Striving for a Secure Retirement

Dallas L. Salisbury
President & CEO
Employee Benefit Research Institute
www.EBRI.org www.ChoosetoSave.org
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EBRI.org
The Secure Retirement Challenges
Low Social Security benefits
Limited retiree medical benefits
Limited DB annuity benefits
DC Non-participation
DC No automatic base contributions
DC Inefficient match formulas
DC Low worker contribution rates
DC Non-growth of contribution rates
DC Non-diversified investing
DC Non-rebalancing
Financial Literacy and Education
Public Policy
Most workers have little in savings.
In total, about how much money would you say you currently have in savings and investments,
not including the value of your primary residence? Please include savings, certificates of deposit,
stocks, bonds, mutual funds, workplace retirement plans, and other investments (Workers
responding n=818, Retirees responding n=190)

Workers Retirees
52%

43%

20%
19%
13%
11% 12% 11% 11%
7%

Less than $25,000- $50,000- $100,000- $250,000

$25,000 $49,999 $99,999 $249,999 or more

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2005 Retirement Confidence Survey 4
EBRI.org
Americans are more likely to save for retirement than for
any other goal.
Other than retirement, for what are you (and your spouse) saving? (Workers n=501; Retirees
n=252) (Top mentions, multiple responses accepted)

69%
Retirement 66%

Children's/grandchildren's 20%
education 7%

Home purchase or 11%

renovation 3%

9%
Money for an emergency
4%
8% Workers
General well being
11%
Retirees
8%
A vacation
7%
16%
Nothing
27%

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2005 Retirement Confidence Survey 5
EBRI.org
More than half of workers feel they are behind schedule.
When it comes to planning and saving for retirement, would you say you are on track, ahead of
schedule, or behind schedule? (Workers n=1,001)

2000 2001 2002 2005

40%
37%
34%
33% 33% 34%
32%
27%
25%26%
25%
23%

3% 4% 3% 3% 4%
3%
2% 2%

A lot ahead A little ahead On track A little behind A lot behind

of schedule of schedule schedule schedule

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2000-2002, 2005 Retirement Confidence Surveys 6
EBRI.org
Workers calculating the amount needed for retirement
report higher accumulation needs.
How much did you (or your spouse) calculate you would need to accumulate in total by the
time you retire?/How much do you think you (and your spouse) will need to accumulate by
the time you retire so that you can live comfortably in retirement? (Workers n=1,001)

38% Total (n=1,001)

23% Did calculation (n=469)
32% Did not do calculation (n=524)

21% 22%
21% 21%
18%
16%

11% 11% 10% 8% 11%

8%
6% 7%
5% 4%
<0.5% 2%
<0.5% <0.5% <0.5%

Under $250,000 $500,000 $1,000,000 $1,500,000 Could Don’t Refused

$250,000 to to to or more not do know/
$499,999 $999,999 $1,499,999 calculation Don’t
remember

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2005 Retirement Confidence Survey 7
EBRI.org
Of those no longer working for pay, more than half are
unable to work.
Could you please tell me the reason why you are no longer working? (Retirees no longer
working for pay in retirement, n=29) (multiple responses accepted)

Not healthy enough 25%

No longer want to work 24%

Old/too old 23%

Still help when needed 12%

Lost job 4%

Don’t need to work 4%

Can’t find work you like 4%

Other 11%

Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2005 Retirement Confidence Survey 8
EBRI.org
3 in 5 workers expect to live comfortably on 70% or less
of their pre-retirement income; most retirees have more.
About what percentage of your pre-retirement household income do you think you (and your
spouse) will need to live comfortably in retirement? By pre-retirement income, I mean your
household income right before you retire. (Workers n=500)
About what percentage of your pre-retirement income is your current household income?
(Retirees n=252)

Workers Retirees

41%
38%

23%
18%
17%
14% 14%
8% 6%
6% 4% 5%
3% 2%
N/A 2%

Lower Less than About About About About 105% Don’t know/
(Don’t 50% 50-70% 70-85% 85-95% 95-105% or more Refused
know %)
Source: Employee Benefit Research Institute and Mathew Greenwald & Associates, Inc.,
2005 Retirement Confidence Survey 9
EBRI.org
 Conservative Estimate of Impact of Automatic Enrollment on Median
Replacement Rates from 401(k) Accumulations by Age and Income
(percent change in replacement rates)

Lowest income Quartile 2 Quartile 3 Highest income

70%
60% 61%
50%
40%
30%
20% 21%
10%
5%
0%
-6%
-10%
-20%
1935-1939 1940-1944 1945-1949 1950-1954 1955-1959 1960-1964 1965-1974

Sources: Tabulations from the EBRI/ICI 401(k) Accumulation Projection Model and
Automatic Enrollment Parameters from Choi, Laibson, Madrian, and Metrick (2001 and 2004)
 Savings Needed for Employment-Based
Benefits Access-Only Plans at Age 65 in 2015
(assumes 7% premium growth)
Age at Death Premium Only Premium + out-of-
pocket
80 $160,000 $230,000

85 $223,000 $321,000

90 $296,000 $426,000

95 $381,000 $548,000

100 $477,000 $687,000

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Phone: 202-659-0670
Fax: 202-775-6312
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