Data & Research October 22, 2009

Confidence in Retirement Preparedness Keeps Slipping

 

The latest Sun Life Financial Unretirement Index shows there is a growing concern among American workers that they have not done enough to prepare for retirement.

Reported by

Nearly a quarter of respondents said they are not at all confident they have done a good job preparing for their retirement. Overall, fewer than one in four workers are very confident they will be able to live the kind of life they want in retirement.

The results show 40% of respondents feel they will have enough money to cover basic living expenses in retirement, compared to 42% who said so in the previous Index and 46% in the inaugural survey in the fall of 2008. The Index also found an 8% decline from last year in the number of people who say they will have enough money to pursue hobbies and interests during retirement (33% last year vs. 25% in the recent Index), and a 7% drop in the number who feel they will be able to live the kind of life they want to live in retirement (31% vs. 24%).

The percentage of Americans who have doubts Social Security will be available when they retire has risen 13% in the last year.

Working Later

In addition, more than half (55%) of respondents indicated they plan to work past age 67. Eighty-four percent said they would do so to earn enough money to live well, 81% said the reason is to stay mentally engaged, and 65% said it is because they love their career. Sixty-three percent said they would work past age 67 to receive health care benefits.

Sun Life created the Unretirement Index to learn more about the reasons why Americans are choosing to continue to work full- or part-time after the age of traditional retirement. The firm defines Unretirement as working at least 20 hours per week after the age when one is eligible to receive Social Security benefits.

Complete Index results are at www.unretirementindex.com.
 

The Markets October 22, 2009

Desire for Advice Influenced Retirement Money Movement

A new analysis shows that, contrary to popular opinion, mass affluent consumers were not passive during the difficult financial environment of 2008 and 2009.

Reported by

In fact, the analysis says, investors moved significant amounts of retirement money, including taxable assets, over the past year, in search of better value, personalized advice and guidance, and a financially sound provider. A large percentage of mass affluent consumers in the study self-identify as “beginners,” recognizing the fact that they need professional financial advice. The study also found that prior to age 65, the frequency and size of money movements generally increased with experience and income.

“Retirement Money in Motion: Capitalizing on IRA, Rollover & Taxable Money Movement” found that the desire to consolidate accounts was the number one driver of retirement movement decisions but, for financial services companies, a minimum, pre-existing 20% wallet-share capture was required to win this business. Financial soundness perceptions (and realities) of companies drove a third of retirement money movement decisions.

Teresa Epperson, a partner at Mercatus LLC, which conducted the study in conjunction with Financial Research Corporation (FRC), noted in a press release that, “While financial soundness concerns drove over a third of retirement money movement, the desire for advice, whether packaged or personalized, was a much more influential driver.”

The study was conducted in May of 2009 and covered the prior 12-month period. Respondents were from most U.S. states, ranged in age from 35 to 70, and had an average of $614,000 in investable assets. Topics covered in the study include an overview of mass affluent consumers’ retirement money movement decisions relative to their retirement assets, as well as their age, income, and investing experience. In addition, participants had to have completed at least one of the following transactions within the past year: rolled assets over from the employer-sponsored retirement plan to an individual retirement account (IRA), transferred assets from an IRA with one firm to an IRA at another firm, or transferred taxable assets designated for retirement from one firm to another.

The study report can be found at www.frcnet.com.

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