1999 Retirement Confidence Survey: CHANGING FACE OF RETIREMENT

June 15, 1999
Danny Devine
202-775-6308
Devine@ebri.org, EBRI
Variny Paladino
202-775-6321
paladino@asec.org, EBRI

 

Workers today headed for later retirement than their parents,many plan to continue working in retirement

WASHINGTON, DC--Today's workers have a different vision of retirement than what their parents are experiencing, according to results of the 1999 Retirement Confidence Survey (RCS) released today. Workers expect to work longer before retiring than their parents actually worked, and many say they plan to work for pay after they retire (68 percent) because they enjoy working and want to stay involved. In addition, the survey shows a significant increase in the number of workers saving for retirement (70 percent in 1999 vs. 63 percent in 1998).

The RCS, co-sponsored by the nonpartisan Employee Benefit Research Institute (EBRI), the American Savings Education Council (ASEC), and Mathew Greenwald & Associates (MGA), found that 24 percent of working Americans feel very confident that they will have enough money to live comfortably in retirement. However, this confidence could prove false, considering that: 1) only half of all workers have tried to determine how much they will need to save before they retire; 2) only 36 percent have thought about insurance coverage for long-term care or nursing home needs; and 3) just 16 percent report having accumulated $100,000 or more for retirement.

Highlights from the survey include:

• Many workers are unaware of the fact that the normal retirement age for full Social Security benefits is currently in the process of gradually increasing from age 65 to 67. Fifty-nine percent of current workers think they will be eligible for full benefits before they actually will be. An additional 19 percent admit that they do not know when they will be eligible for full benefits.

• Today's workers expect to work longer than current retirees actually worked. Nearly half of today's workers expect to retire at age 65 (30 percent) or later (17 percent) and 5 percent expect they will never retire. Only 5 percent of workers expect to retire before age 55, while 13 percent plan to retire between the ages of 55 and 59, and one-fourth believe they will retire between the ages of 60 and 64 (26 percent).

• Most current retirees say they retired before age 65 (70 percent). Forty-three percent of current retirees retired earlier than planned, and many cited a “negative event” as the reason: health problems or disability (40 percent) and changes at the work place such as downsizing or closure (14 percent). Fourteen percent of early retirees cited family reasons, 12 percent other work-related reasons, and a small proportion (14 per-cent) retired earlier than planned because they could afford it.

• Top reasons workers listed for working after retirement: enjoying work and wanting to stay involved (64 per-cent); having enough money to make ends meet (37 percent); keeping health insurance and other benefits (37 percent); having extra spending money (36 percent); helping to support children or other household members (18 percent); and trying a different career (16 percent).

• Four-in-10 current retirees cite Social Security as their main source of income, while workers are most likely to say that personal savings (32 percent savings in retirement plans at work, 17 percent savings outside of work) will be their most important source of income during retirement.

• Workers are increasingly confident that Social Security (30 percent vs. 20 percent in 1996) and Medicare (33 percent vs. 23 percent in 1996) will continue to provide benefits of equal value to today's. At the same time, at least two-thirds are not confident that either of these programs will continue to provide benefits equivalent to those received today for Social Security and Medicare (69 percent and 66 percent, respectively).

• Fear continues to be one of the primary motivators for saving for retirement. Specific reasons workers cited for starting to save include: not being able to count on Social Security (53 percent); seeing people not prepare and struggle in retirement (48 percent); availability of a retirement plan at work (48 percent); and running out of time to prepare for retirement (39 percent). (Forty-nine percent of workers said they began saving when they started earning enough money to do so.)

Additional findings:

Minority RCS: Included in the Retirement Confidence Survey is a detailed analysis of the retirement saving and planning behavior and attitudes of minority groups (African-Americans, Hispanic-Americans, and Asian-Americans). Regarding overall retirement confidence, 31 percent of Asian-Americans are very confident that they will have enough money to live comfortably throughout their retirement years, compared with 24 percent of African-Americans, and 19 percent of Hispanic-Americans. All three minority groups listed personal savings as their most important expected source of retirement income.

In terms of retirement preparations and planning, 48 percent of Hispanic-American households have begun saving for retirement, compared with 54 percent of African-American households and 76 percent of Asian-American households. Forty-six percent of African-American households have tried to calculate how much money they will need to save for retirement to live comfortably, versus 34 percent of Hispanic-American households and 55 percent of Asian-American households. Many individuals in each minority group say they expect to work for pay after they retire (54 percent of Asian-Americans, 61 percent of Hispanic-Americans, and 62 percent of African-Americans).

Gender: Overall, males are more likely than females to say that they are very confident regarding retirement issues. Twenty-nine percent of males versus 20 percent of females say they are very confident that they will have enough money to live comfortably in their retirement years. Twenty-nine percent of males versus 21 percent of females say they are very confident about doing a good job of preparing financially for retirement.

Savings tools: Two planning tools were created in conjunction with the survey. The Retirement Personality Profiler is an interactive questionnaire that allows individuals to determine which of five distinct personality groups they fall under based on their attitudes toward their finances and planning for retirement. The five retirement personality types are: Planners (35 percent); Savers (18 percent); Strugglers (20 percent); Impulsives (15 percent), and Deniers (13 percent).

The Retirement Readiness Rating indicates how well workers are preparing for retirement. The scale runs from 0 to 25, with those scoring 25 apparently doing the best job of preparing. Individuals can take a short quiz to determine their rating and also get feedback. Based on the results of the survey and the R3 scale, fewer than 1-in-10 American workers appears to be doing a very good job of preparing for retirement.

Both quizzes, as well as other interactive savings tools, are available at the EBRI and ASEC Web sites: www.ebri.org and www.asec.org.

The ninth annual Retirement Confidence Survey (RCS) gauges the views and attitudes of working and retired Americans regarding retirement, their preparations for retirement, their confidence with regard to various aspects of retirement, and related issues. The survey was conducted within the United States between January 4 and February 28, 1999, through 20-minute telephone interviews with 1,002 individuals (751 workers and 251 retirees) ages 25 and older. Random digit dialing was used to obtain a representative cross section of the U.S. population and interview quotas were established by sex of respondent to reflect the actual proportions in the population.

In addition to the 1,002 Americans in the base survey sample, African-Americans, Hispanic-Americans, and Asian-Americans were oversampled to permit analysis of these minority groups. A total of 200 interviews were completed within each ethnic group (totaling 600 interviews) among working adults, using targeted lists to supplement random digit dialing. Among Hispanic-Americans, interviews were conducted in English or Spanish, according to the preference of the respondent.

In theory, a sample of 1,002 yields a statistical precision of plus or minus 3 percentage points (with 95 percent certainty) of what the results would be if the entire population ages 25 and older were surveyed with complete accuracy. Likewise, each of the minority samples of 200 has a precision of plus or minus 7 percentage points (with 95 percent certainty) of what the results would be if every member of the working minority population ages 25 and older were surveyed with complete accuracy. There are other possible sources of error in all surveys, however, that may be more serious than theoretical calculations of sampling error. These include refusals to be interviewed and other forms of nonresponse, the effects of question wording and question order, and screening. While attempts are made to minimize these factors, it is difficult or impossible to quantify the errors that may result from them.

The 1999 RCS data collection was funded by grants from 24 public and private organizations, and the minority oversamples were funded by grants from 9 organizations. Staffing was donated by EBRI, ASEC, and MGA. RCS materials and a list of underwriters may be accessed at the EBRI Web site: www.ebri.org/rcs.

The RCS is co-sponsored by the Employee Benefit Research Institute (EBRI), the American Savings Education Council (ASEC), and Mathew Greenwald & Associates, Inc. (MGA).

Founded in 1978, EBRI's mission is to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI is a private, nonprofit, nonpartisan public policy research organization based in Washington, DC. EBRI does not lobby and does not take positions on legislative proposals.

ASEC is a coalition of private- and public-sector institutions that undertakes initiatives to raise public awareness about what is needed to ensure long-term personal financial independence. ASEC's goal is to make saving; investing; and planning for different life stages, including retirement, a vital concern of Americans. ASEC is part of the Employee Benefit Research Institute Education and Research Fund (EBRI-ERF), a 501(c)(3) nonprofit, educational organization.

MGA is a full-service market research and consulting firm located in Washington, DC, that specializes in all aspects of survey research design and analysis, focus group and one-on-one qualitative research; new product development and testing; marketing, communications and advertising research; attitude tracking surveys; market segmentation; and database marketing and analysis.

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