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Merrill Lynch Announces Results of Annual Retirement Preparedness Survey
EMPLOYERS FACE NEW CHALLENGES IN THE FACE OF UNREALISTIC EXPECTATIONS AND LACK OF PLANNING
NEW YORK, May 11, 2004 — Merrill Lynch (NYSE: MER) today announced the results of their annual Retirement Preparedness Survey. This year the survey highlights the growing gaps between what Americans dream of doing in retirement, what many will be capable of achieving, and what issues employers will need to address in light of the nation's aging workforce.
A leader in retirement services for employers and individuals, Merrill Lynch has been measuring retirement preparedness and attitudes for over 15 years.
Results of the survey show 79% of Americans look forward to retirement and 75% see retirement as a chance to take it easy, relax and travel. Yet respondents seem to be re-defining what it means to be retired. The survey shows that 54% intend to be working full or part-time after age 65, citing financial reasons, and are interested in staying active, involved and engaged. 15% say they never want to retire.
"These results point to a dramatically different human resources challenge for employers as aging Americans will remain in the workplace longer, or seek more flexible work arrangements," said Cynthia Hayes, first vice president, Employer Plan Solutions for the Retirement Group at Merrill Lynch. "Employers will increasingly need to evolve their culture to one that embraces older workers and creates the work balance being sought."
The survey also reveals a new set of financial challenges on the horizon as employers increasingly shift responsibility for health and retirement benefits to individuals. With escalating healthcare costs and questionable levels of individual retirement preparedness, employers may need to play a more significant role in providing access to information and planning resources to help bridge the gap between expectations and needs. For example:
- 79% of Americans rank covering healthcare costs in retirement as very or extremely important, and half indicate that their current or former employer offers healthcare insurance after retirement.
- 56% indicate that their primary source of retirement income will be from personal savings or a defined contribution plan. Yet, at an average age of 46 and an income of $55,000, respondents have only accumulated average savings of $51,000.
In spite of this apparent shortfall, slightly more than half of Americans are confident that they will have saved enough money to live on in retirement. And respondents show an overwhelming interest in retirement savings with 88% saying it is a key priority.
"With much of the workforce in their peak earning years, employers have a timely opportunity to help individuals maximize savings opportunities through employer sponsored plans and reinforce the need for a self-sufficient retirement future," says Hayes.
With employers historically carrying a significant amount of responsibility for health and retirement benefits, many Americans may mistakenly believe that guarantees exist. In fact, 58% of those surveyed believe that 401(k) accounts are guaranteed by law.
As last year, the survey data supports growing concerns that Americans need more financial planning and advice to help improve the likelihood of reaching a successful retirement. 75% of Americans say that retirement is the primary reason they invest, yet many lack access to financial advice that identifies the amount of savings needed for retirement and how to invest those assets to reach their goals. In fact, 52% say the type of financial advice they need most is retirement related.
The survey highlights the need for financial advice that magnifies the importance of personal savings during the accumulation years as well as the equally important need for income management during retirement. 64% of Americans do not have a financial plan, and many show unrealistic expectations for investment returns and annual saving withdrawal rates during retirement.
"While we recommend a four to six percent annual withdrawal of assets each year in retirement, the survey respondents expect to withdraw 21% of their retirement savings each year," Hayes said. "Furthermore, the survey reflects expectations of an average expected rate of return of 22% from assets during retirement."
Survey Methodologies
The Merrill Lynch Retirement Preparedness Survey is an annual independent study to track American attitudes about retirement. Results are based on a telephone survey of 1,000 individuals between the ages of 25 and 69, with an additional sample of 100 people between the ages of 60 and 69 years old. Respondents were nearly evenly split between men and women.
The Retirement Group at Merrill Lynch is responsible for assets in excess of $295 billion for nearly 6 million individuals and services 24,000 workplace-based retirement programs.
Merrill Lynch is one of the world's leading financial management and advisory companies, with offices in 35 countries and total client assets of approximately $1.5 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 $513 billion. For more information on Merrill Lynch, please visit www.ml.com.
Contact Media Relations:
Erik Hendrickson 212.449.7293
erik_hendrickson@ml.com