2012 Retirement Confidence Survey Funders’ Briefing February 22, 2012 Employee Benefit Research Institute 1100 13th Street NW, Suite 878 Washington, DC 20005 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

2012 RCS Methodology 22nd annual measure of worker and retiree confidence about retirement 1,262 20-minute phone interviews conducted in January 2012 using random-digit dialing with cell phone supplement Interviewed Americans ages 25 and over Two questionnaire versions - 1,003 interviews with workers (not retired) - 259 interviews with retirees

2012 RCS Methodology (continued) Data weighted by age, sex, and education Margins of error - ± 4 percentage points for all workers - ± 7 percentage points for all retirees Unweighted sample sizes noted on charts to provide information for margin of error estimates Data may not total to 100 due to rounding and/or missing categories

Overview Retirement confidence is basically stagnant Concerns about preparing for retirement are overshadowed by more immediate financial concerns The percentage saving for retirement is slowly falling Newer technologies are generally not used to help with financial planning

Retirement confidence

Worker confidence about having enough money for retirement is essentially unchanged. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1993-2012 Retirement Confidence Surveys

Retiree confidence about being able to afford a comfortable retirement also remains steady. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? (2012 Retirees n=259) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1993-2012 Retirement Confidence Surveys

Workers/retirees continue to be most confident about basic expenses, least confident about long-term care. Next, I would like to know how confident you (and your spouse) are about certain aspects related to retirement. (2012 Workers n=1003, Retirees n=259) You will have enough money to take care of your basic expenses during your retirement You are doing/did a good job of preparing financially for 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 your retirement Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Surveys

The share of workers somewhat confident about future benefits from Social Security has increased slightly. 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? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1992-2012 Retirement Confidence Surveys

While the share of retirees very confident about Social Security has increased. 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? (2012 Retirees n=259) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1992-2012 Retirement Confidence Surveys

The proportion of workers confident about future benefits from Medicare has returned to 2010 levels. 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? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1992-2012 Retirement Confidence Surveys

But the proportion of retirees not at all confident about Medicare benefits has increased. 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? (2012 Retirees n=259) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1992-2012 Retirement Confidence Surveys

OTHER FINANCIAL CONCERNS

Roughly 6 in 10 workers and 4 in 10 retirees report a problem with debt. Thinking about your current financial situation, how would you describe your level of debt? (2011 Workers n=1003, 2010 Retirees n=259) Workers Retirees Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005-2012 Retirement Confidence Surveys

And the presence of debt is strongly related to retirement confidence. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

By far, the financial issue considered most pressing is job uncertainty. What do you think is the most pressing financial issue facing most Americans today? (Top mentions) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

Only a minority express confidence in the immediate financial future. How confident are you that…. (2012 Workers n=1003, Retirees n=259) You will have paid employment for as long as you need it/You will find paid employment if you should need it Your investments will grow in value The economy will grow an average of at least 3% a year for the next 10 years Inflation will average no more than 4% for the next 10 years Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Surveys

These concerns are also strongly related to retirement confidence. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

Preparations for retirement

About 2 in 3 retirees indicate they planned financially for their retirement. Did you (or your spouse) plan financially for your retirement? (2012 Retirees n=259, Percent Yes) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011-2012 Retirement Confidence Surveys

Of these, 3 in 10 started planning less than 10 years before they retired. When did you (or your spouse) begin to pay serious attention to planning financially for your retirement? (2012 Retirees who planned financially for retirement n=178) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011-2012 Retirement Confidence Surveys

The percentage of workers doing a retirement needs calculation remains steady. Have you (or 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? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1993-2012 Retirement Confidence Surveys

The likelihood of doing a calculation increases with household income. Have you (or 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 with Household Income <$35,000 Workers with Household Income $35,000-$74,999 Workers with Household Income $75,000+ Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

Many still think they need little in savings to live comfortably in retirement. How much did you (or your spouse) calculate you would need to accumulate in total by the time you retire? If haven’t calculated: How much do you think you (and your spouse) will need to accumulate in total by the time you retire so that you can live comfortably in retirement? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005-2012 Retirement Confidence Surveys

Many guess at how much they will need. How did you (or your spouse) determine this amount? Did you…? (Among workers giving an amount needed for retirement) (Top mentions, multiple responses accepted) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2011 Retirement Confidence Survey

Two-thirds of workers report having saved for retirement, a slow decline since 2009. 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. (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1994-2012 Retirement Confidence Surveys

This decline has occurred primarily among lower-income workers. 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. Workers with Household Income <$35,000 Workers with Household Income $35,000-$74,999 Workers with Household Income $75,000+ Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

The percent of workers currently saving for retirement has also slowly declined during this period. Are you (and/or your spouse) currently saving for retirement? (Percent Yes, 2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2001-2012 Retirement Confidence Surveys

Two-thirds of retirees report they saved for retirement. Not including Social Security taxes or employer-provided 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. (2012 Retirees n=259) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1994-2012 Retirement Confidence Surveys

Total worker savings are unchanged from 2010. 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? (2012 workers n=1003) 2002 2007 2008 2009 2010 2011 2012 Less than $1,000 50% 35% 36% 20% 27% 29% 30% $1,000 - $9,999 19 16 17 18 $10,000 - $24,999 13 11 10 12 $25,000 - $49,999 $50,000 - $99,999 15 9 $100,000 - $249,999 14 $250,000 or more 7 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1994-2012 Retirement Confidence Surveys

Retiree savings also remain about the same. 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? (2012 retirees n=259) 2002 2007 2008 2009 2010 2011 2012 Less than $1,000 45% 32% 51% 23% 27% 28% $1,000 - $9,999 17 15 14 19 $10,000 - $24,999 13 9 16 12 8 $25,000 - $49,999 7 10 11 6 $50,000 - $99,999 $100,000 - $249,999 20 $250,000 or more Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2002-2012 Retirement Confidence Surveys

2 in 3 workers feel they are behind schedule in planning and saving for retirement. When it comes to planning and saving for retirement, would you say that you are ahead of schedule, on track, or behind schedule? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2000-2012 Retirement Confidence Surveys

USE OF TECHNOLOGY AND advice

Half of workers and only one-quarter of retirees use the internet to help manage their finances. Do you currently use … to help you manage your finances? (2012 Workers n=1003, Retirees n=259, Percent yes) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Surveys

Few use a smart phone app or tablet computer to manage their finances. Do you currently use … to help you manage your finances? (2012 Workers n=1003, Retirees n=259, Percent yes) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Surveys

Just one in ten using the internet to manage finances are very confident about obtaining advice online. When it comes to preparing for retirement/managing your finances in retirement, how comfortable are you about doing each of the following online? (2012 Workers using internet n=654, Retirees using internet n=101) Obtaining information about financial products online Using calculators online to assist you with financial decisions Shifting money from one account or investment to another Purchasing financial products online Obtaining advice from financial professionals online Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Surveys

Roughly 1 in 4 workers and retirees report obtaining investment advice from a professional advisor. In the past year, did you (and your spouse) obtain investment advice from a professional financial advisor who was paid through fees or commissions? (2012 Workers n=1003, 2012 Retirees n=259, Percent Yes) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2009-2012 Retirement Confidence Surveys

Expectations about retirement

1 in 4 workers say they changed the age at which they expect to retire in the past year. In the past 12 months, has the age at which you expect to retire changed? (2012 Workers n=1003) If yes: Do you now expect to retire…? (2012 Workers whose retirement date changed n=261) If yes Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

1 in 5 workers have decided to delay retirement in the past year. Do you now expect to retire later, at an older age than before? (2012 Workers n=1003) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2002-2012 Retirement Confidence Surveys

One-quarter of workers expect to retire at age 70 or later. Realistically, at what age do you expect to retire?/How old were you when you retired? Median Workers 65 Retirees 61 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

Yet many retirees leave the workforce before they had planned. Did you retire earlier than you planned, later than you planned, or about when you planned? (2012 Retirees n=259) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 1991-2012 Retirement Confidence Surveys

People retire early for a variety of reasons, many beyond their control. Why did you retire earlier than you had planned? (2012 Retirees retiring earlier than planned n=131, Percent yes) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

Most retirees rely on Social Security income, but workers plan to patch income together from many sources. Do you expect the following will be/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? (2012 Workers who plan to retire n=934, Retirees n=259) Social Security Employment Employer-sponsored retirement savings plan Individual retirement account or IRA Other personal savings and investments Employer-sponsored traditional pension or cash balance plan Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2012 Retirement Confidence Survey

1 in 10 workers say they are very likely to buy or choose a guaranteed income product. When you (and your spouse) retire, how likely do you think you (or your spouse) will be to purchase a financial product or select a retirement plan option that will pay you guaranteed income each month for the rest of your life? (2012 Workers who plan to retire n=934) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2010-2012 Retirement Confidence Surveys

A similar proportion of retirees report having bought an annuity or chosen an annuity option. When or since you (or your spouse) retired, did you (or your spouse) purchase a financial product or select a retirement plan option that pays you guaranteed income each month for the rest of your life? (2012 Retirees n=259) 2010 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2010-2012 Retirement Confidence Surveys