Striving for a Secure Retirement Dallas L. Salisbury President & CEO Employee Benefit Research Institute

2 EBRI.org

The Secure Retirement Challenges Low Social Security benefits Limited retiree medical benefits Limited DB annuity benefits DC Non-participation DC No automatic base contributions DC Inefficient match formulas DC Low worker contribution rates DC Non-growth of contribution rates DC Non-diversified investing DC Non-rebalancing Financial Literacy and Education Public Policy

4 EBRI.org In total, about how much money would you say you currently have in savings and investments, not including the value of your primary residence? Please include savings, certificates of deposit, stocks, bonds, mutual funds, workplace retirement plans, and other investments (Workers responding n=818, Retirees responding n=190) Most workers have little in savings. Less than $25,000 $25,000- $49,999 $50,000- $99,999 $100,000- $249,999 $250,000 or more Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey

5 EBRI.org Americans are more likely to save for retirement than for any other goal. Other than retirement, for what are you (and your spouse) saving? (Workers n=501; Retirees n=252) (Top mentions, multiple responses accepted) Children's/grandchildren's education Money for an emergency General well being Retirement Home purchase or renovation A vacation Nothing Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey

6 EBRI.org More than half of workers feel they are behind schedule. When it comes to planning and saving for retirement, would you say you are on track, ahead of schedule, or behind schedule? (Workers n=1,001) A lot ahead of schedule On track A little behind schedule A little ahead of schedule A lot behind schedule Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., , 2005 Retirement Confidence Surveys

7 EBRI.org $1,000,000 to $1,499,999 $250,000 to $499,999 $1,500,000 or more Under $250,000 Don’t know/ Don’t remember $500,000 to $999,999 Refused Could not do calculation How much did you (or your spouse) calculate you would need to accumulate in total by the time you retire?/How much do you think you (and your spouse) will need to accumulate by the time you retire so that you can live comfortably in retirement? (Workers n=1,001) Workers calculating the amount needed for retirement report higher accumulation needs. Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey

8 EBRI.org Of those no longer working for pay, more than half are unable to work. Could you please tell me the reason why you are no longer working? (Retirees no longer working for pay in retirement, n=29) (multiple responses accepted) Not healthy enough Old/too old Still help when needed Other Don’t need to work No longer want to work Lost job Can’t find work you like Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey

9 EBRI.org 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 n=500) About what percentage of your pre-retirement income is your current household income? (Retirees n=252) 3 in 5 workers expect to live comfortably on 70% or less of their pre-retirement income; most retirees have more. Less than 50% About % 105% or more Don’t know/ Refused About 50-70% About 70-85% About 85-95% Lower (Don’t know %) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc., 2005 Retirement Confidence Survey

Conservative Estimate of Impact of Automatic Enrollment on Median Replacement Rates from 401(k) Accumulations by Age and Income (percent change in replacement rates) Sources: Tabulations from the EBRI/ICI 401(k) Accumulation Projection Model and Automatic Enrollment Parameters from Choi, Laibson, Madrian, and Metrick (2001 and 2004)

Savings Needed for Employment-Based Benefits Access-Only Plans at Age 65 in 2015 (assumes 7% premium growth) Age at DeathPremium OnlyPremium + out-of- pocket 80$160,000$230,000 85$223,000$321,000 90$296,000$426,000 95$381,000$548, $477,000$687,000

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