a survey of americans’ changing emotions and …...the retirement reformation a survey of...
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The Retirement Reformation
A Survey of Americans’ Changing Emotions and Behaviors Concerning Retirement
May 2012
TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. © 2012 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
Table of Contents
Method 3
Sentiment & Emotions Concerning Retirement 4
Current and Past Retirement Savings Behavior 10
Retirement Savings Goals & Beliefs Among Non-Retirees 16
Retirees’ Experiences Since Retirement 25
Retirement Savings Strategy Confidence Index 38
Conclusions 30
Appendix: Study Sample Characteristics 34
Method • An online survey was conducted with N = 2029 U.S. residents from
March 27-28, 2012 by Head Research on behalf of TD Ameritrade .
• Sample was drawn from major regions in proportion to the U.S. Census:
• New England (5%), Mid-Atlantic (16%), South (25%), Midwest (22%), Southwest (12%), West (20%)
• In each region, half of the respondents were male and half were female
– Quotas ensured at least n = 500 respondents from each age cohort of interest to TD Ameritrade:
• Mature Generation (1930 to 1945): n = 502
• Baby Boomers (1946 to 1964): n = 504
• Generation X (1965 to 1976): n = 505
• Generation Y (1977 to 1989): n = 518
– All respondents were required to be sole or shared decision makers with respect to planning and saving for retirement
– The average time required to complete the survey was 10 minutes
– The statistical margin of error in this survey is +/- 2.2%. This means that in 19 out of 20 cases, survey results based on N = 2029 respondents will differ by no more than 2.2% in either direction from what would have been obtained from the opinions of all adults born from 1930 to 1989 in the U.S.2
1 Head Research and TD Ameritrade, Inc. are separate, unaffiliated companies and are not responsible for each other’s products and services
2 Assumes responders are the same as non-responders and that panelists are the same as non-panelists
About TD Ameritrade Holding Corporation Millions of investors and independent registered investment advisors (RIAs) have turned to TD Ameritrade’s (NYSE: AMTD) technology, people and education to help make investing and trading easier to understand and do. Online or over the phone. In a branch or with an independent RIA. First-timer or sophisticated trader. Our clients want to take control, and we help them decide how - bringing Wall Street to Main Street for more than 36 years. An official sponsor of the 2012 U.S. Olympic Team, TD Ameritrade has time and again been recognized as a leader in investment services. Please visit the TD Ameritrade’s newsroom or www.amtd.com for more information. Brokerage services provided by TD Ameritrade, Inc., member FINRA (www.FINRA.org) /SIPC (www.SIPC.org) /NFA (www.nfa.futures.org) About Head Research Head Research is a division of Head Solutions Group (U.S.) Inc., a leading market research partner for Financial Services companies in North America. With offices in New York, Toronto, and Montreal, Head delivers the deep customer insights that increase institutional knowledge and propel business action.
General Sentiment & Emotions Concerning Retirement
19
29
52
28 27
45
19 24
57
18
31
51
19
29
52
0
10
20
30
40
50
60
Disagree Neutral Agree
% o
f R
esp
ond
ents
All Mature Generation Baby Boomers Gen X Gen Y
General Sentiment Concerning Retirement • Those who are not retired were asked to indicate the degree to which they agree with the
statement: “I am looking forward to retirement.”
– Overall, a slight majority (52%) of respondents are looking forward to retirement, with Baby Boomers (57%) being the most likely to feel this way, perhaps because they are closest to retiring
– Those in the Mature Generation, who are not already retired (17% of the cohort) are the exception –they are significantly less likely to agree with this statement (45%) than other cohorts
– Though not shown on this graph, married males (60%) and females (55%) are significantly more likely to be looking forward to retirement than those who are not married (single males = 40%, single females = 47%)
Base: Those who are not retired (n = 1434) - Mature Generation (n = 83), Baby Boomers (n = 343), Generation X (n = 493), Generation Y (n = 515)
“I am looking forward to retirement.”
Why People Aren’t Looking Forward To Retiring
The most common unprompted reasons survey respondents gave for not looking forward to retirement included:
Base: Those who are not retired and not looking forward to retirement (n = 274)
I am 24 years old I don’t want to look so far into the future - Generation Y (24 years old)
“ ”
Because I don't have enough money saved up for retirement at this time due to ongoing financial problems now - Generation X (43 years old)
“ ” I don’t want to
retire. I love my job - Mature Generation (67 years old)
“ ” I do not look forward to be at home all day and not having a nice steady paycheck - Generation X (42 years old)
“ ”
I’ve always worked. It’s hard to imagine not working at all - Mature Generation (74 years old)
“ ”
I am a public employee who has seen his benefits cut, pay cut and retirement cut - Baby Boomer (51 years old)
“ ” I cannot afford to
retire and the way the economy is today, no one can - Baby Boomer (49 years old)
“ ”
I have no savings and a large amount of debt. I doubt I will ever be able to retire - Generation Y (33 years old)
“ ”
(Mostly Gen Y)
(#1 for all except Gen Y) 28%
26%
23%
14%
Not enough money saved
Too young / retirement too far away
I like my work / like to work
Don’t want to be bored / idle
Why People Are Looking Forward To Retiring
Those who indicated they are looking forward to retirement gave the following unprompted reasons for their response:
Base: Those who are not retired and are looking forward to retirement (n = 752)
I have worked for 45 years - Mature Generation (70 years old) “ ”
More time for travel, hobbies and grandchildren - Mature Generation (69 years old)
“ ”
Retirement is a time in one’s life to sit back and relax and enjoy the rest of your life with your loved ones - Generation Y (32 years old)
“ ”
More time to travel and pursue other hobbies - Generation Y (35 years old)
“ ”
Relaxing and doing the things I want to do like travelling - Generation X (44 years old)
“ ”
…enjoying time with my spouse - Generation Y (28 years old)
“ ”
I’ve had a long hard working life - Baby Boomer (56 years old)
“ ” Freedom to structure my time as I want to, to spend more time with family & friends, to travel - Baby Boomer (59 years old)
“ ”
36%
Not enough money saved
25%
19%
16%
To enjoy hobbies / activities / free time / enjoy life
Want to travel
Want to spend time with spouse / family / friends
Relax / have no stress / slow down
Tired of working / have worked for a long time
30%
No significant differences across cohorts
Emotional Response to Thoughts of Retirement
• This emotion map has been constructed based on an analysis of the correspondence between the mean responses of each age cohort on 11-point emotional experience scales, where “0” meant a respondent was not experiencing the emotion being described through to a “10” which meant they strongly felt the emotion being described as they thought about retirement
• The analysis indicates that age cohorts experience different emotions when thinking about retirement:
Base: All respondents (n = 2029), Mature Generation (n = 502), Baby Boomers (n = 504), Gen X (n = 505), Gen Y (n = 518)
Anxious
Envious Frustrated
Embarrassed
Out of control
Disinterested
Baby Boomers
Mature Generation Gen Y
Gen X
Regretful
Proud
Satisfied
Positive
Mature Generation
Baby Boomers Gen X
Gen Y
Proud, satisfied and positive
Anxious and regretful
Embarrassed, frustrated, envious
Disinterested, feeling out of control
How to Read this Emotion Map • Arrows represent different emotions, the green
dots represent different age cohorts
• The longer the arrow, the more a particular emotion contributes to differentiating between age cohorts
• The closer a cohort’s green dot is to the tip of an emotion arrow, the more the age cohort is described by that emotion
Greatest Concerns About Retirement Income
• Those who are not already retired are most worried about not having enough money to live on / being able to save enough money for retirement and falling short due to unforeseen circumstances:
– Age cohorts are in alignment, with the exception of the Mature Generation whose second greatest concern is having to downgrade their standard of living, followed by concern about having to dip into savings instead of living on interest income
Base: Respondents who are not yet retired (n = 1434)
5
2
3
5
7
12
14
20
32
0 5 10 15 20 25 30 35
Other
Losing my savings due to fraud or financial impropriety
Being unable to properly manage my retirement income once I am retired
Having to dip into my savings instead of living on the interest income
Having to downgrade my standard of living and live a more frugal life
My savings is not growing / gaining as much interest as I had hoped
Losing my savings due to the poor state of the economy
Requiring more money than I have planned for due to unforseen circumstances
Not having enough to live on / not being able to save enough
% of Respondents
What is your greatest concern about retirement income?
Current and Past Retirement Savings Behavior
53
10 14 18
5
34
16 27
8 15
46
10 21
15 8
59
10 11 18
2
56
10 11 21
2
0
20
40
60
80
Automatic Withdrawal from Pay
Self Saver
Irregular Saver
Not Started
Other
% o
f R
esp
ond
ents
All Mature Generation Baby Boomers Gen X Gen Y
Current Saving Style • Although most survey respondents who are saving for retirement do so via automatic
withdrawals from their pay, Gen X (59%) and Gen Y (56%) are more likely than other age cohorts to be doing so:
– Most people (64%) who have automatic withdrawals contribute bi-weekly, 19% contribute weekly
– 18% of all survey respondents haven’t started saving, including Baby Boomers (15%) who are close to retirement, as well as the Mature Generation (8%), who should already be retired
– Married males (60%) and females (54%) more likely to be saving by means of automatic withdrawals than people who are single
– Single females (29%, mean age 37 years old) are most likely to have not started saving for retirement
Base: Those who are not retired (n = 1434) - Mature Generation (n = 83), Baby Boomers (n = 343), Generation X (n = 493), Generation Y (n = 515)
Which one of the following best describes your current situation with respect to saving money for retirement?
71
44 40
51 49 52
65
48 50
78
42 39
73
41
32
0
10
20
30
40
50
60
70
80
90
401(k) / 403(b) / Employer-Sponsored
IRA (Traditional or ROTH)
Other like Money Market / Savings Account
% o
f R
esp
ond
ents
All Mature Generation Baby Boomers Gen X Gen Y
Retirement Saving / Investment Vehicles • Savers in the Generation X (78%) and Y (73%) cohorts are significantly more likely to use
401(k) / 403(b) and other employer-sponsored retirement savings vehicles than other age cohorts
• A higher proportion of the Mature Generation and Baby Boomers use other vehicles such as money market or savings accounts and IRAs than younger cohorts
Base: Those who are not retired and are saving for retirement (n = 1119) - Mature Generation (n = 63), Baby Boomers (n = 267), Generation X (n = 394), Generation Y (n = 395)
Which of the following savings/investment vehicles do you use to save money for retirement? (Select all that apply)
Saving History: Age • Overall, survey respondents would have preferred to have started saving for retirement 8
years earlier than they actually did:
– The Mature Generation and Baby Boomers would have preferred to have started saving 11 years and 10 years earlier, respectively
– Gen X and Gen Y have a significantly narrower difference: 4 years for Gen X and 2 years for Gen Y
– Although not shown on this graph, those who haven’t started saving yet expect to start, on average, when they are 41 years old – much too late for prudent retirement planning
Base: First started – those who have saved (n = 1714) – Mature Generation (n = 482), Baby Boomers (n = 428), Gen X (n = 406), Gen Y (n = 398) Like to have started – those who saved or would like to have started (n = 1635),
Mature Generation (n = 379), Baby Boomers (n = 403), Gen X (n = 427), Gen Y (n = 426)
At what age did you first start saving for retirement? At what age would you have liked to start?
32
38
35
28
24
24
27 25
24 22 20
25
30
35
40
All Mature Generation
Baby Boomers
Gen X
Gen Y
Mean A
ge
Age first started saving Age would have liked to started saving
Saving History: Past Acceleration of Savings • 41% of survey respondents who have started
saving for retirement have accelerated their savings at some point in the past – this is significantly higher for the Mature Generation (51%) and Baby Boomer (46%) cohorts:
– Married males (48%) are significantly more likely to have accelerated saving in the past than others (36%)
Base: Those who have or are saving (n = 1775), Mature Generation (n = 495), Baby Boomers (n = 453), Gen X (n = 415), Gen Y (n = 412)
Was there a time in the past when you accelerated your savings to help ensure you
will / would have enough money for your retirement?
41
51 46
32 31
0
10
20
30
40
50
60
% W
ho
Said
“Y
es”
Mature Generation
All Baby Boomers
Gen X
Gen Y
• Events that stimulated acceleration of savings are numerous. The most common were:
– Increase in income (21%)
– Realized needed more money for desired lifestyle (9%)
– Approaching retirement / getting older (8%)
• Examples of other events mentioned by 5% or less of respondents included:
– Employer started offering incentives
– Economy
– Wanted to retire sooner
– Children moved out / finished college
– Had children
– Legally allowed to
– Catch-up opportunity
– Unexpected income
– Advice from an expert / friend
– To get a tax break
– Sold property / stocks / etc.
Saving History: Obstacles • 73% of respondents have experienced
obstacles when saving for retirement:
– Significantly more Mature Generation survey respondents (41%) report having never had obstacles in saving for retirement than other age cohorts (22%)
– More married males (32%) have never had obstacles than others (24%)
– Those without children (30%) are more likely to have never had obstacles than those with children (21%)
Base: All respondents (n = 2029), Mature Generation (n = 502), Baby Boomers (n = 504), Gen X (n = 505), Gen Y (n = 518)
What events or situations, if any, have you faced (or did you face if you’re already retired) that caused you to pause or cut back on saving for retirement?
27
73
0
10
20
30
40
50
60
70
80
% o
f R
esp
ond
ents
Didn’t Have Any Obstacles
Have Had Obstacles
• Most common events or situations that caused a pause / cut back in saving for retirement:
(Base: Those who faced obstacles, n = 1486)
30% Lack of / steady employment
27%
20%
20%
14%
9%
8%
Paying off major debts, not including a mortgage
Education expenses
Healthcare expenses, not including elder care expenses
Paying off a mortgage
Just didn’t get around to saving
Divorce expenses like lawyers’ fees, child or spousal support
Retirement Savings Goals and Beliefs Among Non-Retirees
27
53
20
31
57
12
37
54
9
28
56
16 19
49
32
0
10
20
30
40
50
60
Worse Than Now About the Same Better Than Now
% o
f R
esp
ond
ents
All Mature Generation Baby Boomers Gen X Gen Y
Expectations of Financial State in Retirement • Overall, a slight majority of respondents (53%) believe their financial state is going to be
about the same in retirement as it is now:
– Significantly more of the Generation Y cohort (32%) believe they will be better off financially in retirement than others (12%)
Base: Those who are not retired (n = 1434) - Mature Generation (n = 83), Baby Boomers (n = 343), Generation X (n = 493), Generation Y (n = 515)
Which of the following statements best reflects your opinion about your financial state in retirement?
Why Some Believe Retirement Will Be Worse • Those who believe they will be financially worse off in retirement were asked to
explain why they hold that belief (open-ended question)
Base: Those believe they will be worse off financially in retirement than they are now (n = 385)
Don’t have enough saved and the interest paid is way too low today - Mature Generation (69 years old)
“ ” The cost of things keeps going up and I know my retirement income will not - Mature Generation (68 years old)
“ ” I don't know if social security
will still be around when I retire - Generation Y (34 years old)
“ ” We can't afford to save up for retirement at the moment and it looks like we won't be able to then - Generation Y (35 years old)
“ ”
Inflation and healthcare costs - Generation X (47 years old)
“ ”
I haven't started saving early enough. There won't be enough time to catch up - Generation X (41 years old)
“ ”
Already have done the math and can't afford to take more out of my paycheck right now - Baby Boomer (54 years old)
“ ” Inflation, rising gas prices and costs of healthcare - Baby Boomer (57 years old)
“ ”
Insufficient savings - Baby Boomer (48 years old)
“ ”
24%
8%
8%
I haven’t / can’t save enough money
Cost of living increases
Economy
Income will be less 20%
A wide variety of low frequency responses were given. The most common ones were:
Why Some Believe Retirement Will Be Better • Those who believe they will be financially better off in retirement were asked to
explain why they hold this belief (open-ended question)
Have saved more than necessary for my lifestyle - Mature Generation (68 years old)
“ ” I will have everything paid off - Mature Generation (75 years old)
“ ” I am planning ahead to make sure I have a comfortable retirement - Generation Y (35 years old)
“ ”
Started saving for retirement at an early age - Generation Y (25 years old)
“ ”
Have some really attractive investments - Generation X (38 years old)
“ ” Mortgage paid off, IRA and 403b doing well, will earn more per month and fewer expenses - Generation X (38 years old)
“ ”
Because I have been saving all I can - Baby Boomer (54 years old)
“ ”
Both my husband and I saved for this, we will have enough money to live comfortably, our house is paid for - Baby Boomer (61 years old)
“ ”
Because I will be getting money from my investments - Baby Boomer (53 years old)
“ ”
Base: Those believe they will be better off financially in retirement than they are now (n = 283)
31%
12%
8%
12%
A wide variety of low frequency responses were given. The most common ones were:
7%
Will have saved enough
Will have paid off loans / debt
Will not have a mortgage
Have started young / planned
Due to investments
Saving Goals: Amount & Expected Sources • Overall, 31% of respondents indicate they have a specific savings goal:
– The Mature Generation who are still not retired (13%) are less likely than others (31%) to have a specific retirement savings goal
– Married males (39%) are more likely to have a specific retirement savings goal than others (27%)
– Those who have children (38%) are more likely to have a specific retirement savings goal than others (25%)
– Those with household incomes of more than $100K per year (40%) are significantly more likely to have a specific goal than those with lower incomes (28%)
• Of the 31% who have a specific goal, the average (median) retirement savings goal is $750,000:
– 71% of those with specific savings goals plan to save $1 million or less
– There are no statistically significant differences in goals between age cohorts
Base: All respondents who are not retired (n = 1434)
Do you have a specific savings goal?
31
69
0
10
20
30
40
50
60
70
80
% o
f R
esp
ond
ents
Yes No
• Those with specific savings goals believe it will come from:
– Working / saving money themselves (86%)
– 401k (60%)
– Investments, other than real estate/401k/IRA (56%)
– IRAs (40%)
– Social Security / Government pensions (40%)
– Pension from work, other than 401k/IRAs (28%)
– Real estate investments (24%)
– An inheritance (16%)
Average $750,000
Percent Saved & Confidence of Reaching Goal • Overall, people have only saved 28% of
their total savings goal, on average; however, not surprisingly, this figure changes significantly depending on age cohort:
– The few Mature Generation who are not retired (n = 11*) are within less than 30% of their goal
– Baby Boomers have only achieved just under half of what they believe they need or want for retirement savings
Base: Respondents who are not retired and have a specific $ goal for retirement savings (n = 442), Mature Generation (n = 11*), Baby Boomers (n = 94), Gen X (n = 165), Gen Y (n = 172)
What percentage of the money you said you wanted to save do you already have saved?
28
71
49
26 15
0
20
40
60
80
Mean %
of
Go
al S
ave
d
Mature Generation
All Baby Boomers
Generation X
Generation Y
*
* Note: very small number of observations – interpret with caution
• About half from each cohort, (except the Mature Generation) are confident they will achieve their savings goal
• Most frequently mentioned reasons why people don’t think they’ll achieve their goals are:
– Hard times / bad economy (26%)
– Not enough income (22%)
– Expenses (20%)
– Not enough time (11%)
54
73
52 49 59
0
20
40
60
80
% W
ho
Ag
ree
Mature Generation
All Baby Boomers
Generation X
Generation Y
*
I am confident that I will achieve my [$ savings goal] by the time I retire
Life Expectancy & Financial Needs In Retirement • Overall, most believe they will require income for 18-22 years depending on age cohort
(median = 20 years)
• On average, the amount of money survey respondents believe they will need to live “comfortably” is $3,000 per month; however this varies significantly both within and between cohorts - Mature Generation believes they will need more than other cohorts
Base: Respondents who are not retired (n = 1434), Mature Generation (n = 83), Baby Boomers (n = 343), Gen X (n = 493), Gen Y (n = 515)
For how many years do you expect to require income once you retire?
20 19
18 19
22
0
5
10
15
20
25
Med
ian N
um
ber
of
Years
Mature Generation
All Baby Boomers
Generation X
Generation Y
How much money per month do you think you will need to live comfortably?
3000
4000
3000
2500 2500
0
1000
2000
3000
4000
Med
ian Inco
me P
er
Mo
nth
Mature Generation
All Baby Boomers
Generation X
Generation Y
Relative Financial Requirements in Retirement • The absolute amount of money people believe
they will need per month may be less important than whether they think they will require less, about the same or more money to live per month when they retire:
– Most (80% overall) feel they will require the same amount of money they currently live on now or less
– Significantly more Generation Y respondents believe they will require more money compared to now
Base: Respondents who are not retired (n = 1434), Mature Generation (n = 83), Baby Boomers (n = 343), Gen X (n = 493), Gen Y (n = 515)
You said you would need [$ amount] per month to live comfortably, is this less, more or about
the same as what you live on now?
80 91
86 83
71
0
20
40
60
80
100
% W
ho
Said
Sam
e o
r Less
Mature Generation
All Baby Boomers
Generation X
Generation Y
• All non-retired survey respondents were asked what they would do if they retire and find out they don’t have enough money to live comfortably – working part-time, cutting back on discretionary expenses and moving to less expensive housing were the most common answers given:
Work part-time or full-time
Move to less expensive housing
Work full-time
Cut back on discretionary exp., e.g., travel, mobile phones,/tablets, etc.
Seek public assistance
Take out a reverse mortgage
Move in with children / family
Sell home to live from the proceeds
Sell car / take public transportation
80%
36%
59%
15%
9%
8%
14%
6%
Why Less / More Money Required in Retirement • Those who indicated that they thought they would require less or more
money in retirement than they live on now were asked to explain why with an open-ended question
Base: Why More: Respondents who believe they will require more money in retirement (n = 287) Why Less: Respondents who believe they will require less money in retirement (n = 586)
Most common unprompted answers why some believe they will require less money in retirement were:
Most common unprompted answers for why some believe they will require more money in retirement were:
41%
17%
11%
No mortgage / rent
Fewer expenses
No debt
I won’t have any children 21%
28%
20%
Cost of living / inflation
More leisure expenses / travel
Medical expenses
23%
Retirees’ Experiences Since Retirement
Perceived Lifestyle Changes Due to Finances • Only half of retirees feel they have not had to
make changes in their lifestyle during retirement
• 37% of retirees indicated they have had to make the following types of changes:
– Cut back on discretionary expenses like travel, entertainment, mobile phones/tablets, etc. (67%)
– Work part (20%) or full time (3%)
– Moved to less expensive housing (16%)
Note: 20% indicated their lifestyle changed but didn’t need to do anything, as these changes were planned
Base: Those who are retired (n = 595)
Agree or Disagree? Since I retired, I haven’t had to change my lifestyle in any significant way
due to my financial situation.
37
11
52
0
10
20
30
40
50
60
% o
f R
esp
ond
ents
Disagree Neutral Agree
Primary reasons retirees gave for why they had to cut back during retirement were:
36%
12%
Income was less / didn’t want to run out of money
Medical expenses
Not enough money / didn’t want to run out
Inflation / increasing costs 14%
7% Economy / market
Only have social security and it’s not enough 6%
41%
13%
7%
Save as much as you can
Plan / get a financial advisor
Limit expenses / defer pleasure until later
Start saving as early as possible 23%
6% Pay off debt as soon as possible
Retirees’ Advice for Those Not Yet Retired
Retirees were asked what one most important piece of advice they have for people who are not yet retired. The following unprompted reasons were the most common ones given…it’s not rocket science:
Base: Those who are retired (n = 595)
Cut back on present pleasures for future security - Mature Generation (69 years old)
“ ” Start saving young and learn to live below your income - Mature Generation (69 years old)
“ ” Make sure you know how much you will need to live comfortably and plan to be debt-free when you do retire - Mature Generation (68 years old)
“ ”
Do your homework. Talk to a financial advisor - Baby Boomer (61 years old)
“ ” Do not retire until you are ready physically, mentally and financially so you can enjoy what you have earned - Mature Generation (69 years old)
“ ”
You should be saving at least 10% of your income as soon as you start working as an adult - Baby Boomer (59 years old)
“ ”
Start saving EARLY, even if it’s just a little bit each week/month - Baby Boomer (70 years old)
“ ”
Always put a little or a lot aside depending on your circumstances - Mature Generation (78 years old)
“ ”
Don’t take early retirement / work as long as possible
5%
Retirement Saving Strategy Confidence Index
62
19 19
44
22
34
64
17 19
70
20
10
69
18 13
0
10
20
30
40
50
60
70
80
Not Confident Neutral Confident
% o
f R
esp
ond
ents
All Lost Generation Baby Boomers Gen X Gen Y
Retirement Saving Strategy Confidence • A modification of the Net Promoter Score1 was used to identify the proportion of survey
respondents that is more (promoters) and less (detractors) confident in the strategy they adopted with respect to saving for retirement:
– Survey respondents were asked to indicate how likely they would be to recommend the approach they have taken to save for retirement to others using an 11-point scale where “0” means “extremely unlikely”, “5” means “neutral” and “10” means “extremely likely”
– As illustrated below, there are far more people who are not confident about their approach to savings than those who are confident of it
– The Mature Generation is significantly more confident than Baby Boomers, Gen X or Gen Y cohorts
Detractors (0 to 6 on scale)
Promoters (9 and 10 on scale)
Base: All respondents (n = 2029), Mature Generation (n = 502), Baby Boomers (n = 504), Gen X (n = 505), Gen Y (n = 518) 1. The Net Promoter Score is a trademark of Satmetrix Systems, Inc., Bain and Company, and
Fred Reichheld. TD Ameritrade, Inc. and Satmetrix Systems, Inc., Bain and Company, and Fred Reichheld are separate, unaffiliated companies.
Net Retirement Savings Strategy Confidence Index (Promoters Minus Detractors)
(RSSC Index)
Note: RSSC Index can vary from -100 to +100. A score of “0” means as many people are confident as are not confident in their strategy – a score of 50 or more suggests the target group is very confident
Overall
Baby Boomers
Generation X
Mature Generation
Generation Y
-43
-45
-60
-10
-56
-100 +100 0
Conclusions
Conclusions • Almost 1 out of every 2 Americans (48%) is NOT looking forward to retirement:
– Their # 1 concern is not having enough money saved
– Others also like their job, want to remain active, and to continue working
– Those who are married are more likely to be looking forward to retirement as they are more financially prepared for this change in lifestyle
• Those who are already retired are satisfied, proud and positive; however, those who haven’t yet retired feel differently:
– Baby Boomers are anxious and regretful as they see retirement coming and they’re not ready
– Generation X is embarrassed, frustrated and envious, as they would like to retire in comfort but don’t know how they will be able to do so
– Generation Y feels out of control and relatively disinterested, as retirement is very far away and they believe social systems may have collapsed by the time they are retire – in fact, it’s not clear they believe that retirement as currently conceived will even exist
• Gen X and Gen Y are starting to save almost a decade earlier than Baby Boomers and the Mature Generation:
– Older people regret that they didn’t start saving for retirement earlier, and Gen X and Gen Y are benefitting from the previous generation’s experience
Conclusions (cont’d)
• Three-quarters (73%) of Americans have faced obstacles saving for a comfortable retirement. The 4 most often cited obstacles are:
– Lack of employment / steady employment, debt load, education and healthcare expenses
• Most Americans (73%) believe their finances in retirement will be the same or better than they are now, the most optimistic (perhaps naïve) cohort being Generation Y, with an overwhelming 81% such believers because they think:
– They will have prepared and saved enough for retirement
– Their expenses will be lower
– They will be debt-free
• More than two-thirds (69%) of Americans have no specific savings goal:
– Those with a goal believe $750,000 dollars, on average, will be enough – we know it is not
– They believe their retirement income will come from their devotion to saving themselves, from pensions and a variety of other sources
– 40% are expecting to depend on government aid and 16% on inheritances
– Those who are married and/or have children are more likely to have a specific retirement savings goal than those who are single or do not have children
Conclusions (cont’d)
• Americans are NOT confident that they will reach their retirement savings goal – only 54% believe they will make it
• Americans are worried they won’t have enough money and plan to work in retirement, cut back on discretionary expenses, and live in homes that are of a lower standard than they’re used to:
– They plan to work full-time (22%) or part-time (70%) in retirement to make up for this gap
– Inflation is their #1 concern
• People’s estimates of how long they will require retirement income are relatively accurate:
– They believe they will require 18 to 22 years of retirement income, slightly less than the 20 to 25 years that statistics indicate they will actually need
• The vast majority of Americans believe they will need the same or less income per month in retirement than they do now:
– Unfortunately: we know that income needs typically increase in retirement due to inflation, healthcare and assisted living requirements, and other unexpected costs
– Reality: 1/3 of retirees indicate that they have had to change their style of living – almost ¼ have gone back to work – they recommend: saving earlier and more, limiting expenses and working longer
Appendix Study Sample Characteristics
5
16
25 22
12
20
0
5
10
15
20
25
30
New England Mid-Atlantic South Midwest Southwest West
% o
f R
esp
ond
ents
Study Sample Characteristics
Base: All respondents (n = 2029)
Region
56
13
2
29
0
10
20
30
40
50
60
Employed Unemployed Students Retired
% o
f R
esp
ond
ents
Employment Status
16
35
19
30
0
10
20
30
40
Single Males Married Males Single Females Married Females
% o
f R
esp
ond
ents
Gender by Marital Status
74
23
3
0
20
40
60
80
Under $100K per year $100K + per year Prefer not to answer
% o
f R
esp
ond
ents
Total Household Income
40
59
1 0
20
40
60
80
Technical degree or less University degree or more Prefer not to answer
% o
f R
esp
ond
en
ts
Education
36
64
0
20
40
60
80
Yes No
% o
f R
esp
ond
en
ts
Presence of Dependent Children