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A delayed retirement? How employees are planning for retirement.2015/2016 Global Benefits Attitudes SurveyU.S.
2015/2016 Global Benefits Attitudes SurveySurvey of nearly 30,000 employees in 19 countries
Americas Responses Europe Responses Asia Pacific Responses
Argentina 1,508 France 1,007 Australia 1,006
Brazil 1,004 Germany 2,281 China 2,005
Chile 1,005 Ireland 758 India 2,003
Colombia 1,001 Netherlands 1,006 Japan 2,002
Mexico 1,011 Turkey 1,031 Philippines 1,010
Canada 2,013 United Kingdom 1,895 South Korea 1,000
United States 5,083
For over a decade Willis Towers Watson has surveyed employees about health and retirement. This survey fielded from June to August 2015 and is the second globally consistent survey. It includes representative samples at non-governmental employers.
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Executive Summary
Financial situation improves and the numbers planning to retire later is moderating1Fears over reductions in standards of living in retirement are widespread2Employees are increasingly reliant on their employer retirement plan4Working longer is the main way employees overcome inadequate savings for retirement5One-in-four expect to work to age 70 or later6
Retirement security is an increasing area of focus for employees3
A. An opportunity – employees are more receptive around retirement issues. Can employers help them save for retirement given competing priorities?
B. Leverage segmentation and new technologies to connect to employees
C. Use tools that can help close the gaps in employee understanding about the savings required and costs in retirement.
D. “Hidden Pensioners”- a potential challenge. Do benefits programs support an orderly retirement that aligns with workforce needs?
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Workers who expect to work into their 70s are less healthy, more stressed and less engaged7
Key findingsThe Road Ahead
Delayed retirement
4
How are employees planning for retirement?
How confident are they of having a comfortable retirement?
What age do they expect to be able to retire?
Retirementexpectations
The business impact
Are we seeing “hidden pensioners”– employees who want to retire, but cannot afford to do so?
What is the impact on job performance, health and stress?
Retirementplanning
What are employees’ priorities for saving for retirement?
Who do employees turn to for help in forming their retirement plans?
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Retirement confidenceLong-term financial worries linger
Short-terms financial worries ease
55%
Canada
48%
U.S.
54%
Europe
54%
Latin America
2013 2015 ChangeGlobal 44% 51% +7U.S. 41% 48% +7Canada 49% 55% +6Latin America 46% 54% +8Europe 50% 54% +4Asia Pacific 42% 50% +8
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Financial satisfaction has risen slowly since 2013/14 as the economy has recovered … will 2016 call a halt to this improvement?
Thinking about all aspects of my financial situation, I am satisfied with where I am today
Percentage agree or strongly agreeSource: 2013/2014 and 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.
50%
Asia Pacific
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Note: Percentage agree or strongly agree, not at all confident or not too confidentSource: 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.
Fears over reductions in Government benefits and declining standards of living in retirement are widespreadHalf lack confidence in having sufficient resources to fund their retirement
I often worry about my future financial state
Lack of confidence in having sufficient retirement resources - 15 years into retirement
Lack of confidence in having sufficient retirement resources - 25 years into retirement
-10% 0% 10% 20% 30% 40% 50% 60%
47%
34%
53%
49%
31%
50%
U.S. Global
When I come to retire Social Security will be much less generous than it is now
When I come to retire the medical benefits provided by the government will be worse
My generation is likely to be much worse off in retirement than my parents’ generation are/were
Long-term concernsGlobal U.S.
71%65%
70%58%
76%66%
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Women report lower retirement confidenceRetirement confidence lower for females and those in their 30s and 40s
How confident are you that you will have enough financial resources to live comfortably for 25 years in retirement?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees.
% reporting confidence in having sufficient resources to last 25 years in retirement
20 to 29 30 to 39 40 to 49 50 or more
61%
50% 50%57%
46% 44% 45% 43%
Men Women♂ ♀
Retirement security is rising up the agenda
Canada
63%U.S.
67%
Europe
49%
Asia Pacific
48%Latin America
57%
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Fears over the sustainability of Government retirement benefits and concerns over adequacy are leading to a greater focus on saving for retirement
Retirement security has become a more important issue for me over the last two or three years
Percentage agree or strongly agreeSource: 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.
All respondents 67%
Generation
Boomers 77%
Gen X 66%
Gen Y 59%
GenderMale 66%
Female 68%
Salary
Low 62%
Middle 66%
High 70%
10
Europe, 54%Canada, 55%
59%
Asia Pacific; 62%
70%
Global, 65%
72%
Latin America, 66%67%
Australia, 69%
80%
U.S., 74%
79%
And employees are relying on their employer’s retirement plan
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Source: 2013/2014 and 2015/2016 Global Benefits Attitudes Survey.Sample: All employees. Except U.S. and Canada, full-time employees only.
Despite reductions in plan generosity and a movement to DC, the importance of employer-sponsored plans is seemingly growing … an employer responsibility?
2010 2011 2013 201520%
30%
40%
50%
60%
70%
80%
56%
65%
74%79%
+23%
2013 2015
My retirement plan is the primary way I save for retirement
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Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees.
Employees are on-board for employers taking a more active role in their retirement
0%
10%
20%
30%
40%
22% 21%18%
11%9% 10% 9%
Employers should activelyencourage employees to save for retirement
Employers should provide a basic retirement plan and
let employees do the rest
Strongly prefer Prefer Slightly prefer Neutral Slightly prefer Prefer Strongly prefer
61%
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Retirement expectationsDelaying retirement
Lowest employment
(year)
Current employment
rate
Australia 8% (1993) 17%
Canada 9% (2001) 17%
France 1% (2006) 3%
Germany 4% (1991) 8%
Ireland 14% (2011) 15%
Japan 28% (2011) 29%
Netherlands 3% (1986) 12%
South Korea 39% (1989) 42%
U.K. 7% (2001) 13%
U.S. 15% (1993) 22%
In the past 20 years the employment rate amongst those aged 65 or older has grown by almost half
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Source: OECD Dataset: LFS by sex and age - indicators
South Korea
Japan
U.S.CanadaAustraliaIrelandU.K.NetherlandsGermany
France
0
10
20
30
40
50
60
Percentage of men aged 65 or older who are in employment
The number of employees planning to retire later is slowing
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A reaction to the strengthening economy during 2014-15? Will this trend persist?
1 out of every 3 employees are planning to retire later than previously.
32%
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
2013 43%
2011 39%
2010 40%
2009 34%
The lowest incidence in the past years
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Expected retirement ages showed some moderation since 2013
At what age do you expect to retire?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. “Don’t know” answers were not considered for the calculations.
But more than 1-in-4 still expect to work past age 70
2009 2010 2011 2013 2015UNDER AGE 65 35% 36% 40% 25% 30%
Younger than 55 5% 2% 3% 1% 2%55 to 59 10% 10% 12% 6% 7%60 to 61 8% 9% 11% 9% 10%62 to 64 12% 15% 13% 10% 11%
AGE 65 19% 20% 22% 23% 24%
OVER AGE 65 46% 44% 38% 52% 46%66 to 69 25% 30% 24% 19% 18%70+ 16% 11% 11% 25% 23%Never retire 6% 3% 2% 8% 5%
Expected retirement ages are close to current ones, but employees know the chances of working longer are significant
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Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.
The average U.S. employee expects to retire at 65, but thinks there is a 50% chance of working to 70
Australia
Canada
France
Germany
Ireland
Japan
Netherlands
South Korea
UK
US
52%
41%
38%
32%
43%
41%
45%
51%
46%
50%
65.5
63.3
63.7
64.6
64.4
63.1
67.2
61
64.4
65.2
Average expected age of retirement What chance do you think there is that you will still be working at age 70?
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Significant numbers now expect to work until their 70s or later in developed economies
37% 21%
12%
22%
10%
Australia UK
Ireland
Netherlands
Germany
15%
28%
South Korea
US
11%
JapanSource: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.
At what age do you expect to retire? Percentage reporting age 70 or above
10%
France
16%
Canada
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Who plans to work later?And the links to employee performance
Late retirement out of necessity?
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Working longer is the main way employees over 50 overcome inadequate savings for retirement
If someone told you that your income in retirement wouldn’t be as much as you wanted, which action do you think you would be most likely to take?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
Age less than 5044%
Work longer
Save more
45% 9% 1%Accept a lower income in retirement
Do nothing and hope for the best
Age 50 or more 52%Work longer
Save more
26% 18% 3%Accept a lower income in retirement
Do nothing and hope for the best
Saving more is not a viable option for many employees
nearing retirement
All employees
47%
Work longer
Save more
Accept a lower income in retirement
Do nothing and hope for
the best
39%
12% 2%
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41% 37%13% 10%
27% 29%
22%17%
19% 12%
21%15%
13% 21%44%
58%
70 or later66 to 69At 65Before 65
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
Financial worries drive people to work laterA hidden pensioner problem?
Employees with future worries or who are struggling financially are more likely to
retire later.
Money worries
Unworried Future worries
Current worries
Struggling
At what age do you expect to retire?
“Hidden pensioners”
employees of retirement age who hold onto their jobs because they cannot afford
to retire
Age
Salary
Gender
Differences in retirement expectations by groups
Women
Men
Below $35,000
$35,000 to $74,999
$75,000 or more
<30
30s
40s
50 plus
30%
27%
48%
28%
20%
24%
28%
33%
27%
At what age do you expect to retire? Percentage expecting to work to 70 or later.
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
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All DC plans Less generous About the same More generous
30%38%
30% 25%
% expecting to work 70 or later by DC plan generosity
How does your DC retirement plan compare to other employers?
DB to DC transition: Impact on retirement age is being felt
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At what age do you expect to retire? Percentage expecting to work to 70 or later.
Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.
Open DB 11% 7% 10% 17%
DC only 19% 13% 22% 30%
Difference +8% +6% +12% +13%
Canada Ireland UK US
Before 65 At age 65 66 to 69 70 or older
Health status
Work stress
Sustainable engagement
I feel stuck in my job and would move somewhere else if I could
28% 30% 29%40%
64% 63% 60%47%
The links to employee performance
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Employees expecting to work longer are less healthy, more stressed, less engaged and more likely to feel stuck in their jobs.
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
Expected Retirement Age
49% 45% 44% 37%
15% 16% 17%28%
Highly engaged
Disengaged
High or above average stress
Very good health
27% 28% 24%40% % agree or
strongly agree
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Planning for retirementWhat are employees doing?
Saving for retirement a top financial priority for those over 40
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But debts and housing loom heavily for the under 40s
What would you say are currently your top financial priorities?
Rank 20s 30s 40s 50 plus
1
2
3
4
5
Other planned saving
(saving for car, holiday, etc.)
Pay off debts
General costs
Saving for retirement
Housing
General saving(saving for a ‘rainy day’)
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
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Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.
Tools and apps widely viewed as important to plan for retirementWidespread appreciation but limited set active users ... an opportunity?
Please indicate the importance of the following in helping you to manage your retirement savings.
20s 30s 40s 50 plusSavings Tracker: Tools to manage and track the value of my retirement savings
Adequacy Tracker: Tools to help me monitor when I can retire/project how much I can expect in retirement
Online Advice: Financial advice websites
Online Forums: Online forums that discuss retirement issues
5%
8%
17%
19%
18%
23%
45%
47%
4%
7%
15%
19%
17%
23%
40%
45%
3%
4%
13%
18%
11%
24%
42%
46%
3%
4%
15%
21%
11%
18%
39%
46%
Very important Important
Age
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DiscussionEmployer considerations
A delayed retirement? How employees are planning for retirement.
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Summary
1. Concerns linger on long-term financial security: Financial satisfaction has improved but concerns on retirement security remain. Employees are worried about their long-term financial security, but are they in a position to save for their retirement?
2. An employer responsibility? Fears of cuts in government benefits are pervasive and, despite reductions in generosity of employer benefits, employees are increasingly looking to their company plans to provide for their retirement.
3. Working longer: Planned retirement ages have fallen slightly but many employees anticipate longer careers and working longer is the chief safety valve in the face of inadequacy. Employees expecting to work longer are more likely to be unhealthy, more stressed and less engaged.
Employer considerationsFinancial security is a top-of-mind issue for employees. How can employers respond?
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1. Saving for retirement: As short-term financial concerns ease, employees are more receptive around retirement issues. But how can employers help them save for retirement given competing priorities (such as housing and debt)?
2. Opportunity to enhance retirement education: Use segmentation and personalization to enhance impact.
3. Tools: Consider tools that can help close gaps in employee understanding about savings amount required and costs in retirement.
4. “Hidden Pensioners”: a potential challenge if employees extend their careers and productivity declines. Do benefits programs support an orderly retirement that aligns with workforce needs? Are there strategies to re-engage older workers?
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Appendix50+ as alternative (closer to retirement, more realistic retirement ambitions)
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At what age do you expect to retire?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more. “Don’t know” answers were not considered for the calculations.
Employees aged 50 or more
Expected retirement ages show slight moderation since 2013More than 1-in-4 expect to work past age 70
2009 2010 2011 2013 2015
UNDER AGE 65 32% 30% 31% 23% 29%Younger than 55 0% 0% 2% 0% 1%55 to 59 8% 6% 5% 4% 5%60 to 61 8% 6% 6% 5% 6%62 to 64 16% 18% 18% 14% 16%
AGE 65 15% 17% 18% 18% 18%
OVER AGE 65 53% 53% 51% 59% 53%66 to 69 32% 37% 35% 26% 26%70+ 16% 13% 12% 25% 23%Never retire 5% 3% 4% 8% 4%
Significant numbers now expect to work until their 70s or later in the developed economies
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32% 12%
5%
8%
3%
Australia UK
Ireland
Netherlands
Germany
25%
27%
South Korea
US
10%
Japan
At what age do you expect to retire? Percentage reporting age 70 or above
2%
France
14%
Canada
Employees aged 50 or more
Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan. Aged 50 or more.
27% expect to work until their 70s or later; but the average employee thinks there is a 46% chance of still being working at age 70
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What chance do you think there is that you will still be working at age 70?
51% 46% 45% 38% 35%
31% 28% 25% 18% 18%
South Korea US Australia Japan Canada
UK Ireland Netherlands France Germany
Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan. Aged 50 or more.
Employees aged 50 or more
37% 43%
12% 10%
20% 13%
15% 15%
28%19%
32%15%
15% 24%40%
60%
70 or later66 to 69At 65Before 65
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At what age do you expect to retire?
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more.
Financial worries drive people to work laterA hidden pensioner problem?
Employees aged 50 or more
Unworried Future worries
Current worries
Struggling
Money worries
Employees with future worries or who are struggling financially are more likely to
retire later.
“Hidden pensioners”
employees of retirement age who hold onto their jobs because they cannot afford
to retire
DB to DC transition: Impact on retirement age is being felt
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At what age do you expect to retire? Percentage expecting to work to 70 or later.
Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan. Aged 50 or more.
Employees aged 50 or more
Open DB 8% 0% 6% 17%
DC only 16% 9% 13% 29%
Difference +8% +9% +7% +12%
United StatesCanada Ireland UK
All DC plans Less generous About the same More generous
29%35%
29% 24%
% expecting to work 70 or later by DC plan generosity
How does your DC retirement plan compare to other employers?
The links to employee performance
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Employees expecting to work longer are less healthy, more stressed, less engaged and more likely to feel stuck in their jobs.
Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more.
Employees aged 50 or more
Before 65 At age 65 66 to 69 70 or older
Health status
Work stress
Sustainable engagement
I feel stuck in my job and would move somewhere else if I could
29% 30% 27%37%
63% 60% 59% 53%
Expected Retirement Age
46% 42% 47% 40%
18% 17% 15%27%
Highly engaged
Disengaged
High or above average stress
Very good health
22% 22% 19%29%
% agree or strongly agree