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Merrill Lynch Announces Results of "Retirement Preparedness Survey"
INVESTORS FALL SHORT IN PLANNING AND SAVING FOR RETIREMENT; CONFIDENCE PLUMMETS
NEW YORK, August 12, 2003 — The majority of Americans are ill prepared for retirement, according to the Merrill Lynch Retirement Preparedness Survey, the results of which were released today by Merrill Lynch (NYSE: MER). A leader in retirement services for employers and individuals, Merrill Lynch has been conducting surveys measuring retirement preparedness and the attitudes and behaviors of Baby Boomers for 15 years.
Findings of the Merrill Lynch Retirement Preparedness Survey show the median reported value of all household retirement savings is only $40,000, and one-fourth of respondents said they have no retirement account at all. According to the Merrill Lynch Retirement Group, an individual should count on having 70% of their pre-retirement annual income per year in retirement.
"The results of our Survey illustrates that Americans are shockingly ill prepared when it comes to planning and saving for retirement," said Cynthia Hayes, first vice president, Employer Plan Management for the Merrill Lynch Retirement Group. "The financial challenge facing Baby Boomers as they look towards 2011 is enormous." To note, 2011 marks the year that the first Baby Boomers reach retirement age 65.
Boomers appear to be aware of their impending financial crisis, as indicated by a comparison of data from five years ago. In 1998, Merrill Lynch found that 90% of Americans believed they would be ready for retirement and a substantial number believed they would be able to retire before age 62. In 2003, investor confidence has plummeted. Only 47% of Americans are either somewhat or very confident that they will have saved enough for retirement. In addition, one-third of respondents believe they will not be able to retire at their desired age of 65 and only 20% are "very confident" in their investing ability over all.
"The economy and other market factors have highlighted for investors the trends that we have been following over the past 15 years," said Ms. Hayes. "We know that Americans have traditionally undersaved for retirement, but these 2003 survey results serve as a wakeup call - for plan sponsors, individual investors and financial services providers."
Need for Education, Advice, Planning
Hayes noted a two-fold problem that needs to be solved — a lack of basic investment knowledge and a lack of financial advice and planning. "For the second year in a row, we were alarmed to discover that over half of the Americans surveyed believe that 401(k) accounts are guaranteed by law. No such guarantee exists," she said.
A recent client conference sponsored by the Merrill Lynch Retirement Group highlighted various advice services that employers can offer to help employees achieve retirement success. "The issue is clear," said Ms. Hayes: "employees need and want help drawing a roadmap that allows them to meet their personal retirement goals. Today, Merrill Lynch provides such a service to plan sponsors with the recently-launched Merrill Lynch Advice Access offering."
The Survey data supports the fact that advice and planning provides results. Sixty-three percent of respondents with a financial plan say they are confident that they will have saved enough to retire versus 38% of those without a plan. In addition, having a financial advisor makes a significant difference in savings. Respondents with a financial advisor have total retirement plan assets about equal to their median household income versus only half of their income for those without an advisor.
Survey Methodologies
The Merrill Lynch Retirement Preparedness Survey is an independent study based on a telephone survey of 1,000 individuals aged 25 to 65 with an additional sample of 100 consumers 60 to 69 years old. Maximum sampling error is +/- 3 percentage points at a 95% confidence level.
The Merrill Lynch Retirement Group is responsible for assets in excess of $260 billion for 5.6 million individuals, and services over 21,000 workplace-based retirement programs.
Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 36 countries and total client assets of approximately $1.4 trillion. As an investment bank, it is a leading global underwriter of debt and equity securities and strategic advisor to corporations, governments, institutions and individuals worldwide. Through Merrill Lynch Investment Managers, the company is one of the world's largest managers of financial assets, with assets under management of $471 billion. For more information on Merrill Lynch, please visit www.ml.com.
Contact Media Relations:
Erik Hendrickson 212.449.7293
erik_hendrickson@ml.com