New Merrill Lynch Retirement Study Reveals Americans and Their Employers Don’t See Eye to Eye

NEITHER INDIVIDUALS NOR EMPLOYERS ARE WELL PREPARED FOR THE “NEW RETIREMENT”

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NEW YORK, May 18, 2006 — Merrill Lynch (NYSE: MER) today announced the findings of a groundbreaking study that uncovers a startling disconnect between how Americans and their employers view retirement. The Merrill Lynch New Retirement Study — a one-of-a-kind study that surveyed both individuals and employers — reveals that while many people are actually working in retirement or have taken steps for a new retirement career, most employers are not on track to prepare for this phenomenon.

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  The 2006 Merrill Lynch New Retirement Study

Conducted for Merrill Lynch by Harris Interactive®, the study builds on the findings of the 2005 Merrill Lynch New Retirement Survey, which discovered that 76 percent of all baby boomers had no intention of seeking a “traditional” retirement. The scope of people surveyed in the 2006 study was expanded considerably to include feedback from U.S. companies as well as a broad spectrum of individuals.

“Not only is the new model of retirement here, but it transcends many different age groups,” said Michael Falcon, head of the Retirement Group at Merrill Lynch. “Multiple generations report cycling in and out of work and pursuing a new career in later life as the retirement ideal. This important study shows us that companies need to be aware of this new concept of retirement in order to prepare for the new work force realities.”

The study sheds a revealing light on this changing model of retirement and the potential for a growing gap between employers and employees. It’s the first of its kind – offering a comprehensive look into the retirement landscape from both sides of the coin.

By creating the study, Merrill Lynch is able to share the retirement concerns of different generations, assess potential work force shortages and retirement readiness as well as gauge the visibility of these issues in today’s marketplace. Key findings include:

  • The New “Retirement Career.” The ideal retirement for 71 percent of adults surveyed is to work in some capacity. In fact, almost half of all adults who do plan to work during retirement, do not plan to ever stop working completely. Among those who expect to work in retirement and eventually stop, the average tenure of their “retirement career” is over nine years and the average age at which they stop working completely is over 70.
  • Working equals longevity in the New Retirement. Among all of the individuals surveyed, the most frequently cited reason for working during retirement was to stay mentally and physically active. As life expectancy increases, both current and future generations of retirees plan to use their longevity bonus to create a freedom-filled and fulfilling “new retirement.” Concerns about health insurance and financial realities were also cited.
  • Gaining control over debt. Paying down debt was ranked as the single most important thing to do toward securing a financial future in the coming year (33 percent), followed by saving more (21 percent). More than half (53 percent) of the individuals surveyed were concerned about the amount of debt in their households, yet most (63 percent) expected to have less debt when they retired and expected to be eventually debt-free (74 percent).
  • Rejecting pre-retirement rigidity and seeking out new opportunities. When asked about their ideal work arrangement during retirement, the most popular option was “cycling” between periods of work and leisure. More than half of the adults surveyed would like to change their line of work and have already taken steps to plan for this new career by attending classes or training sessions and researching other careers.
  • Boomers want to give back and prefer to pursue “retirement careers” where they can share or pass on knowledge to others such as consulting and teaching. Volunteering was also ranked very highly. Despite concerns over ageism in the workplace, only one-fourth of individuals over age 60 said they had difficulty finding work if they wanted to.
  • Working and retired. Those who are in the midst of their “retirement career” are more satisfied than those who are retired and not working. In addition, working retirees are less likely to fear not being able to afford healthcare and feel they have less debt.
  • Are you ready? Less than one-third of individuals who are not already retired, feel adequately prepared for their retirement. However, three-quarters of boomers feel healthier, are more open to taking on new challenges and believe their work prospects are better than when their parents’ generation turned 60.
  • Companies are not completely in the dark, and while they recognize the shift toward the desire to work in retirement, they are more likely to assume that employees want to work a regular part-time schedule than to cycle between periods of work and leisure. They also have not responded to individuals’ overwhelming desire to pursue a completely new line of work in their “new retirement.”
  • Highly skilled professionals are the most valued and most at risk for a shortage. However, many companies are not responding to this threat. Only one in four employers said that they are on track with preparing for the boomer outflow from the workforce and almost one-third (31 percent) say there has not been much thought about it. Employers who have taken steps to prepare for future labor shortages focus on recruitment, but tend to focus on younger workers, not recruitment and retention of older, skilled workers.
  • Concerns over the increasing cost of benefit programs rank as the most pressing human resource and benefits issue that employers are facing. Well over half (65 percent) of the companies surveyed considered this a very serious issue — almost 10 times as many as those companies that considered retaining older workers as a serious problem (7 percent).
  • The bottom line — competitive and economic pressures continue to be the primary driving factors behind corporate benefit decisions and greatly outweigh concerns about work force shortages. Until personnel shortages hit the bottom line, there is little impetus for action. Forty percent of the companies surveyed reported that the wave of retiring boomers retiring is not an important priority at the HR level or at the senior management level.
  • The common denominator. Like their employees, most companies do not believe that the majority of workers are well prepared for retirement. While the new retirement is on most company radar screens, the challenges that it brings have not been adequately addressed.

Rethinking Conventional Approaches to Retirement — The Individual and Employer
As individuals continue to reject traditional retirement and the wave of people seeking “retirement careers” comes crashing in, some companies have already begun to embrace the changes ahead. Those leading the pack realize first and foremost the importance of attracting and retaining older and talented workers.

One of the most notable findings of theMerrill Lynch New Retirement Study is that awareness, recognition, understanding and a willingness to address the issues head-on is what is necessary for companies to manage boomer outflow and to be prepared for the next generations of “career retirees.” “The pioneers on the employment front are those companies that have already realized that the ‘new retirement’ is here,” said Cynthia Hayes, head of Employer Plan Solutions at Merrill Lynch. “By permitting telecommuting and more flexible schedules, providing coaching and mentoring services, as well as offering increased access to health insurance, these companies have demonstrated that they are already thinking about the new approaches they can take to leverage a very valuable work force segment that still has the desire to work.”

A New Twist — The Gender Divide
Merrill Lynch also unveiled today the results of another interesting component of the study — the Couple’s Survey — which focuses on how the two genders view retirement. “When people are thinking about their retirement dreams and goals, there is often someone else who is figuring into their plan,” said Ms. Hayes. “And although most married couples agree that they would like to continue working, they often have very different views about their ideal retirement plan.”

While about two-thirds of spouses report common goals, over one-fourth report not having ever discussed several key retirement considerations — and men and women don’t even agree on this. Husbands were significantly more likely to say they share common goals with their wives, while women were more apt to say they haven’t ever discussed the issue. One third of the spouses surveyed disagree about whether or not they have a viable financial plan. “This segment of our survey is important because it reflects the potential disconnects among married couples when it comes to their attitudes and expectations about retirement; it underscores need for couples to communicate their views and plan their retirement together,” added Ms. Hayes.

Survey Methodology
Harris Interactive conducted interviews online for the individual component of The Merrill Lynch New Retirement Study between December 1 and 19, 2005. A nationwide crossection of 5,111 adults were surveyed, of whom 523 were in the age range of 25 to 40; 2753 in the age range of 41 to 59 and 1,835 in the age range of 60 to 70. Additional sample groups surveyed online include “Affluent” aged 25 to 70, “Local Markets” aged 41 to 70 and 613 sets of “Spouses” aged 25 to 70.

Over 1,000 U. S. companies with 100 employees or more participated in telephone interviews conducted by Harris Interactive between January 4 and February 3, 2006, for the “employer component” of the study. Of the companies surveyed, 250 were Merrill Lynch clients and 751 were National Random Sample companies. Data were weighted to ensure that each quota group had a representative sample based on the number of employees working in each size range and industry.

More About The Merrill Lynch New Retirement Study
The Merrill Lynch New Retirement Study was produced with the help of Harris Interactive in an effort to better understand the retirement expectations and preparedness of both individuals and employers. By building on the findings of the 2005 New Retirement, this new study allows us to recognize the New Retirement realities and expectations of a broad segment of the population and American Corporations. The results of this major research effort are an important step in Merrill Lynch’s ongoing, long-term commitment to their individual and institutional clients.

About Merrill Lynch
Merrill Lynch is one of the world's leading wealth management, capital markets and advisory companies, with offices in 36 countries and territories and total client assets of approximately $1.8 trillion. As an investment bank, it is a leading global trader and underwriter of securities and derivatives across a broad range of asset classes and serves as a 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. Firmwide, assets under management total $581 billion. For more information on Merrill Lynch, please visit www.ml.com.

About Harris Interactive® Inc.
Harris Interactive Inc. (www.harrisinteractive.com), based in Rochester, New York, is the 13th largest and the fastest-growing market research firm in the world, most widely known for The Harris Poll® and for its pioneering leadership in the online market research industry. Long recognized by its clients for delivering insights that enable confident business decisions, the Company blends the science of innovative research with the art of strategic consulting to deliver knowledge that leads to measurable and enduring value. Harris Interactive serves clients worldwide through its United States, Europe (www.harrisinteractive.com/europe) and Asia offices, its whollyowned subsidiary Novatris in Paris, France (www.novatris.com), and through an independent global network of affiliate market research companies.

Note to Editors/Reporters
For more information about this survey, or to obtain a copy of the full set of findings, please visit www.totalmerrill.com/retirement.

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Contact:
Jennifer Grigas 212.449.3260
jennifer_grigas@ml.com