OUTLIVING RETIREMENT SAVINGS A GLOBAL EMPLOYEE CONCERN, METLIFE RESEARCH FINDS
NEW YORK, June 18, 2008
Despite worries about funding a comfortable retirement or outliving their retirement savings, many full-time workers in developing and mature economies, including the United States, have taken few or no independent steps to plan for retirement, according to recent MetLife research. Two MetLife surveys – the inaugural Study of International Employee Benefits Trends (iEBTS), and the sixth annual U.S. Study of Employee Benefits Trends (EBTS) – document the challenges faced by workers around the world in preparing for a secure retirement.
The studies found that more than eight out of 10 Mexican (81%) and Indian (80%) employees; more than half of Australian employees (58%) and more than one-quarter of U.K. employees (31%) have done no retirement planning independent of any mandatory government plans. In addition, nearly half ofU.S.employees (46%) have not taken any steps to determine income need in retirement.
“The widespread lack of independent retirement preparedness is especially worrisome in both developing and mature economies as life expectancies around the globe continue to rise and pension reform puts more responsibility on employees to fund their own retirements,” noted William J. Toppeta, president of MetLife International.
Worries vs. Planning inMexicoandIndia
The divide between employee concerns about retirement readiness and employee actions to prepare for a successful retirement is particularly pointed inMexico, and to a lesser extent,India.
For example, nearly three out of four Mexican employees (74%) say they are “concerned” that they will have to work full- or part-time to live comfortably in retirement years, and almost seven out of ten (67%) say they are “concerned” about outliving their retirement money. However, only 21% of Mexican workers say they have taken any steps to determine their households’ retirement needs. Even fewer (19%) say they have begun any retirement planning. In spite of their concerns and insufficient planning, most Mexican workers expect to retire early. The survey revealed that most expect to stop working by age 58, and one out of four plans to retire between the ages of 30 and 50.
InIndia, while almost three out of four employees (71%) say they are “concerned” about outliving retirement money, only one out of every three (35%) say they have taken steps to determine retirement needs; only 20% say they have done actual planning for retirement.
“The very concept of retirement savings is new or distant to workers in many developing economies, such asMexicoandIndia,” said Mr. Toppeta. “By tradition, typically a family would take care of its older members, but with the geographic mobility among more young people to locations far away from their family home base, leaving their families for jobs in different locations, the traditional family ‘safety net’ is becoming frayed in many fast-growing countries that lack national health or retirement systems.”
In a sharp departure from the other countries surveyed, one-third (33%) of Indian employees say they never expect to retire – which may account for why 80% of all employees say they have not done any retirement planning.
Of those Indian workers who have planned for retirement, nearly six out of ten (58%) say they have either achieved or are on track to achieving their retirement goals.
U.K.Employees Most Prepared?
In terms of retirement preparedness, theU.K.may be the most financially fit of the countries studied. Indeed, 71% ofU.K.workers surveyed say they have taken steps to determine their households’ retirement needs and 69% have actually started to plan.
Further, of those who have planned, more than half (59%) say they have either reached or are on track to reach their retirement savings goals. About one-third (34%) ofU.K.employees are “concerned” about outliving retirement money, contrasted to 55% ofU.S.workers.
Australia: Under Prepared But Optimistic
Many Australians are optimistic despite their apparent lack of independent retirement preparation. When asked about their top retirement concerns, just under half (49%) of Australian employees say they are “extremely concerned” about outliving retirement money. Fifty-eight percent of Australians, however, have done no planning for retirement in addition to the country’s “Superannuation Fund,” a government-sponsored benefits and retirement program. The median Superannuation Fund balance among those Australians closest to retirement age (51 and older) is a meager $57,800 [AUS].
Australiaalso has the highest percentage of employees without retirement savings goals among the countries surveyed. While most workers plan to retire at around age 60, 15% of Australians say they do not have any retirement savings goals.
Helping Employees Manage Longevity Risk at the Workplace
Many of the employees surveyed recognize the importance of retirement benefits and expressed interest in receiving both financial and retirement planning products through the workplace. Nearly half of Indian employees (48%) whose employers do not offer retirement benefits would be interested in purchasing retirement planning products through their employer, even if they had to pay 100% of the cost. About two in every three Mexican employees (66%) are interested in receiving advice from a financial advisor regarding their retirement savings.
In theU.S., the desire for financial planning guidance is on the rise; nearly half of employees surveyed (49%) are interested in financial planning assistance for retirement issues, up from 38% the previous year.
More than a half (54%) of Australian employers are receptive to offering financial planning services, including personalized advice, to employees and nearly one-third of employees are interested in having employers provide this type of service. In theU.K., 61% of employees already consult with financial professionals, and 29% of employees are interested in having their employers offer this service.
“Employers now have a huge opportunity to differentiate themselves by filling a great void in the retirement planning needs of their employees. The study shows that employees are receptive to receiving financial solutions in the workplace. Such a move would also enable employers to attract and retain their most talented employees at a time when the competition for talent is intensifying globally. This could create a win-win situation for employees and employers,” added Mr. Toppeta.
About the Studies
The MetLife Study of International Employee Benefits Trends (iEBTS) provides insight into the financial needs, habits and perceptions of employees and employers inIndia,Mexico,Australiaand theU.K.
The 6th annual MetLife Study of Employee Benefits Trends (EBTS) provides a comprehensive picture of theU.S.benefits landscape by surveying employers and employees on pressing issues facing the benefits industry today. For copies of this study and the inaugural Study of International Employee Benefits Trends, please visit www.whymetlife.com/internationalpr.
The first-ever MetLife Study of International Employee Benefits Trends was conducted between November 2006 and March 2007 by GfK Custom Research inIndia,Mexico,Australiaand theU.K. The employee survey polled 2,507 full-time employees beginning at age 18, including a mix of men and women at different employer sizes in each country. The employer survey consisted of 1,275 interviews with benefits decision-makers at companies with differing number of employees, representing a mix of industries and geographic regions.
The 6th annual U.S. Study of Employee Benefits Trends was conducted during the third quarter of 2007 and consisted of two distinct studies fielded by GfK Custom Research North America. The employer survey comprised 1,652 interviews with benefits decision-makers at companies with a minimum of two employees. The employee survey polled 1,380 full-time employees, age 21 and over, at companies with at least two employees.
Celebrating 140 years, MetLife is a subsidiary of MetLife, Inc. (NYSE: MET), a leading provider of insurance and financial services with operations throughout the United States and the Latin America, Europe and Asia Pacific regions. Through its domestic and international subsidiaries and affiliates, MetLife, Inc. reaches more than 70 million customers around the world and MetLife is the largest life insurer in theUnited States(based on life insurance in-force). The MetLife companies offer life insurance, annuities, auto and home insurance, retail banking and other financial services to individuals, as well as group insurance, reinsurance and retirement & savings products and services to corporations and other institutions. For more information, please visit www.metlife.com.