Retirement Re-Set

The past decade has re-set retirement. We began the decade, in early 2001, in a place of relative security and stability, but are emerging from the decade at time of financial tumult and uncertainty. At the same time, the baby boomer generation—the largest generation in the history of our country—is now moving into their retirement years. This year, the oldest of the boomers started turning 65, and bring new expectations and hopes for retirement, along with lower savings rates and greater anxiety for how they will fund their long lives.

In October 2001, SunAmerica and Age Wave launched the Re-Visioning Retirement Study. This comprehensive study was the first to look beyond basic financial and demographic issues to reveal the emotions, attitudes, expectations, and behaviors of retirees nationwide. Ten years have now passed since the Re-Visioning Retirement Study. This year, SunAmerica and Age Wave rejoined forces to launch a new initiative, the SunAmerica Retirement Re-Set Study, to reveal how the mindset, family dynamics, lifestyle expectations, and financial planning for retirement have changed in the past decade. The study included a national survey among people age 55+ conducted by Harris Interactive. Key findings include:

#1: Retirement Mindset Re-Set

• One-third of Americans age 55+ say their financial assets have not yet recovered to prerecession levels. Almost half (46%) say their home is worth less now than it was before the recession.
• Americans are recovering from the “recession mind-bender.” The percent of people who felt secure dropped dramatically during the recession but is now on the rebound. Similarly, people became more worried and angry during the recession but are now increasingly optimistic.
• A new outlook: Today, 54% view retirement as a new chapter in life, rather than a winding down—a significant increase over the 38% that held a similar view a decade ago.

#2: Re-Setting Timing and Purpose

• Retirement is being postponed: Pre-retirees say they now intend to delay retirement by five years—from 64 to 69—triggered in part by increasing longevity, as well as the recession and financial need.
• Retirement no longer means the end of work: Almost two-thirds say they would ideally like to remain productive and include some work in retirement.
• The top reason people want to work during retirement is “the stimulation and satisfaction” rather than financial need
• Americans 55 and older say that boomers are more likely to have less in entitlements, less money for retirement and less respect from younger generations compared to prior generations of retirees. However, they also expect boomers to be more active and youthful, have more opportunities to learn and grow, and experience more interesting lives.

#3: Re-Setting Values and Obligations

• 85% say they now appreciate the importance of quality relationships with their friends and family even more after the recession.
• Asked how the recession affected their financial situation and investment strategy, 96% say it’s important to protect themselves and their families against financial uncertainties.
• Nearly half of Americans 55 and older expect to provide this support and, in a new twist on childcare, 70% of those believe their adult children will need financial assistance.
• Financial peace of mind is now six times more important than accumulating wealth: 82% name it their key financial goal.

#4: Re-Setting Long Life Expectations

• “Remaining productive” is now seen as the top benefit of living a very long life, followed by “deepening relationships with family” and “witnessing new discoveries as the world evolves.”
• Half of today’s retirees retired earlier than they planned. The top reason people give for early retirement is unexpected health problems.
• Asked what their financial challenges are for retirement preparation, people say their top concern is higher taxes.

#5: Re-Setting Financial Solutions

• Three-quarters say the last several years have provided a much-needed financial wake-up call, and 81% report they have learned important lessons regarding saving, investing, and preparing for retirement.
• Americans believe they can still “get there from here,” and 78% say they can still have a fulfilling retirement by being more financially disciplined.
• 92% feel that financial management should be a standard part of a high school education. 80% of employed people age 55+ want education and advice on saving and investing for retirement at their workplace.
• Protecting assets is now five times more important to investors than higher-risk returns.

#6: Re-Setting the Path to a Successful Retirement

• There are four distinct segments of Americans age 55+ based on their retirement attitudes, expectations, and behaviors: Ageless Explorers (20% of respondents), Cautiously Contents (18%), Live for Todays (27%), and Worried Strugglers (35%).
• The first two groups are enjoying their retirement and have a high level of happiness and financial security. The second two retiree groups are struggling due to misfortune and/or bad planning. Over the past decade, the percent of those age 55+ who are “Ageless Explorers” and “Cautiously Contents” fell from 46% to 38%. Meanwhile the percentage of people who fall in the two segments who are having a difficult time—the “Live for Todays” and “Worried Strugglers”—rose from 54% to 62%.
• Help helps: many now increasingly recognize that they can’t “do-it-themselves” and that they need professional guidance to set a new, more predictable path toward successful retirement. The vast majority (68%) who have used financial advisors believe they have been very helpful. Those who sought professional advice are 72% more likely to feel very financially prepared for retirement and are also more likely to be financially informed and secure in retirement

To learn more about the landmark results from the SunAmerica Retirement Re-Set Study, please visit www.retirementreset.com.