2012 Retirement Confidence Survey Funders Briefing February 22

2012 Retirement Confidence Survey Funders’ Briefing February 22, 2012 Employee Benefit Research Institute 1100 13 th Street NW, Suite 878 Washington, DC 20005 Phone: (202) 659 -0670 Fax: (202) 775 -6312 Mathew Greenwald & Associates, Inc. 4201 Connecticut Ave. NW, Suite 620 Washington, DC 20008 Phone: (202) 686 -0300 Fax: (202) 686 -2512

2012 RCS Methodology • 22 nd annual measure of worker and retiree confidence about retirement • 1, 262 20 -minute phone interviews conducted in January 2012 using random-digit dialing with cell phone supplement • Interviewed Americans ages 25 and over • Two questionnaire versions - 1, 003 interviews with workers (not retired) - 259 interviews with retirees 2

2012 RCS Methodology (continued) • Data weighted by age, sex, and education • Margins of error - ± 4 percentage points for all workers - ± 7 percentage points for all retirees • Unweighted sample sizes noted on charts to provide information for margin of error estimates • Data may not total to 100 due to rounding and/or missing categories 3

Overview • Retirement confidence is basically stagnant • Concerns about preparing for retirement are overshadowed by more immediate financial concerns • The percentage saving for retirement is slowly falling • Newer technologies are generally not used to help with financial planning 4

RETIREMENT CONFIDENCE

Worker confidence about having enough money for retirement is essentially unchanged. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? (2012 Workers n=1003) Very 6% 19% 55% 19% 41% Somewhat 10% 19% 47% Not Too 16% 13% 17% 18% 45% 44% Not At All 17% 14% 10% 17% 19% 40% 44% 43% 18% 24% 23% 21% 24% 25% 24% 27% 1993 1997 2002 2003 2004 2005 2006 2007 16% Don't Know/Refused 22% 22% 24% 41% 18% 2008 21% 43% 27% 23% 24% 38% 36% 38% 13% 16% 13% 14% 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1993 -2012 Retirement Confidence Surveys 6

Retiree confidence about being able to afford a comfortable retirement also remains steady. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? (2012 Retirees n=259) Very Somewhat 7% 11% 11% 16% 18% 16% 12% 45% 34% 32% 27% 33% 40% 1993 1997 2002 35% 39% 2003 Not Too 13% 16% 27% 42% 2004 7% 12% 40% 2005 Not At All 13% 12% 33% 40% 2006 11% 10% Don't Know/Refused 17% 16% 35% 18% 17% 19% 21% 17% 41% 36% 42% 20% 19% 24% 21% 2009 2010 2011 2012 38% 41% 2007 29% 2008 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1993 -2012 Retirement Confidence Surveys 7

Workers/retirees continue to be most confident about basic expenses, least confident about long-term care. Next, I would like to know how confident you (and your spouse) are about certain aspects related to retirement. (2012 Workers n=1003, Retirees n=259) Very Confident You will have enough money to Workers take care of your basic expenses during your retirement Retirees Somewhat Confident 26% 32% You are doing/did a good job Workers of preparing financially for retirement Retirees 19% 27% You will have enough money to Workers take care of your medical expenses during your retirement Retirees 13% 24% You will have enough money to Workers pay for long-term care should you need it during your retirement Retirees 45% 48% 45% 44% 38% 52% 47% 71% 80% 64% 71% 9% 28% 37% 18% 30% 47% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Surveys 8

The share of workers somewhat confident about future benefits from Social Security has increased slightly. How confident are you that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today? (2012 Workers n=1003) Very 24% 39% 44% Somewhat 1992 17% 5% 1997 Not At All 30% 31% 32% 35% 34% 38% 35% 31% 33% 34% 25% 26% 28% 23% 27% 6% 7% 7% 8% 2002 2003 2004 2005 36% 27% Not Too Don't know/Refused 34% 37% 39% 34% 28% 33% 31% 24% 21% 26% 23% 24% 29% 6% 7% 5% 6% 2006 2007 2008 2009 2010 2011 2012 30% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1992 -2012 Retirement Confidence Surveys 9

While the share of retirees very confident about Social Security has increased. How confident are you that the Social Security system will continue to provide benefits of at least equal value to the benefits received by retirees today? (2012 Retirees n=259) Very 5% 15% 33% 10% 9% 33% Somewhat 14% 1992 1997 Not At All 4% 8% 4% 11% 5% 12% 13% 30% 22% 26% 22% 31% 36% 39% 37% 44% 18% 21% 19% 2004 2005 2006 34% 13% Not Too 27% 2002 2003 Don't Know/Refused 4% 18% 16% 17% 20% 18% 31% 24% 31% 30% 36% 43% 17% 14% 2007 2008 43% 17% 23% 38% 39% 38% 13% 11% 2009 2010 2011 21% 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1992 -2012 Retirement Confidence Surveys 10

The proportion of workers confident about future benefits from Medicare has returned to 2010 levels. How confident are you that the Medicare system will continue to provide benefits of at least equal value to the benefits received by retirees today? (2012 Workers n=1003) Very Somewhat Not Too Not At All Don't Know/Refused 26% 25% 26% 28% 28% 29% 26% 40% 36% 35% 33% 36% 33% 35% 28% 34% 31% 30% 29% 30% 33% 29% 25% 31% 5% 5% 6% 7% 5% 6% 4% 5% 5% 5% 4% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 4% 25% 45% 26% 1992 34% 37% 21% 1997 30% 35% 34% 36% 29% 35% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1992 -2012 Retirement Confidence Surveys 11

But the proportion of retirees not at all confident about Medicare benefits has increased. How confident are you that the Medicare system will continue to provide benefits of at least equal value to the benefits received by retirees today? (2012 Retirees n=259) Very 6% 7% 17% 16% 26% 39% Somewhat 8% 26% 5% 11% 31% Not Too Not At All 4% 9% 10% 24% 26% Don't Know/Refused 5% 13% 22% 32% 13% 26% 32% 34% 38% 28% 31% 10% 1992 1997 44% 37% 42% 18% 19% 16% 2002 2003 2004 2005 50% 44% 12% 15% 2006 2007 44% 4% 17% 50% 39% 13% 31% 28% 45% 38% 8% 9% 7% 9% 12% 2008 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1992 -2012 Retirement Confidence Surveys 12

OTHER FINANCIAL CONCERNS

Roughly 6 in 10 workers and 4 in 10 retirees report a problem with debt. Thinking about your current financial situation, how would you describe your level of debt? (2011 Workers n=1003, 2010 Retirees n=259) 2005 2011 2012 69% 62% 57% 39%41%42% 40%37%38% 20%22%20% 6% A Major Problem A Minor Problem Workers Not a problem 15%12% A Major Problem 24%27%25% A Minor Problem Not a problem Retirees Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2005 -2012 Retirement Confidence Surveys 14

And the presence of debt is strongly related to retirement confidence. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Workers w/major debt problem (n=190) Workers w/no debt problem (n=378) 41% Wokers w/minor debt problem (n=429) 45% 44% 33% 23% 18% 11% 28% 16% 19% 14% 4% Very Confident Somewhat Confident Not Too Confident Not at All Confident Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 15

By far, the financial issue considered most pressing is job uncertainty. What do you think is the most pressing financial issue facing most Americans today? (Top mentions) Workers (n=1003). . . 10% 13% 9% 9% 9% 7% 8% 5% 7% 6% 4% 3% 2% 4% 2% 2% Retirees (n=259) 42% 41% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 16

Only a minority express confidence in the immediate financial future. How confident are you that…. (2012 Workers n=1003, Retirees n=259) Very Confident You will have paid employment for as Workers long as you need it/You will find paid employment if you should need it Retirees Your investments will grow in value Workers Somewhat Confident 28% 9% 17% 26% 11% 44% 48% 64% 34% 44% The economy will grow an average Workers of at least 3% a year for the next 10 years Retirees 8% 37% 10% 30% 45% 40% Inflation will average no more than Workers 4% for the next 10 years Retirees 7% 26% 33% 27% 30% Retirees 73% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Surveys 17

These concerns are also strongly related to retirement confidence. Overall, how confident are you that you (and your spouse) will have enough money to live comfortably throughout your retirement years? Workers very confident about continued employment (n=273) Workers somewhat confident about continued employment (n=430) Workers not confident about continued employment (n=259) 48% 45% 40% 32% 31% 19% 9% 18% 24% 10% 5% Very Confident 17% Somewhat Confident Not Too Confident Not at All Confident Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 18

PREPARATIONS FOR RETIREMENT

About 2 in 3 retirees indicate they planned financially for their retirement. Did you (or your spouse) plan financially for your retirement? (2012 Retirees n=259, Percent Yes) 2011 69% 2012 64% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2011 -2012 Retirement Confidence Surveys 20

Of these, 3 in 10 started planning less than 10 years before they retired. When did you (or your spouse) begin to pay serious attention to planning financially for your retirement? (2012 Retirees who planned financially for retirement n=178) The year you retired The year before you retired 2 to 4 years before you retired 2% 2% 1% 5% 12% 9% 17% 13% 5 to 9 years before you retired 27% 23% 10 to 19 years before you retired 34% 20 years or more before you retired Don't know 2012 2011 43% 6% 5% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2011 -2012 Retirement Confidence Surveys 21

The percentage of workers doing a retirement needs calculation remains steady. Have you (or your spouse) tried to figure out how much money you will need to have saved by the time you retire so that you can live comfortably in retirement? (2012 Workers n=1003) Respondent 48% 53% 51% 42% 31% 32% 29% 33% Respondent and/or Spouse 44% 38% 45% 39% 32% 43% 42% 42% 43% 47% 44% 46% 42% 37% 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1993 -2012 Retirement Confidence Surveys 22

The likelihood of doing a calculation increases with household income. Have you (or your spouse) tried to figure out how much money you will need to have saved by the time you retire so that you can live comfortably in retirement? Percentage Yes 62% 39% 26% Workers with Household Income <$35, 000 Workers with Household Income $35, 000 -$74, 999 Workers with Household Income $75, 000+ Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 23

Many still think they need little in savings to live comfortably in retirement. How much did you (or your spouse) calculate you would need to accumulate in total by the time you retire? If haven’t calculated: How much do you think you (and your spouse) will need to accumulate in total by the time you retire so that you can live comfortably in retirement? (2012 Workers n=1003) 2005 32% 31% 2007 2011 2012 34% 26% 21% Under $250, 000 20% 18%19%18% $250, 000 to $499, 999 22% 20% $500, 000 to $999, 999 11%10% 13% 9% 8% 7% 7% 6% 7% $1, 000 to $1, 499, 999 $1, 500, 000 or more 9% 8% 10% Don't know/Don’t remember Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2005 -2012 Retirement Confidence Surveys 24

Many guess at how much they will need. How did you (or your spouse) determine this amount? Did you…? (Among workers giving an amount needed for retirement) (Top mentions, multiple responses accepted) Guess Ask a financial advisor Do your own estimate 11% 21% 7% 21% 4% 9% Read or hear that is how much needed 10% 8% 7% Use an online calculator 14% 1% 5% Based on current expenses/lifestyle 1% 8% 5% Fill out a worksheet or form 10% 0% 42% 67% 39% 43% All workers (n=885) Did calculation (n=452) Did not do calculation (n=421) Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2011 Retirement Confidence Survey 25

Two-thirds of workers report having saved for retirement, a slow decline since 2009. Not including Social Security taxes or employer-provided money, have you (and/or your spouse) personally saved any money for retirement? These savings could include money you personally put into a retirement plan at work. (2012 Workers n=1003) Respondent 73% 60% 57% 58% 66% 68% 59% 78% 74% Respondent and/or Spouse 72% 71% 72% 69% 68% 69% 70% 66% 75% 69% 68% 66% 68% 65% 67% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1994 -2012 Retirement Confidence Surveys 26

This decline has occurred primarily among lower-income workers. Not including Social Security taxes or employer-provided money, have you (and/or your spouse) personally saved any money for retirement? These savings could include money you personally put into a retirement plan at work. 2009 2012 93% 80% 93% 74% 49% 35% Workers with Household Income <$35, 000 Workers with Household Income $35, 000 -$74, 999 Workers with Household Income $75, 000+ Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 27

The percent of workers currently saving for retirement has also slowly declined during this period. Are you (and/or your spouse) currently saving for retirement? (Percent Yes, 2012 Workers n=1003) 61% 62% 2001 2002 2003 58% 2004 62% 64% 2005 2006 60% 2007 64% 2008 65% 2009 60% 59% 58% 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2001 -2012 Retirement Confidence Surveys 28

Two-thirds of retirees report they saved for retirement. Not including Social Security taxes or employer-provided money, did you (and/or your spouse) personally save any money for retirement before you retired? These savings could include money you personally put into a retirement plan at work. (2012 Retirees n=259) Respondent 68% 65% 66% 64% 62% 61% 59% 66% 63% 59% 61% 54% 67% 52% 48% 52% 50% Respondent and/or Spouse 71% 74% 68% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1994 -2012 Retirement Confidence Surveys 29

Total worker savings are unchanged from 2010. In total, about how much money would you say you (and your spouse) currently have in savings and investments, not including the value of your primary residence? (2012 workers n=1003) 2002 Less than $1, 000 - $9, 999 50% $10, 000 - $24, 999 2007 2008 2009 2010 2011 2012 20% 27% 29% 30% 19 16 17 18 35% 36% 13 13 13 11 10 12 $25, 000 - $49, 999 13 10 12 11 10 $50, 000 - $99, 999 15 13 12 12 11 9 10 $100, 000 - $249, 999 15 15 15 12 11 14 11 $250, 000 or more 7 14 12 12 11 10 10 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1994 -2012 Retirement Confidence Surveys 30

Retiree savings also remain about the same. In total, about how much money would you say you (and your spouse) currently have in savings and investments, not including the value of your primary residence? (2012 retirees n=259) 2002 Less than $1, 000 - $9, 999 45% $10, 000 - $24, 999 2007 2008 2009 2010 2011 2012 23% 27% 28% 17 15 14 19 14 12 8 32% 51% 13 9 16 $25, 000 - $49, 999 7 10 9 13 11 6 9 $50, 000 - $99, 999 14 12 6 9 6 11 8 $100, 000 - $249, 999 19 20 13 10 15 12 12 $250, 000 or more 15 14 12 12 12 17 15 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2002 -2012 Retirement Confidence Surveys 31

2 in 3 workers feel they are behind schedule in planning and saving for retirement. When it comes to planning and saving for retirement, would you say that you are ahead of schedule, on track, or behind schedule? (2012 Workers n=1003) 3% 2% A lot ahead of schedule 3% 2% 3% 6% 6% A little ahead of schedule 4% 3% 4% 2012 22% 21% On track 37% 2011 34% 38% 2005 30% 2002 A little behind schedule 23% 25% 2000 25% 37% 40% A lot behind schedule 32% 33% 29% 1% 1% Don't know/refused 1% 3% 1% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2000 -2012 Retirement Confidence Surveys 32

USE OF TECHNOLOGY AND ADVICE

Half of workers and only one-quarter of retirees use the internet to help manage their finances. Do you currently use … to help you manage your finances? (2012 Workers n=1003, Retirees n=259, Percent yes) 53% 26% Workers Retirees Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Surveys 34

Few use a smart phone app or tablet computer to manage their finances. Do you currently use … to help you manage your finances? (2012 Workers n=1003, Retirees n=259, Percent yes) Workers Retirees 53% A desktop or laptop with a direct internet connection 26% 46% A desktop or laptop using a wireless internet connection A smart phone app A tablet computer 18% 20% 4% 12% 2% 11% 4% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Surveys 35

Just one in ten using the internet to manage finances are very confident about obtaining advice online. When it comes to preparing for retirement/managing your finances in retirement, how comfortable are you about doing each of the following online? (2012 Workers using internet n=654, Retirees using internet n=101) Very Comfortable Somewhat Comfortable Obtaining information about Workers financial products online Retirees Using calculators online to assist you Workers with financial decisions Retirees Shifting money from one account Workers or investment to another Retirees Purchasing financial products Workers online Retirees Obtaining advice from financial Workers professionals online Retirees 34% 23% 41% 30% 52% 37% 36% 19% 17% 35% 41% 34% 75% 72% 28% 68% 24% 58% 19% 33% 14% 20% 34% 52% 10% 31% 41% 7% 22% 29% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Surveys 36

Roughly 1 in 4 workers and retirees report obtaining investment advice from a professional advisor. In the past year, did you (and your spouse) obtain investment advice from a professional financial advisor who was paid through fees or commissions? (2012 Workers n=1003, 2012 Retirees n=259, Percent Yes) 2009 30% 2010 2011 33% 2012 32% 23% Workers 26% 21% 23% 24% Retirees Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2009 -2012 Retirement Confidence Surveys 37

EXPECTATIONS ABOUT RETIREMENT

1 in 4 workers say they changed the age at which they expect to retire in the past year. In the past 12 months, has the age at which you expect to retire changed? (2012 Workers n=1003) If yes: Do you now expect to retire…? (2012 Workers whose retirement date changed n=261) Don't know 1% 88% Yes 25% No 74% If yes 12% Later, at an older Sooner, at a younger age than before Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 39

1 in 5 workers have decided to delay retirement in the past year. Do you now expect to retire later, at an older age than before? (2012 Workers n=1003) 25% 24% 20% 18% 15% 2002 21% 14% 2005 2008 2009 2010 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2002 -2012 Retirement Confidence Surveys 40

One-quarter of workers expect to retire at age 70 or later. Realistically, at what age do you expect to retire? /How old were you when you retired? Workers (n=1003) 25% 17% Median Retirees (n=259) 26% Workers Retirees 65 61 26% 16% 9% 11% 10% 5% 8% 7% 5% 1% 55 -59 60 -64 65 66 -69 70 or older Never retire 1% Don't know Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 41

Yet many retirees leave the workforce before they had planned. Did you retire earlier than you planned, later than you planned, or about when you planned? (2012 Retirees n=259) Earlier Than Planned About When Planned 55% 52% 49% 43% 39% 3% 1991 51% 45%47% 7% 1997 5% 2002 5% 2007 49% 47% 42% 40% 37% Later Than Planned 4% 2008 45%46% 41% 7% 2009 50% 37% 9% 4% 2010 3% 2011 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 1991 -2012 Retirement Confidence Surveys 42

People retire early for a variety of reasons, many beyond their control. Why did you retire earlier than you had planned? (2012 Retirees retiring earlier than planned n=131, Percent yes) 51% You had a health problem or disability 33% You could afford to retire earlier 28% You wanted to do something else 23% You had another work-related reason 21% Changes at your company 19% You had to care for a spouse or another family member Changes in the skills required for your job 11% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 43

Most retirees rely on Social Security income, but workers plan to patch income together from many sources. Do you expect the following will be/Is the following a major source of income, a minor source of income, or not a source of income in your (and your spouse’s) retirement? (2012 Workers who plan to retire n=934, Retirees n=259) Major source Social Security Workers Retirees Employment Workers Retirees Employer-sponsored Workers retirement savings plan Retirees Minor source 31% 23% 8% 20% 69% 27% 43% 21% 20% 47% 79% 23% 91% 56% 41% 79% 29% 72% Individual retirement account or IRA Workers Retirees 23% 40% 14% 26% 40% 64% Other personal savings and investments Workers Retirees 23% 16% 62% Employer-sponsored traditional Workers pension or cash balance plan Retirees 27% 34% 39% 29% 45% 29% 21% 56% Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2012 Retirement Confidence Survey 44

1 in 10 workers say they are very likely to buy or choose a guaranteed income product. When you (and your spouse) retire, how likely do you think you (or your spouse) will be to purchase a financial product or select a retirement plan option that will pay you guaranteed income each month for the rest of your life? (2012 Workers who plan to retire n=934) 2010 2012 35% 34% 29% 28% 20% 21% 12% 4% 4% Very Likely Somewhat Likely Not Too Likely Not at All Likely Don't Know/ Refused Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2010 -2012 Retirement Confidence Surveys 45

A similar proportion of retirees report having bought an annuity or chosen an annuity option. When or since you (or your spouse) retired, did you (or your spouse) purchase a financial product or select a retirement plan option that pays you guaranteed income each month for the rest of your life? (2012 Retirees n=259) Don't know 2% Don't know 3% Yes 14% No 84% 2010 Yes 12% No 86% 2012 Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc. , 2010 -2012 Retirement Confidence Surveys 46