Data & Research June 4, 2008

Even You Might Not Be Saving Enough

Financial service employees are not more on track with their retirement savings than other people, a study from MetLife found.
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It is the classic situation of the doctor who does not have time to exercise or the hairdresser with unkempt hair. Financial services employees appear to have fallen in the same trap as other Americans who are unconfident about their retirement savings (see Americans Know They’re Not Saving Enough).

According to a press release from MetLife, more than half (54%) of financial services employees surveyed said they are behind schedule for achieving their retirement financial goals— a greater number than employees across all industries that say the same (47%). Less than one-third of employees in the financial services industry report being on track with their retirement savings goals.

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MetLife, an insurance provider, also found that the surveyed employees are no more knowledgeable about insurance products than people in other industries. Sixty-one percent of employees surveyed are unfamiliar with variable universal life, almost half (48%) are unfamiliar with long-term care insurance, and 29% are unfamiliar with accidental death and dismemberment policies.

For financial services employees in the study making more than $100,000, more than 35% have not considered annuities as an option to provide income in retirement, 45% have not evaluated the costs of long-term care for elderly parents or spouses, and nearly half (45%) have not discussed how they will afford medical care in retirement with a financial professional.

A free paper from Metlife, What Financial Services Companies Can Do to Stand Out in a Competitive Talent Market: Innovative Employee Benefits Solutions for the Financial Services Industry, is available at www.whymetlife.com.

Data & Research June 4, 2008

Social Security Data Overestimate Early Retirement

Social Security analysis is not accurately portraying when people retire, says a brief by the Center for Retirement Research (CRR) at Boston College.
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Social Security’s claim year analysis does not accurately take into account the claiming behavior of individuals, according to the brief.

According to claim analysis, the group of people claiming Social Security benefits at age 62 has been falling since the mid-“90s. Yet the brief asserts that this data is misleading, as the proportion of people claiming benefits early has not changed over the years.

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In order to uncover that information, the analysis took into consideration both claim year data and the behavior of cohorts, or segments of people by age.

In the past, the brief says both claim year analysis and cohort analysis provided reasonable estimates of those claiming benefits at any age, but the changing landscape of retirement has caused differences. The claim year analysis masks changes in claiming behavior by overestimating the proportion of retirees claiming benefits at 62.

As the Boomers approach retirement in larger numbers, the differences are likely to be amplified, then eventually stabilize, the brief says. “As the retirement income system contracts, now more than ever, it is necessary to measure Social Security beneficiaries’ claiming behavior accurately,” the brief reads.

The good news is that CRR’s data show that more people are claiming retired-worker benefits at later ages—consistent with increased labor force participation at older ages, the brief says. Yet in 2006, 46% of insured workers still claimed Social Security benefits as soon as they became eligible.

The full brief is available here.

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