SOA Aging and Retirement Research Perspectives Across the

SOA Aging and Retirement Research Perspectives Across the Generations CHICAGO ACTUARIAL ASSOCIATION MEETING – MARCH 26, 2019

Agenda • Background on SOA Aging and Retirement Strategic Research Program • Overview of Generational Survey Findings 2 Generations

SOA Strategic Plan (excerpt) 3

Five Strategic Research Programs • Aging and Retirement – Launched Oct 2018 • Actuarial Innovation and Technology – Launching April 2019 • Mortality and Longevity • Health Care Cost Trends • Catastrophe and Climate 4

Program Umbrella Spans extensive SOA research on: • Retirement Plans • Post Retirement Needs and Risks, • Retirement Plan Mortality Tables, • Long Term Care, • Living to 100 Symposiums • Other aging/retirement issues Aging and Retirement

Aging and Retirement Program Launch • Program Launch highlighted by generational study/media attention • Created a Fact Sheet series on previous studies to further highlight findings for different audiences • New program research completing regularly Aging and Retirement

Launch Survey: Financial Perspectives on Aging and Retirement Across the Generations October 2018

SOA Research on Post Retirement Risks • Long term goal of this research: Understand improve postretirement risk management • Many lack adequate assets to maintain living standard in retirement • Decisions will require trade-offs on living standards • Consider multiple stakeholders • Formed Committee on Post Retirement Needs and Risks to oversee this work in 2000 Generations

SOA Retirement Risk Surveys • Started biennial Retirement Risk Survey series in 2001. • 10 th survey will be in 2019. • Looks at workers nearing retirement (pre-retirees) and retirees understanding of post-retirement risks and their concerns • Consistent findings – Top concerns for both pre-retirees and retirees are: keeping value of savings and investments up with inflation; paying for adequate healthcare; and paying for long term care or stay in a nursing home • Periodic focus group research supplements the survey • What about generations? Generations

SOA Generational survey – Motivation • • • Prior work primarily focused on near-retirees and retirees (45 -80) Generational survey builds on the prior years’ work Goal: Understand differences and similarities by generation Goal: Help improve security and help stakeholders improve their offerings Goal: Defining and understanding how financial fragility compares across generations 10 Generations

Definition of generations • Initial methodological decision – defining and choosing generations • Different sources use varying definitions of Generations • For purposes of survey defined by ages in 2018: • • • Millennials (ages 20 -38), (birthyears: 1980 -1998) Gen Xers (ages 39 -53), (birthyears: 1965 -1979) Late Boomers (ages 54 -63), (birthyears: 1955 -1964) Early Boomers (ages 64 -72), (birthyears: 1946 -1954) Part of Silent Generation (ages 73 -83), (birthyears: 1935 -1945) • Early and Late Boomers separated: different opportunities through their careers, etc. 11 Generations

Methodology • • • Online survey (conducted July 17 - July 27, 2018) Used Research Now panel Conducted by Greenwald & Associates for SOA Sampled 2001 individuals, about 400 per generation Demographics representative of US population SOA Review Group (Carol Bogosian, Cindy Levering, Anna Rappaport and Andrea Sellars) 12 Generations

Generational inherent differences • Different characteristics: size, education level, labor force characteristics • Born and enter adulthood in different historic, technological and economic circumstances

Current Environment and Context • Major shift: DB to DC • Financial literacy challenges • Many Americans: limited access to unbiased financial advice except linked to employee benefits • Big increases over time: college costs, student loans, and housing • Demographic trends: life spans, family structures, number of children 14 Generations

Key Results and Areas of Focus Aging and Retirement

A Selection of Survey Areas of Focus • Financial Behaviors and Priorities • Retirement Savings and Planning • Financial Fragility 16 Generations

Financial Behaviors and Priorities Aging and Retirement

All generations feel similarly optimistic. Older generations more in control/satisfied Feelings When Financial Planning 43% Optimistic 45% 48% 46% 34% 36% In control 44% 52% 57% 29% 25% Satisfied 36% 46% 56% 21% 19% 20% 22% 20% Smart Happy 48% 12% 15% Millennials 16% 19% Gen X 26% Late Boomers Early Boomers Silent What are your feelings when you are reviewing your financial situation and looking ahead for planning purpose? Please select as many words below that describe how you feel. Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400) 18 Generations

Millennials are more likely to be overwhelmed by their financial situation than older generations. Optimistic Overwhelmed 40% 22% 34% In control 29% Satisfied Smart Depressed Happy Upset Confused Angry 6% 4%5% 10% 14% 15% 16% 14% 21% 20% 21% 43% 47% 44% 36% Millennials

Most say affording everyday bills is a priority, Millennials more than others. Saving for retirement is most important to Gen Xers and Late Boomers. Current Priorities Highest priority Saving for medical expenses 30% 25% 23% 26% 24% 20% Silent Early Boomers 12% 11% 13% 10% Late Boomers Silent 22% 21% 20% 21% 27% 38% 35% 40% 37% Gen X 19% 21% 20% 21% Millennials 29% 48% Early Boomers Silent Early Boomers 22% 19% 17% 16% 11% Late Boomers 11% 41% 41% Late Boomers 37% 19% Gen X 22% 34% 32% 52% 26% Millennials Late Boomers 38% 41% 37% 51% 48% Gen X 21% 30% Gen X 25% 42% Millennials 59% 36% 42% 33% 35% Paying off credit card debts 69% 31% 29% 25% Building up an emergency fund Silent 60% Millennials Gen X Millennials 50% 43% 28% 25% 68% Silent 24% 61% 60% Early Boomers 67% Late Boomers 30% Saving for retirement Early Boomers Being able to afford everyday bills 79% High priority Thinking of your current financial situation, how much of a priority is each of the following? Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400) 20 Generations

Saving for a home and paying off student loans are higher priorities for Millennials. Current Priorities Highest priority 19% 18% 9% 11% 6% 4% Gen X 3% Millennials Early Boomers Late Boomers Gen X 11% 5% 13% 11% 6% 4% 4% 3% 1% Silent 30% Early Boomers 30% Late Boomers Paying off student loans Silent 23% Millennials 8% 11% 11% 4% 8% 6% 8% 4% 16% Silent 11% 10% 7% 20% Early Boomers 18% 25% 21% 19% Saving for children’s education 36% 24% 25% Late Boomers 29% 27% Silent Early Boomers Late Boomers Gen X Millennials 26% 44% Early Boomers 23% 28% 22% 26% 17% 10% 7% 8% 10% 6% 29% 35% Gen X 36% Saving for buying or upgrading a home Millennials 38% Late Boomers 29% 34% Millennials 39% Saving for longterm care Gen X Saving for vacations High priority Thinking of your current financial situation, how much of a priority is each of the following? Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400) 21 Generations

Summary of Other Key Results Planning for their financial situation varies by generation • Half of Millennials and about 40% of Gen X’ers plan at most 2 to 3 months ahead. • About 25% of the other generations plan at most 2 to 3 months • Only 17% of Millennials plan for 10 years or more and increases by generational age up through 36% for the Silents. 22 Generations

Summary of General Takeaways All generations – General Takeaways • See themselves more as savers than spenders, but older generations say so more • See themselves as thrifty, but older generations say so more • Most individuals consider themselves planners • About half of each generation enjoy managing their finances • Few consider themselves investment pros 23 Generations

Retirement Savings & Planning Aging and Retirement

Roughly two in three Boomers, those closest to retirement, feel on track in planning for a financially secure retirement. Agree/Disagree You are on track in planning for a financially secure retirement 58% 64% 67% 64% 32% 38% 37% 32% 29% 27% Late Boomers Early Boomers Silent 55% 38% 37% 20% 18% Millennials Gen X Agree strongly Agree somewhat Please indicate the extent to which you agree or disagree with the following statements. Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400) 25 Generations

Younger generations are more likely to work for an employer that offers a retirement savings plan. Employer Offers Retirement Savings Plan Millennials 77% Gen X Late Boomers Early Boomers Silent 19% 80% 16% 69% 4% 4% 30% 64% 34% 63% 37% Yes No Not sure Does your employer offer a retirement saving plan such as a 401(k) or 403(b) plan, profit sharing plan or other type of retirement savings plan? [IF EMPLOYED] Millennials (n=280); Gen X (n=285); Late Boomers (n=199); Early Boomers (n=81); Silent (n=28*) 26 *Caution: Low n-size (11 -49) Generations

Concern over Inflation in Retirement 73% Millennials 69% Gen X 65% Late Boomers 62% Early Boomers 53% Silent How concerned are you about each of the following in retirement? [IF RETIRED OR RETIRED FROM PREVIOUS CAREER] Late Boomers (n=175); Early Boomers (n=341); Silent (n=366) 27 Generations

Millennials, Gen Xers, and Late Boomers anticipate retiring at age 65. Expected Retirement Age Median Expected Retirement Age Millennials: 65 Gen X: 65 Late Boomers: 65 32% 35% 12% 11% Before 60 17% 15% 18% 26% 19% 11% 4% 60 -64 65 -69 Millennials 9% 70 or older Gen X 14% 15% 16% 12% Do not expect to retire 17% 14% Don't know Late Boomers At what age do you expect to retire or begin to retire from your primary occupation? [IF WORKING AND NOT RETIED] Millennials (n=304); Gen X (n=308); Late Boomers (n=191) 28 Generations

Early Boomers and the Silent Generation most often retire between the ages of 60 and 64. Retirement Age Median Retirement Age Early Boomers: 62 Silent: 62 43% 40% 26% 25% 14% 3% 13% 3% Before 50 <0. 5% 50 -59 60 -64 65 -59 Early Boomers 70 or older 2% 6% Don't know Silent How old were you when you retired or began to retire from your primary occupation? [IF RETIRED OR RETIRED FROM PREVIOUS CAREER] Late Boomers (n=175); Early Boomers (n=341); Silent (n=366) 29 Generations

Financial Fragility Aging and Retirement

Financial Fragility Index Methodology The financial fragility index is defined by assigning and weighting scores to the following characteristics: • Feelings about financial situation and planning • Level of Confidence in making financial decisions • How respondents would cover unexpected expenses • Feelings about being on track for a secure retirement Based on score, respondent assigned to one of 3 levels of fragility: Low, Moderate, High 31 Generations

Financial Fragility by Demographic Groups - Generations Age Millennials Gen X Late Boomers Early Boomers Silent Moderate Low 39% High 35% 52% 26% 24% 57% 24% 26% 68% 67% 32 17% 21% 20% 11% 14% Generations

Financial Fragility by Demographic Groups - Gender Low Male Female Moderate High 55% 26% 48% 29% 33 19% 23% Generations

Financial Fragility by Demographic Groups – Other • By marital status: Married least likely to have high fragility (15%). • By employment status: Retired (11%) and Employed (20%) much less likely to have high financial fragility than Unemployed (43%) and Disabled (46%) • High Financial Fragility decreases with greater education, income and savings. 34 Generations

Financial Planning Time Frame by Financial Fragility Financial Planning Time Frame Low Moderate 5% 13% 12% 11% 20% High I can only plan paycheck to paycheck I tend to think 1– 2 years ahead I tend to think 10 or more years ahead 11% 30% 7% 11% 29% 16% 59% 13% 17% I tend to think 2– 3 months ahead I tend to think 3– 5 years ahead For the rest of your life 5% 8% 3% 2% 5% 10% 2% 6% I tend to think 4– 12 months ahead I tend to think 6– 10 years ahead When you are reviewing your financial situation and looking ahead for planning purposes, what time frame do you tend to consider? Low Fragility (n=1, 150); Moderate Fragility (n=484); High Fragility (n=367) 35 Generations

Current Debt Obligations by Financial Fragility 64% 56% 40%39% 25% 28% 35% 30% 34% 23%23% 8% Credit card debt Home mortgage Car loan(s) or Student loan(s) lease payment(s) Low 19% 18% 8% 6% 6% 12% 7% 1% 1% Home equity Money owed to Business loan(s) loan friends or family Moderate 1% 3% Other 8% I have no debt High What types of debt do you currently have? Low Fragility (n=1, 150); Moderate Fragility (n=484); High Fragility (n=367) 36 Generations

Report Suggestions on Financial Fragility • Useful to recognize differences in planning behavior by fragility level • Financial wellness and education programs should understand the range of differences among financial fragility levels. • Avoid high-cost debt and know how to best use debt • Maintaining an emergency fund can an important tool • Small steps needed to move from shorter to longer range thinking. 37 Generations

Another interesting finding – Millennials • Special Report focused on Millennials • All generations believe Millennials have it the hardest. 38 Generations

Media Coverage • • • Forbes Money Magazine USA Today Barron’s Many local newspapers Trade publications 39 Generations

Survey Reports • Full report and tabulated questionnaire: • Financial Perspectives on Aging and Retirement Across the Generations • Posted Questionnaire and Results • Six brief reports on specific topics: • Difficulty in Gaining Financial Security for Millennials • Financial Priorities, Behaviors and Influence on Retirement • Family Obligations Across Generations • Financial Risk Concerns and Management Across Generations • Financial Fragility Across the Generations • Family Obligations Across the Generations 40 Generations

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