26 th annual measure of worker and retiree confidence about retirement Conducted on January 2 February 3, 2016 by the Employee Benefit Research Institute (EBRI), in association with Mathew Greenwald & Associates, Inc. 20-minute phone interviews using random-digit dialing with cell phone supplement Data are weighted by age, sex, and education Margins of error for the full RCS sample: ± 3.5 percentage points for all workers ± 4.4 percentage points for all retirees This report focuses on the survey responses of 902 Americans age workers (not retired) 499 retirees Note: Percentages may not sum to 100 due to rounding and/or missing categories. Also, generally, missing responses are excluded from analysis. 9

10 Current Financial Situation 10 10

11 Nearly half of workers and a third of retirees report having a problem with debt; but just one in nine, overall, describe their level of debt as being a major problem. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 11% 13% 8% 30% 34% 25% A Major Problem A Minor Problem 59% 52% 68% Not a Problem Don't Know 50+ Overall (n=893) 50+ Workers (n=401) 50+ Retirees (n=492) 11

12 The percentage of 50+ workers and retirees describing their level of debt as a problem increased by points, respectively, from 2005 to 2011 a likely result of the Great Recession. However, both percentages have now returned to roughly 2005 (pre-recession) levels. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] Percentage describing their level of debt as a major or minor problem 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 50+ Workers 50+ Retirees 58% 57% 48% 50% 50% 47% 43% 43% 41% 38% 43% 31% 31% 33% NOTE: This question was not asked of survey participants in the years Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (years: 2005, ) 12

13 Among workers and retirees, women and men are equally as likely to describe their level of debt as a problem. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 9% 12% 33% 27% A Major Problem A Minor Problem 58% 60% Not a Problem 50+ Men (n=403) 50+ Women (n=490) 13

14 Among workers and retirees, those who are widowed are the least likely to describe their level of debt as a problem; while those who are divorced, partnered or single are the most likely to do so. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 9% 7% 22% 31% 71% 59% 16% 31% 52% Major problem Minor problem Not a problem Don't Know Married (n=520) Widowed (n=143) Divorced, Partnered, or Single (n=230) 14

15 Among workers and retirees, those with household incomes of less than $25,000 are significantly more likely than those with higher household income levels to describe their level of debt as a major problem. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 27% 9% 11% 7% 3% 40% 28% 37% 24% 26% 70% 50% 51% 61% 57% Major problem Minor problem Not a problem Don't know 1% 1% Less than $25,000 (n=158) $25,000- $49,999 (n=166) $50,000- $74,999 (n=147) $75,000- $124,999 (n=142) $125,000 or more (n=110) 15

16 Among workers and retirees, those who rate their overall health as very good or excellent are much less likely to describe their level of debt as a problem than those who rate their overall health as poor, fair or good. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 19% 30% 9% 8% 4% 18% 29% 38% Major Problem Minor Problem 49% 52% 63% 76% Not a Problem Don't Know Poor/Fair (n=205) Good (n=234) Very Good (n=262) Excellent (n=181) 16

17 Among workers and retirees, those with a bachelor s degree or higher education are less likely than those with less education to describe their level of debt as a problem. Thinking about your current financial situation, how would you describe your level of debt? [50+ Workers and Retirees] 13% 12% 5% 6% 31% 33% 27% 25% Major Problem 56% 55% 66% 69% 1% 1% Minor Problem Not a Problem Don't Know High School or Less (n=227) Some College (n=279) Bachelor's Degree (n=194) Graduate or Professional Degree (n=187) 17

18 Retirement Experiences Compared with Expectations 18 18

19 Three in eight (38%) retirees say their expenses in retirement match what they expected; while for about three in five retirees, their expenses are either higher (38%) or lower (21%) than expected. Compared with what you expected when you first retired, would you say your expenses in retirement are? [50+ Retirees (n=499)] 18% 20% 38% 13% 8% 2% Much higher Somewhat higher About the same Somewhat lower Much lower Don't know 19

20 Although nearly half of retirees (46%) retired when planned, an equal share of retirees retired earlier than planned; while 1 in 20 (5%) retired later than planned. Did you retire earlier than you planned, later than you planned, or about when you planned? [50+ Retirees (n=492)] Don't know 4% Later than planned 5% Earlier than planned 46% About when planned 46% 20

21 Retirees who retired earlier than planned (46%) are more likely than those who retired when planned or later than planned (33%) to say their retirement expenses are higher than expected. Compared with what you expected when you first retired, would you say your expenses in retirement are? [50+ Retirees] 47% Retired Earlier than Planned (n=206) 26% 13% 20% 20% 26% 11% 15% 16% 2% 1% 2% Retired About When Planned or Later (n=267) Much higher Somewhat higher About the same Somewhat lower Much lower Don't know 21

22 Among retirees who retired earlier than planned, the most-cited reason stated by more than half of the retirees was having a health problem or disability. What is your reason for saying that [you retired earlier than planned]? [50+ Retirees who retired earlier than they planned, n=206)] You had a health problem or a disability 55% You could afford to retire earlier than you planned 32% There were changes at your company, such as downsizing or closure You wanted to do something else 25% 25% You had another work-related reason You had to care for a spouse or another family member 17% 21% (Multiple responses permitted.) Changes in the skills required for your job 11% 22

23 More than a quarter of retirees more often men than women have worked for pay after retiring. Have you worked for pay since you retired? [50+ Retirees] 1% 2% 2% 1% 4% 18% 17% 20% 3% 5% 7% 1% Yes, both fulland part-time Yes, full-time Yes, part-time 73% 67% 78% Yes, seasonally/ sporadically No Overall (n=354) 50+ Men (n=165) 50+ Women (n=189) 23

24 Among retirees who worked for pay after retiring, the most-cited reasons for doing so are wanting to stay active and involved and they enjoy working. What is your reason for saying that you [worked for pay after you retired]? [50+ Retirees who worked for pay after retiring, n=147] Wanting to stay active and involved Enjoying working 82% 80% Wanting money to buy extras Needing money to make ends meet A joy opportunity A decrease in the value of your savings or investments 57% 50% 49% 43% Keeping health insurance or other benefits 32% Trying a different career 22% 24

25 Expected and Actual Age of Retirement 25 25

26 Although three in four retirees retired before age 65; eight in 10 workers don t expect to retire until age 65 or older or expect to never retire. Realistically, at what age do you expect to retire? [50+ Workers] /How old were you when you retired? [50+ Retirees] 38% 43% Mean Expected/Actual Age of Retirement 50+ Workers: Retirees: 60 18% 19% 17% 17% 28% 8% 9% 50+ Workers (N=378) 50+ Retirees (N=467) 0% 3% 0% Under Never retire 26

27 Nearly one in five workers say they have changed their expected retirement age in the past year; among these workers, the large majority expect to retire later. In the past 12 months, has the age at which you expect to retire changed? [50+ Workers (n=403)]. If yes: Do you now expect to retire [sooner or later than planned?] [50+ Workers whose expected age of retirement changed (n=68)] Don't know 1% Yes 18% If yes 83% No 81% Later; at an older age than before 17% Sooner; at a younger age than before 27

28 On average, women expect to retire at a later age than do men. Realistically, at what age do you expect to retire? [50+ Workers] 42% 44% Mean Expected Age of Retirement 31% Male 50+ Workers: 66 Female 50+ Workers: 68 20% 15% 23% Male 50+ Workers (N=166) 1% 0% 5% 2% 9% 8% Female 50+ Workers (N=212) Under Never retire 28

29 Although, on average, men and women retired at about the same age; men were more likely than women to have retired between age 55 and 59; while women were more likely than men to have retired after age 65. How old were you when you retired? [50+ Retirees] 38% 37% Mean Age of Retirement Male 50+ Retirees: 59 Female 50+ Retirees: 60 18% 25% 16% 16% 13% 20% 11% Male 50+ Retirees (N=229) Female 50+ Retirees (N=238) 6% Under

30 Over the years, the average expected age of retirement among workers has increased slightly; while the actual age of retirement among retirees has remained fairly stable. Realistically, at what age do you expect to retire? [50+ Workers] /How old were you when you retired? [50+ Retirees] Average Expected/Actual Age of Retirement Workers 50+ Retirees NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 30

31 Workers who rate their overall health as poor, fair or good are more likely than those who rate their health as very good or excellent to expect to retire before the age of 65. However, their expected age of retirement, on average, is the same (67). Realistically, at what age do you expect to retire? [50+ Workers] 47% Mean Expected Age of Retirement (Among 50+ Workers providing a retirement age) Poor, Fair or Good Health: 67 Very Good/Excellent Health: 67 38% 27% 28% Poor, Fair or Good Health (n=147) 1% 0% 3% 2% 20% 15% 11% 7% Very Good or Excellent Health (n=228) Under Never Retire 31

32 Retirees who rate their overall health as poor, fair or good were twice as likely to have retired before the age of 55 than those who rate their overall health as very good or excellent. How old were you when you retired? [50+ Retirees] 38% 42% Mean Age of Retirement (Among 50+ Retirees providing a retirement age) Poor, Fair or Good Health: 59 Very Good/Excellent Health: 62 22% 11% 18% 16% 15% 21% 7% 10% Poor, Fair or Good Health (n=266) Very Good or Excellent Health (n=192) Under

33 Levels of Confidence about Retirement and Related Areas 33 33

34 Three in four workers and four in five retirees feel at least somewhat confident about their ability to do a good job of planning for retirement. Overall, how confident are you about your ability to do a good job of planning for retirement? 44% 34% 56% Very Confident Somewhat Confident Not Too Confident 33% 41% 24% Not at All Confident Don't Know 11% 11% 10% 10% 13% 7% 50+ Overall (n=889) 50+ Workers (n=402) 50+ Retirees (n=487) 34

35 Nine in 10 workers and retirees feel at least somewhat confident about their ability to do a good job of preparing a budget. Overall, how confident are you about your ability to do a good job of preparing a budget? Very Confident 66% 64% 68% Somewhat Confident Not Too Confident Not at All Confident 25% 27% 22% Don't Know 6% 6% 5% 3% 2% 5% 50+ Overall (n=901) 50+ Workers (n=402) 50+ Retirees (n=499) 1% 35

36 More than eight in 10 workers (82%) and nearly nine in 10 retirees (88%) feel at least somewhat confident about their ability to do a good job deciding when to take Social Security benefits. Overall, how confident are you that can a good job deciding when to take Social Security benefits? Very Confident 62% 53% 73% Somewhat Confident Not Too Confident Not at All Confident 29% 22% 15% 8% 10% 5% 5% 3% 8% 3% 1% 4% Don't Know 50+ Overall (n=889) 50+ Workers (n=402) 50+ Retirees (n=487) 36

37 About three in four workers (74%) and retirees (76%) feel at least somewhat confident in their ability to do a good job of choosing health insurance on their own rather than through an employer. Overall, how confident are you in your ability to do a good job of choosing health insurance on your own, not through an employer? 48% 40% 56% Very Confident Somewhat Confident Not Too Confident 28% 34% 20% Not at All Confident Don't Know 11% 12% 8% 11% 10% 12% 3% 1% 6% 50+ Overall (n=889) 50+ Workers (n=402) 50+ Retirees (n=487) 37

38 By and large, workers (72%) and retirees (78%) feel at least somewhat confident that they are doing/did a good job of preparing financially for their retirement. Overall, how confident are you that you (and your spouse) are doing (if worker)/did (if retiree) a good job of preparing financially for your retirement? 36% 29% 43% Very Confident Somewhat Confident 39% 43% 11% 12% 35% 10% 13% 15% 11% 1% 1% 2% Not Too Confident Not at All Confident Don't Know 50+ Overall (n=901) 50+ Workers (n=402) 50+ Retirees (n=499) 38

39 Retirees (74%) are more likely than workers (65%) to feel at least somewhat confident that they will have enough money to live comfortably in retirement. For both groups, however, confidence levels are positively related to the amount of their savings and investments. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Median Savings and Investments 50+ Workers 50+ Retirees Not at All/Not Too Confident: $1,000 to $9,999 Less than $1,000 Somewhat/Very Confident: $100,000 to $149,999 $50,000 to $99,999 28% 20% 38% Very Confident 41% 16% 19% 12% 14% 16% 12% 50+ Overall (n=902) 45% 1% 1% 1% 50+ Workers (n=403) 36% 50+ Retirees (n=499) Somewhat Confident 38% Not Too Confident Not at All Confident Don't Know 39

40 Six in 10 workers (68%) and retirees (64%) feel as confident or more confident about having enough money for retirement than they did last year. How does your current level of confidence about having enough money for retirement compare with your confidence last year at this time? 9% 8% 11% 13% 16% 9% 44% 44% 44% 20% 18% 21% Much more confident A little more confident About as confident A little less confident Much less confident Don't Know 38% 14% 14% 13% 1% 1% 1% 50+ Overall (n=902) 50+ Workers (n=403) 50+ Retirees (n=499) 40

41 Retirees (85%) are more likely than workers (80%) to feel at least somewhat confident that they will have enough money to take care of their basic expenses during retirement. Overall, how confident are you that you (and your spouse) will have enough money to take care of your basic expenses during your retirement? 46% 43% 49% Very Confident 37% 37% 36% Somewhat Confident Not Too Confident Not at All Confident 7% 7% 6% 10% 1% 11% 1% 8% 1% Don't Know 50+ Overall (n=901) 50+ Workers (n=402) 50+ Retirees (n=499) 41

42 Retirees (78%) are more likely than workers (62%) to feel at least somewhat confident that they will have enough money to take care of their medical expenses during retirement. Overall, how confident are you that you (and your spouse) will have enough money to take care of your medical expenses during your retirement? 32% 38% 19% 15% 11% 14% 17% 10% 2% 1% 2% 50+ Overall (n=900) 22% 40% 50+ Workers (n=402) 43% Very Confident 35% 50+ Retirees (n=498) Somewhat Confident Not Too Confident Not at All Confident Don't Know 42

43 Over half of workers (52%) and more than a third of retirees (36%) are not confident that they will have enough money to pay for long-term care should they need it during retirement. Overall, how confident are you that you (and your spouse) will have enough money to pay for long-term care should you need it during your retirement? 21% 15% 33% 19% 26% 29% 22% 2% 2% 1% 50+ Overall (n=894) 31% 23% 50+ Workers (n=397) 26% 36% 14% 50+ Retirees (n=497) Very Confident Somewhat Confident Not Too Confident Not at All Confident Don't Know 43

44 Nearly half of workers (48%) and nearly two in five retirees (38%) are not confident that Social Security will continue to provide benefits of at least equal value to what today s retirees receive. Overall, 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? 15% 12% 17% Very Confident 40% 39% 41% Somewhat Confident Not Too Confident 22% 25% 20% 21% 23% 18% 2% 3% Not at All Confident Don't Know 50+ Overall (n=902) 50+ Workers (n=403) 50+ Retirees (n=499) 44

45 Nearly half of workers (47%) and about four in nine retirees (43%) are not confident that Medicare will continue to provide benefits of at least equal value to what today s retirees receive. 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? 12% 14% 15% 39% 38% Very Confident Somewhat Confident 38% Not too Confident 26% 27% 19% 20% 3% 50+ Overall (n=901) Not at All Confident 24% 2% 50+ Workers (n=403) Don't Know 19% 3% 50+ Retirees (n=498) 45

46 Over the years, retirees confidence that they are doing a good job preparing financially for retirement has fluctuated more significantly than that of workers. Percentage Somewhat or Very Confident How confident are you that you are doing (if worker)/did (if retiree) a good job of preparing financially for your retirement? 100% 50+ Workers 95% 50+ Retirees 90% 85% 80% 77% 80% 74% 75% 70% 71% 71% 74% 70% 65% 70% 72% 75% 70% 70% 67% 66% 69% 68% 60% 65% 65% % 78% 72% 68% 55% 50% NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 46

47 Since 2006 (with one exception in 2008), workers have felt less confident about having enough money to live comfortably in retirement than retirees. Percentage Somewhat or Very Confident Overall, how confident are you that you will have enough money to live comfortably throughout your retirement years? 100% 50+ Workers 95% 50+ Retirees 90% 85% 80% 75% 79% 73% 70% 65% 60% 66% 69% 64% 67% 61% 62% 65% 68% 67% 55% 53% 45% 54% 52% 74% 63% 65% 50% 71% 54% 53% % 57% 40% NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 47

48 Over the years, workers and retirees age experienced larger declines in confidence about having enough money to live comfortably throughout retirement than those ages and 70+. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? [50+ Workers and Retirees] Age Age Age 70+ Percentage Somewhat or Very Confident 100% 90% 82% 83% 78% 80% 73% 70% 68% 68% 74% 67% 67% 60% 75% 67% 55% 74% 70% 58% 57% 50% 68% 61% 76% 72% 70% 66% 61% 53% 53% % 72% 69% 68% 67% 62% 58% 49% 40% NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 48

49 Although retirees confidence and particularly that of workers about having enough money to take care of basic expenses during retirement has fluctuated significantly since 2006, it has now bounced back to pre-recession levels. How confident are you that you will have enough money to take care of basic expenses during your retirement? Percentage Somewhat or Very Confident 100% 50+ Workers 50+ Retirees 95% 90% 85% 84% 85% 83% 80% 80% 80% 75% 79% 82% 79% 76% 76% 75% 74% 82% 76% 82% 80% 80% 78% 73% 70% 72% 71% 72% 65% NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 49

50 Over the years, workers generally have felt less confident than retirees about having enough money to take care of their medical expenses during retirement. How confident are you that you (and your spouse) will have enough money to take care of your medical expenses during your retirement? 50+ Workers Percentage Somewhat or Very Confident 100% 50+ Retirees 90% 80% 74% 77% 71% 70% 70% 60% 66% 68% 72% 57% 50% 54% 53% 53% % 40% 78% 62% 62% % 68% 66% 61% 78% 55% 50% 30% NOTE: Overall sample sizes for each group by year are provided in the Appendix. Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 50

51 Over the years, workers and retirees confidence about having enough money to pay for long-term care during retirement has fluctuated fairly in tandem. How confident are you that you will have enough money to pay for long-term care, such as nursing home or home health care, should you need it during retirement? Percentage Somewhat or Very Confident 100% 90% 50+ Workers 80% 50+ Retirees 70% 60% 56% 60% 48% 50% 40% 46% 49% 43% 30% 44% 39% 50% 43% 34% 39% 47% 44% 36% 34% % 62% 45% 46% % 39% 20% 10% 0% Source: Employee Benefit Research Institute, Retirement Confidence Survey (Data files for 2004 through 2016 surveys). 51

52 Key Predictors of Overall Retirement Confidence 52 52

53 More than four in five retirees (83%) and more than three in four workers (78%) feel at least somewhat confident, overall, about their retirement future*. 36% 32% 44% 46% 16% 4% 50+ Overall (n=902) 17% 50+ Workers (n=403) 42% Very Confident Somewhat Confident Not Too Confident Not at All Confident 41% 6% 15% 2% 50+ Retirees (n=499) *Note: Overall retirement confidence is a composite score based on workers and retirees responses to seven questions: Confidence that: they will have enough money to live comfortably throughout retirement; they will have enough money to take care of basic expenses during retirement; they did/are doing a good job of preparing financially for retirement; they will have enough money to take care of their medical expenses during retirement; they will have enough money to pay for long-term care, if needed, during retirement; the Social Security system will continue to provide benefits of at least equal value to what retirees receive today; and the Medicare system will continue to provide benefits of at least equal value to what retirees receive today. For each question above, points were assigned as follows: not at all confident =1; not too confident =2; somewhat confident =3; and very confident =4. (No points were assigned for don t know and refused responses.) Composite Score ranges : 0-7 (not at all confident); 8-14 (not too confident); (somewhat confident) and (very confident). 53

54 Age, self-reported health status, total amount of savings and investments, household income, and having other retirement savings outside of an IRA or employer-sponsored plan are key predictors of overall retirement confidence* among 50+ workers and retirees. [50+ Workers and Retirees (n=342)] Age 6.5% Self-Reported Rating of Overall Health 4.7% OVERALL RETIREMENT CONFIDENCE Total Amount of Savings & Investments 2.4% Having Other Retirement Savings Invested Outside of an IRA or Employer-Sponsored Retirement Savings Plan 1.3% Household Income 1.7% *NOTE: Stepwise multiple regression was used to assess the relationships among various factors and overall retirement confidence. The specific factors assessed were gender; age; education level; employment status (i.e., full-time, retired, other); marital status (i.e., married, widowed, other); self-reported rating of overall health; household income; total amount of savings and investments; whether respondent (or spouse) tried to calculate the amount needed for a comfortable retirement; whether respondent (or spouse) has an IRA; whether respondent (or spouse) has an employer-sponsored retirement savings plan; whether respondent (or spouse) has a defined benefit or pension plan; and whether respondent (or spouse) has other retirement savings invested outside of an IRA or employer-sponsored retirement savings plan. The order and percentages noted for each predictor reflects the degree to which each predictor uniquely explains overall retirement confidence. More information about the regression analysis is available in the Appendix. 54

55 Among workers and retirees, as age increases, the percentage who are very confident about their retirement future tends to increase. Overall Confidence in Retirement Future [50+ Workers and Retirees] 28% 38% Very Confident 46% Somewhat Confident 48% Not too Confident 41% 41% Not at All Confident 17% 7% (n=301) 19% (n=286) 2% 13% 1% 70+ (n=315) Age Group 55

56 Among workers and retirees, as self-reported ratings of health become more favorable, the percentage who are very confident about their retirement future tends to increase. Overall Confidence in Retirement Future [50+ Workers and Retirees] 25% 45% 58% Very Confident Somewhat Confident 48% Not too Confident 40% 37% 21% 6% Poor/Fair/Good (n=127) 14% 1% Very Good (n=129) Not at All Confident 5% Excellent (n=111) Self-Reported Overall Health 56

57 Among workers and retirees, as household income increases, the percentage who are very confident about their retirement future tends to increase. Overall Confidence in Retirement Future [50+ Workers and Retirees] 16% 34% 36% 43% 64% 39% Very Confident Somewhat Confident 47% 48% 51% 32% 13% Less than $25,000 (n=159) 16% Not too Confident 32% 3% $25,000$49,999 (n=167) 15% 2% $50,000$74,999 (n=148) 4% 2% $75,000$124,999 (n=142) Not at All Confident 4% $125,000 or more (n=110) Household Income 57

58 Among workers and retirees, those who have $150k or more in savings and investments are more likely to be very confident about their retirement future than those who have less than $150k. Overall Confidence in Retirement Future [50+ Workers and Retirees] 25% 53% Very Confident Somewhat Confident 45% Not too Confident 42% 23% 7% Less than $150,000 (n=106) Not at All Confident 5% $150,000 or more (n=123) Total Amount of Savings and Investments 58

59 Among workers and retirees, those who have other retirement savings outside of an IRA or employer-sponsored retirement savings plan are more likely to be very confident about their retirement future than their counterparts. Overall Confidence in Retirement Future [50+ Workers and Retirees] 24% Very Confident 55% Somewhat Confident 45% Not too Confident 39% 25% 7% Does Not Have Other Savings (n=441) Not at All Confident 5% Does Have Other Savings (n=408) 59

60 Estimations of the Amount Needed for Retirement 60 60

61 Prior to retiring, fewer than half of retirees calculated the amount of money they would need to save for a comfortable retirement. Did you calculate how much money you would need to save by the time you retired so you could live comfortably in retirement? [50+ Retirees (n=499)] 45% 53% 2% Yes No Don't Know 61

62 Workers are more likely than retirees to have taken various measures to estimate their needs for a comfortable retirement. Have you? 63% 60% Estimated the amount of your Social Security benefit at your planned retirement age Thought about how you would occupy your time in retirement 59% Estimated how much income your (and spouse) would need each month in retirement 49% 35% 37% Calculated how much you (and spouse) would need to cover health expenses in retirement Calculated how much you would need to save for a comfortable retirement Prepared a formal, written financial plan for retirement Met with a professional financial advisor about retirement planning 45% 57% 20% 24% 74% 66% Workers (n=403) Retirees (n=499) 39% 33% 62

63 The median amount of money that workers expect they will need to accumulate prior to retirement so they can live comfortably in retirement is $250k - $499k. Estimated Amount Needed for a Comfortable Retirement How much do you think you will need to accumulate in total by the time you retire so that you can live comfortably in retirement? [50+ Workers (n=392)] 7% $2 million or more $1.5 to $1.9 million 3% Median Estimated Amount Needed for a Comfortable Retirement: 11% $1 to $1.49 million $250,000 to $499,999 8% $750,000-$999,999 14% $500,000-$749,999 18% $250,000-$499,999 15% $100,000-$249,999 13% Less than $100,000 8% Don't remember/know Could not do calculation 3% 63

64 The amount that workers estimate they will need to accumulate prior to retirement so that they can live comfortably in retirement generally increases with household income. How much do you think you will need to accumulate in total by the time you retire so that you can live comfortably in retirement? [50+ Workers who plan to retire and who estimated the amount they will need for a comfortable retirement (n=392)] 6% 4% 18% 37% 27% 8% Less than $50,000 (n=105) 1% Median Estimated Amount Needed for a Comfortable Retirement 4% 11% 13% 18% 27% 44% 33% $2 million or more 23% $500,000 to $999,999 13% 5% 5% $50,000 to $99,999 (n=120) $100,000 or more (n=128) Household Income Less than $50,000: $100,000 to $249,999 $50,000 - $99,999: $250,000 to $499,999 $100,000+: $250,000 to $499,999 $1 to $1.9 million 2% 1% $100,000 to $499,999 Less than $100,000 Don't remember/don't know Could not do calculation Household Income 64

65 Saving for Retirement 65 65

66 Three in four workers (76%) and two in three retirees (65%) have personally saved for retirement. [50+Workers] Not including Social Security taxes or employer-provided money, have you (and/or your spouse) personally saved any money for retirement? / [50+Retirees] Not including Social Security taxes or employerprovided money, did you (and/or your spouse) personally save any money for retirement before you retired? These savings could include money you personally put into a retirement plan at work. 71% 29% 50+ Overall (n=900) 76% 24% 50+ Workers (n=402) Personally saved for retirement 65% Have not personally saved for retirement Don'tknow 34% 1% 50+ Retirees (n=498) 66

67 Among workers, the likelihood of having personally saved for retirement tends to increase with total household income level. Not including Social Security taxes or employer-provided money, have you (and/or your spouse) personally saved any money for retirement? These savings could include money you personally put into a retirement plan at work. [50+ Workers] Personally saved for retirement 50% 81% 98% 50% 19% Less than $50,000 (n=107) $50,000-$99,999 (n=121) 2% Have not personally saved for retirement $100,000 or more (n=129) Household Income 67

68 Workers are more likely than retirees to have an IRA, employer-sponsored retirement savings plan and/or other personal savings and investments. Do you currently have? 55% 49% 45% 41% 47% 43% 42% 24% 45% 38% 50+ Overall (n=876) 28% 22% 50+ Workers (n=397) 50+ Retirees (n=480) An Individual Retirement Account or IRA Employer-Provided Pension or Cash Balance Plan Employer-Sponsored Retirement Savings Plan Other Personal Savings or Investments 68

69 Slightly more than a third of 50+ workers and about half of retirees have less than $25k in savings and investments. In total, about how much money would you say you currently have in savings and investments, not including the value of your primary residence? [50+ Workers and Retirees] Median Savings and Investments 23% 27% 10% 9% 8% 8% 12% 12% 9% 9% 5% 11% 17% 9% 8% 6% 11% 14% 50+ Overall: 50+ Workers: 50+ Retirees: $25,000 - $49,999 $50,000 - $99,999 $10,000 - $24,999 $250,000 or more $100,000 to $249,999 $50,000 to $99,999 $25,000 to $49,999 24% 22% 20% 9% 7% 11% 50+ Overall (n=659) 50+ Workers (n=325) 50+ Retirees (n=334) $10,000 to $24,999 $1,000 to $9,999 Less than $1,000 Don't know 69

70 As workers and retirees total household income increases, the total amount they have saved for retirement also tends to increase. In total, about how much money would you say you currently have in savings and investments, not including the value of your primary residence? [50+ Workers and Retirees] 3% 2% Median Savings and Investments 4% 4% 10% 16% 10% 7% 11% 10% 25% 18% 14% 58% 3% Less than $25,000 (n=140) 61% Household Income Less than $25,000: $25,000 - $49,999: $50,000 - $99,999: $100,000+: 13% 24% 13% 17% 7% 7% 8% 9% 7% $25,000 to $49,999 (n=132) $50,000 to $99,999 (n=191) Household Income Less than $1,000 $10,000 - $24,999 $50,000 - $99,999 $250,000 - $499,999 $250,000 or more $100,000 to $249,999 15% 9% 6% 1% $100,000 or more (n=151) $50,000 to $99,999 4% 4% $25,000 to $49,999 $10,000 to $24,999 $1,000 to $9,999 Less than $1,000 Don't know 70

71 Workers believe they need to save about 27% of their total household income each year, on average, to live comfortably in retirement. More than a quarter overall don t know how much they will need to save. About what percentage of your total household income do you think you (and your spouse) need to save each year from now until you expect to retire so you can live comfortably throughout your retirement? [50+ Workers who gave an expected retirement age (n=393)]. Mean Estimated Percentage of Total Household Income that Workers Believe They Will Need to Save Each Year in order to Live Comfortably in Retirement 27% 29% 25% 16% 7% 0% to 9% 7% 13% 4% 10% to 19% 20% to 29% 30% to 39% 40% to 49% 50% or more Don't know 71

72 Among workers and retirees, men are more likely than women to have personally saved for retirement. Not including Social Security taxes or employer-provided money, have you/did you personally saved any money for retirement? [50+ Workers and Retirees] 71% 83% 70% 61% Yes No Don't Know 29% 17% 30% 38% 1% 50+ Male Workers (n=176) 50+ Female Workers (n=226) 50+ Male Retirees (n=230) 50+ Female Retirees (n=268) 72

73 The large majority of both male and female workers say they are currently saving for retirement. Are you currently saving for retirement? [50+ Workers] Yes 89% 90% 11% 10% Overall (n=324) Men (n=150) 88% No Women (n=174) 73

74 In the past year, 50+ workers saved an average of 17% of their total household income for retirement. About what percentage of your total household income did you save last year for retirement? [50+ Workers expecting to retire at some point( n=287)]. Mean Percentage of Total Household Income Saved for Retirement in Prior Year: 17% 0% to 9% 10% to 19% 35% 19% 20% to 29% 19% 16% 5% 0% to 9% 10% to 19% 20% to 29% 30% to 39% 1% 40% to 49% 5% 50% or more 30% to 39% 40% to 49% 50% or more Don't know Don't know 74

75 Among workers who say they are currently saving less than they think they need for retirement, the most-cited reasons are cost of living or day-to-day expenses. Why are you currently saving less than you think you need to save for retirement? [50+ workers who think they are saving less than needed for retirement, n=125] Cost of living or day-to-day expenses Not paid enough Health costs or health insurance costs Currently unemployed or underemployed Education expenses Paying off other debt Don't know Haven t thought about it Saving/have enough Something else Expenses related to providing care to someone else Paying off mortgage/housing expenses Other savings priorities Don't have a retirement plan at work 15% 11% 11% 9% 8% 8% 7% 7% 6% 3% 2% 2% 1% 34% 75

76 A quarter of workers who are currently saving less than they think they need to save for retirement say they don t know what the impact of this will be. What do you think the impact will be of currently saving less than you need for retirement? [50+ workers who think they are saving less than needed for retirement, n=125] 25% Don't know 15% Will have less to live on in retirement Will need to retire later 13% Will need to save more later 13% 12% Little/no impact 10% Will need to work in retirement 8% Difficult retirement Less money for travel, entertainment 5% Something else 4% Will need to rely on others for financial support 4% Liquidate assets (Multiple responses permitted) 0% 76

77 Workers and retirees who are married are more likely to have a greater amount of savings and investments than those who are widowed*, divorced or single. In total, about how much money would you say you (and your spouse) currently have in savings and investments, not including the value of your primary residence? [50+ Workers and Retirees] 29% 11% 8% 8% 6% 11% 15% 16% 12% 9% 11% 7% 12% 10% 9% 7% 9% 13% 16% 10% 16% Married (n=377) Widowed (n=101) Median Savings and Investments Married: $50,00 to $99,999 Widowed: $25,00 to $49,999 Divorced, Separated or Single: $1,000 to $9,999 $250,000 or more 14% $100,000 to $249,999 $50,000 to $99,999 36% $25,000 to $49,999 2% Divorced or Single* (n=181) $10,000 to $24,999 $1,000 to $9,999 Less than $1,000 Don't know NOTE: Those who are widowed are significantly older, on average, than the other groups and are more likely to be retirees, which may affect their lower savings amount as many may already be drawing down their savings while in retirement. *Divorced or Single includes: Divorced or separated, not married and living with a partner, and single, never married. 77

78 Among workers and retirees, the more favorably they rate their overall health, the higher their amount of retirement savings and investments tend to be. In total, about how much money would you say you (and your spouse) currently have in savings and investments, not including the value of your primary residence? [50+ Workers and Retirees] Median Savings and Investments 8% 5% 7% 6% 10% 11% 44% 20% 10% 11% 9% 8% 16% 18% 26% 47% Poor/Fair: Good: Very Good: Excellent: $1,000 to $9,999 $25,000 to $49,999 $50,000 to $99,999 $250,000 to $499,999 16% $250,000 or more 9% 11% 7% 12% $100,000 to $249,999 9% 10% 11% 8% Poor/Fair Health (n=162) Good Health (n=176) Very Good Health (n=187) 13% 8% 5% 4% 8% 6% 9% Excellent Health (n=131) $50,000 to $99,999 $25,000 to $49,999 $10,000 to $24,999 $1,000 to $9,999 Less than $1,000 Don't know 78

79 Among workers and retirees, as education level increases, the amount of retirement savings and investments also tend to increase. In total, about how much money would you say you (and your spouse) currently have in savings and investments, not including the value of your primary residence? [50+ Workers and Retirees] Median Savings and Investments HS Graduate or less: $1,000 to $9,999 Vocational/Some College: $25,000 to $49,999 Bachelor s degree: $100,000 to $149,999 Graduate/Professional degree: $250,000 - $499,999 12% 8% 7% 9% 8% 15% 19% 10% 13% 6% 9% 14% 36% 10% 8% 14% 9% 10% 6% 6% 10% 8% High School Graduate or Less (n=179) Vocational/ Some College (n=206) Bachelor's Degree (n=139) 30% 20% $250,000 or more 51% $100,000 to $249,999 $50,000 to $99,999 15% 5% 4% 6% 6% 6% 6% Graduate or Professional Degree (n=135) $25,000 to $49,999 $10,000 to $24,999 $1,000 to $9,999 Less than $1,000 Don't know 79

80 Although retirees are more likely than workers to cite Social Security as a major source of retirement income, Social Security is the most-cited major source of expected or actual retirement income for both groups. [Worker: Do you expect the following to be]/[retiree: Is] the following] a major source of income, a minor source of income, or not a source of income in your (and your spouse s retirement)? 50+ Workers planning to retire at some point (n=348) Not a Source Minor Source Social Security 5% Employer-Sponsored Retirement Savings Plan Employer-Provided Pension or Cash Balance Plan IRA 35% Other Personal Savings or Investments 38% 41% 41% 23% 0% 20% 41% 26% 62% 40% 60% Not a Source Minor Source Social Security 48% 31% 46% Employment during Retirement Major Source 46% 27% 50+ Retirees (n=497) 26% 21% IRA 80% 100% 64% 50% Employer-Sponsored Retirement Savings Plan Other Personal Savings or Investments 14% 6% 29% Employer-Provided Pension or Cash Balance Plan 24% Major Source 18% 58% 49% Employment during Retirement 19% 20% 30% 55% 20% 40% 20% 24% 18% 74% 0% 30% 17% 8% 60% 80% 100% 80

81 Among workers and retirees, women are more likely than men to cite Social Security as a major source of expected or actual retirement income; while men are more likely to cite employment as a minor source of expected or actual retirement income. [50+ Workers: Do you expect the following to be]/[50+ Retirees: Is] the following] a major source of income, a minor source of income, or not a source of income in your (and your spouse s retirement)? 50+ Men (n=390) 50+ Women (n=473) Not a Source Minor Source Social Security Major Source 6% 43% Employer-Provided Retirement Savings Plan 40% Employer-Provided Pension or Cash Balance Plan 45% Other Personal Savings and Investments 39% IRA 44% Employment during Retirement 43% 0% 23% 39% 37% 45% Minor Source Major Source Social Security 5%33% 35% Employer-Provided Retirement Savings Plan 47% 32% Employer-Provided Pension or Cash Balance Plan 53% 21% 26% 22% IRA 48% 30% 22% 20% Other Personal Savings and Investments 48% 33% 18% 51% 25% Not a Source 12% 20% 40% 60% 80% 100% Employment during Retirement 54% 0% 62% 25% 27% 35% 11% 20% 40% 60% 80% 100% 81

82 Among workers, seven in ten men and nearly two in three women think they will work for pay after they retire. Do you think you will do any work for pay after you retire? [50+ Workers] 68% 70% 65% Yes No 22% 18% 26% 10% 12% 8% Overall (n=373) Men (n=164) Women (n=209) Don't Know 82

83 More than one in four workers with a retirement savings plan have taken a loan from the plan. Have you ever taken a loan from your current retirement savings plan? [50+ Workers; with a retirement savings plan] 73% 27% Yes No 83

84 About half of workers and retirees have participated in a retirement savings plan with a previous employer. Did you participate in a retirement savings plan with any of your previous employers? [50+ Workers and Retirees] 48% 50% 53% Yes No 51% 49% 1% 50+ Overall (n=900) 46% Don't Know 1% 50+ Workers (n=401) 50+ Retirees (n=499) 84

85 Appendix 85 85