Survey: EBRI Retirement Confidence Survey Shows More Americans To Delay Retirement

According to the Employee Benefit Research Institute (EBRI), Americans' confidence in their ability to retire appears to be stabilizing as the volatility of the recession has abated, but their self-described preparations for retirement continue to erode. Published as EBRI Issue Brief No. 340, "The 2010 Retirement Confidence Survey: Confidence Stabilizing, But Preparations Continue to Erode", EBRI's 20th annual survey, shows that, among other things, a growing number of American workers are planning to delay retirement and fewer have saved for retirement.

With respect to when they retire, 24% of those surveyed report they have postponed their planned retirement age in the past year. Reasons given include the poor economy (29%), a change in their employment situation (22%), inadequate finances (16%), and the need to make up for losses in the stock market (12%). Looked at over a longer time, the percentage of workers who expect to retire after age 65 has continued to increase--from 11% in 1991 to 14% in 1995, 19% in 2000, 24% in 2005, and 33% in 2010.

With respect to retirement savings, the survey finds that 69% report that they and/or their spouse have saved for retirement (down from 75% in 2009), 60% say that they and/or their spouse are currently saving for retirement (down from 65% in 2009). Furthermore, it finds that an increased percentage of workers report they have virtually no savings and investments, with 27% saying they have less than $1,000 in savings, and 54% percent that the total value of their household's savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.

Source: Employee Benefits Research Institute Press Release (March 9, 2010)

EBRI Published Research Showing Older Workers Staying in the Workforce Longer

The Employee Benefit Research Institute (EBRI) has released the results of a research study finding that the labor-force participation rate is increasing for older Americans (those age 55 and older) as older workers are faced with higher health costs and economic losses. As published in the February 2010 issue of EBRI Notes, "Labor Force Participation Rates: The Population Age 55 and Older, 2008" used U.S. Census Bureau data to determine that while the percentage of civilian noninstitutionalized Americans aged 55 or older who were in the labor force declined from 34.6% in 1975 to 29.4% in 1993, the labor-force participation rate has steadily increased since then, reaching 39.4% in 2008—-the highest level over the 1975–2008 period.

In addition, according to a summary of the findings, for those aged 55–64, the increase in participation is is being driven almost exclusively by the increase of women in the work force; the male participation rate is flat to declining. For those aged 65 and older, however, labor-force participation is increasing for both men and women.

EBRI also reports that education is a strong factor in an individual’s participation in the labor force at older ages, with individuals with higher levels of education being significantly more likely to be in the labor force than those with lower levels of education. EBRI also suggests that the upward trend is likely to continue because of workers’ need for access to employment-based health insurance and for more earning years to accumulate assets in defined contribution (401(k)-type) plans. EBRI also noted that monetary needs are not the only driver, and that there is an increased desire among Americans to work longer, particularly among those with more education, for whom more meaningful jobs may be available that can be done well into older ages.

Source: Employee Benefit Research Institute Press Release (February 18, 2010)

EBRI Research Shows Decline in Tenure of Older Workers Other than the Oldest

According to research published in EBRI Notes in January issue, while the median tenure of workers--the midpoint of wage and salary workers’ length of employment in their current job--was virtually unchanged over the past 25 years, there were significant changes among older workers.

Thus, while the median tenure for all workers was 5.1 years at the same job in 2008, compared with 5.0 years in 1983, among those ages 60–64, the percentage with 25 or more years of tenure increased by more than 3 percentage points from 2006–2008, after a fairly steep decline from 1983–2006. In 1983, 23.3% of wage and salary workers ages 60–64 had tenure of 25 or more years, compared with 16.6% in 2006. For those ages 55–59, a persistent decline occurred: from 22.7% in 1983 to 17.6% in 2008.

Source: EBRI Press Release (January 7, 2010)

EBRI Survey Suggests Ways Employers Can Encourage Workers To Postpone Retirement

According to results of conducted by the Employee Benefit Research Institute (EBRI), employers have a narrow window of up to two years in which they may be able to change retiring workers’ decisions by offering them incentives to remain with the company.

The "EBRI 2008 Recent Retirees Survey: Report of Findings" surveyed 4,981 workers in aerospace and defense industry companies who retired in 2003 or later and are currently between the ages of 55 and 65. Among other things, EBRI reports that many retirees would have been open to an approach from their employer asking them to stay longer with the company: 61% would have viewed the experience positively, while only 10% indicated they would have reacted negatively to an approach asking them to delay their retirement.

With respect to 19 possible incentives that might encourage retiring workers to postpone retirement, EBRI found that three appeared especially likely to be successful:

• feeling truly needed for an assignment;
• for retirees with a defined benefit pension, receiving a full pension while working part;
• being able to work seasonally or on a contract basis.

Source: EBRI Press Release (July 10, 2008); Issue Brief #319 (July 2008)

EBRI Report Shows Women over 50 Much Less Likely To Receive Annuity and/or Pension

According to a report from the Employee Benefit Research Institute (EBRI), gender is a “particularly strong factor” in determining the likelihood of
whether a worker age 50 and older receives an annuity and/or employment-based pension income in retirement. Specifically, in 2006, women over age 50 were much less likely than men to receive annuity and/or pension income and if they did the amount was likely to be much smaller.

The study--"Retirement Annuity and Employment-Based Pension Income, Among Individuals Age 50 and Over: 2006; and Finances of Employee Benefits, 1950-2006"--evaluates the impact of gender, age, education, marital status, and other demographic factors in the likelihood of a worker receiving annuity and/or pension income in retirement. With respect to gender:

. . .the study reports that in 2006, some 44.6 percent of men age 65 and older received annuity and/or pension income, with a mean (average) amount of $17,200 per year. By contrast, only 28.4 percent of women age 65 and older received annuity and/or pension income in 2006, with mean pension income of $11,142 annually.

However, going forward, younger women are more likely to receive annuity and/or pension income and the amounts are likely to be greater, since younger women now spend more time in the work force.

With respect to factors other than gender, the study found:

• The likelihood of receiving annuity and/or pension income increases with age, until the oldest age group (80 and older).
• More men age 50 and older with a graduate-level education received annuity and/or pension income than men without a high school diploma.
• Men age 50 and older who were married or widowed were more likely to receive annuity and/or pension income than men of the same age who were never married. However, women age 50 and older who were never married were more likely to receive annuity and/or pension income than married women, but widowed women were much more likely to receive annuity/pension income than either married women or women who were never married.

Source: EBRI Press Release (January 17, 2008)

Survey: EBRI Reports More Older Americans Working Full Time

According to new research published by Employee Benefit Research Institute (EBRI), there is a trend toward more full-time, full-year work among older workers and that trend can be seen is virtually every demographic group.

Among other things, EBRI writes in "Employment Status of Workers Age 55 and Older" in its August issue of EBRI Notes that:

• those aged 55 or older in the labor force increased from about 29% n 1993 to 38% in 2006
  
• those aged 65–69 in the labor force increased from about 18% in 1985 to 29% in 2006.
  
• the percentage of workers age 55 or older who work full time, full year steadily increased from 54% in 1993 to 64% in 2005.
  
• across each race/ethnicity category, the percentage of workers age 55 or older working full time, full year increased from 1987 to 2005.
  

Source: EBRI News Release (August 2, 2007)

Survey: EBRI Reports More Americans Working into Older Age

An analysis of U.S. census figures by the Employee Benefit Research Institute (EBRI) shows that the U.S. labor-force participation rate is increasing for those age 55 and older. In addition, the increase for those ages 55–64 is driven almost exclusively by an increase of women in the work force, while the labor force participation rate increased for both men and women age 65 and above.

Published in the June 2007 EBRI Notes, the article--"Labor-Force Participation: The Population Age 55 and Older"--reports that, in the "near-elderly" 55–64 age group, labor force participation for women increased from 57.1% in
1993 to 66.7% in 2006; for men, participation dipped from 78.3% to 77.7% in those same years. For those age 65 and older, participation among men rose from 14.8% to 20.3% and for women from 8.1% to 11.7%. EBRI also compares the participation rate for those without pension income to those with pension income.

Source: EBRI News Release (June 12, 2007)

EBRI Reports Americans Experience Retirement System Changes, but Not Responding to those Changes

According to the Employee Benefit Research Institute (EBRI), "a large percentage of American workers recognize the U.S. retirement system is undergoing major changes, but many are not adapting in ways that are likely to leave them well-positioned for a comfortable retirement." EBRI's 17th annual survey or retirement confidence, sponsored with Mathew Greenwald & Associates, finds that finds pension-plan changes by employers have left nearly half of workers less confident about the benefits they will receive from a traditional pension plan, but that many workers are counting on employer-provided benefits in retirement that are increasingly unavailable.

The report--"The Retirement System in Transition: The 2007 Retirement Confidence Survey"(EBRI Issue Brief #304)--finds tht almost half of workers are saving for retirement but that total savings and investments (not including the value of their primary residence or any defined benefit plans) of less than $25,000, and that the majority not putting money aside for retirement have little in savings at all.

“We have known for decades that major changes were taking place in the U.S. retirement system,” said Jack VanDerhei, a Temple University professor, EBRI fellow, and co-author of the 2007 Retirement Confidence Survey. “This year, we found that a substantial number of workers realize that the shift from traditional pensions to 401(k) plans affects them personally. Unfortunately, only 24 percent of those affected indicate that they will save more on their own, and only 8 percent indicate that they will save more in the employer’s plan as a result of these changes. EBRI research suggests that the vast majority of employees are likely to need some type of additional savings if they hope to end up with the same amount of retirement savings they would have expected prior to the change.”

Source: Employee Benefit Research Institute News Release (April 11, 2007)

EBRI Publishes Detailed Look at U.S. Retirement System

The Employee Benefit Research Institute (EBRI) has published Retirement Security in the United States: Current Sources, Future Prospects, and Likely Outcomes of Current Trends, an in-depth book on the U.S. retirement system and how it may change in the future.

Among other things, it examines the changing pattern of retiree income across the age spectrum, the additional amounts that today’s workers need to save to retire with sufficient funds to meet basic living expenses, and the amounts that workers with pensions would need to set aside to compensate the benefit loss if their pensions were frozen.

Source: EBRI Press Release (September 22, 2006)

EBRI Report Shows that Regular 401(k) Savers Doing Well

The Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI) have jointly issued a report showing that the average account balance among U.S. workers who consistently held 401(k) accounts from 1999 through 2005 increased 50% despite one of the worst bear markets since the Great Depression.

According to the study--“401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2005”--average account balances rose to $102,014 at year-end 2005 from $67,785 at year-end 1999 among participants who maintained accounts for the entire period.

“The data demonstrate the power of persistence and the impact it has on an individual’s ability to accumulate sizeable gains in a 401(k) account,” said ICI Senior Economist Sarah Holden, a co-author of the study.

The average account balance for consistent participants in their 60's rose nearly 12% over the same period.

Source: Employee Benefits Research Institute Press Release and Investment Company Institute Press Release (August 24, 2006)

Survey: Americans' Retirement Hopes Filled With Holes

According to the Employee Benefit Research Institute (EBRI), a large majority of Americans expect to enjoy a comfortable retirement, but many have not taken the actions needed to turn their aspirations into reality and face the prospect of having to work far longer than they expect. Published as EBRI Issue Brief No. 292, Will More of Us Be Working Forever? The 2006 Retirement Confidence Survey, EBRI's 16th annual survey, suggests that many have accumulated only modest retirement savings, underestimate the share of their preretirement income they are likely to need in retirement, and have made no estimate of how much they will need to live comfortably once they retire.

By the numbers 24% said they are very confident they will have enough money to live comfortably in retirement, and another 44% said they are somewhat confident. Among the survey's highlights:

• 68% of current workers say they and their spouses have accumulated less than $50,000 in retirement savings--including 88% of those 25–35 and 52% aged 55 and older.
• 66% of current workers think they have some chance that they will live until age 90-—or spend 25 years in retirement, assuming they retire at age 65. However, 58% also think they will have less than 25 years of retirement and another 19% are unable to estimate how long their retirement will last.
• 59% said they hope to have a retirement standard of living equal to or higher than in their working years, but only 58% have actually calculated how much money they will need to retire comfortably.

An Executive Summary of the report is also available.

Source: Press Release EBRI (April 4, 2006)

Pension Freezes: EBRI Research Shows Who’s Affected and by How Much

The Employee Benefit Research Institute (EBRI) has published a new analysis that quantifies how workers are likely to be affected by pension freezes, and how much they would have to save in a 401(k)--whether provided by their employer and/or saved by themselves--to offset the loss of accrued benefits from the pension freeze. According to Defined Benefit Plan Freezes: Who's Affected, How Much, and Replacing Lost Accurals, in the March 2006 EBRI Issue Brief No. 921, how an individual worker might be affected by a pension freeze varies widely, based on the terms and natuyre of each plan, but the data “illustrate the general impact of age and tenure: Older, longer-tenure workers tend to be affected by a pension freeze more than younger workers because they do not have as much time left in their working careers in a 401(k) plan to offset the accrual loss from a pension freeze.”

Generally, the report finds that:

• Workers in career-average pension plans would have to save a median amount of about 7% of their annual salary to replace the lost accrual benefits from a pension freeze;<
• Workers in final-average pension plans would have to save a median amount of about
  8% percent of their annual salary;
• Workers in cash balance plans would have to save about 3% percent of their annual
  salary.

An Executive Summary of the report is also available.

Source: Press Release Employee Benefit Research Institute (March 8, 2006)

EBRI Reports Decreasing Availabiliy of Retiree Health Insurance

According to a new Employee Benefit Research Institute (EBRI) Issue Brief on “The Impact of the Erosion of Retiree Health Benefits on Workers and Retirees”, both early retirees and those over age 65 experienced a substantial drop in employer-based retiree coverage from 1997 to 2002, the last year for which numbers are available. During that five-year period, EBRI reports that the percentage of private employers that offered health benefits to early retirees (those under 65) fell to 13% from 22%, the percentage of private employers that offered retiree health benefits to Medicare-eligible retirees (65 and older) dropped to 13% from 20%.

The EBRI study notes that signs of a shift in worker expectations are apparent already. In 1997, just over 50 percent of wage and salary workers ages 45–64 expected to receive health benefits in retirement; by 2002, that had declined to 47 percent.

Source: News Release Employee Benefit Research Institute (March 22, 2005)