Post on 27-Mar-2015
ING studies the economic outlook of today’s government workforce
Public Employees In Focus
ING digs deep into the retirement and financial mind-set, opinions, confidence and habits of today’s government workers… who are these previously unstudied stakeholders, what do they think about the world around them, their financial situations, and how do they make decisions?
For plan sponsor use only.Not for distribution to the general public.
(c) 2010, ING North America Insurance Corporation.C10-0730-005 (08/10)
Retirement - Insurance - Investments 2
Behavioral Finance and retirement research traditionally focuses on large private sector employers, and their 401(k) plans.
State and Local Governments employ 8.3 million workers
(Bureau of Labor Statistics, 2008)
Data desert in understanding the motivations, opinions,
personalities, attitudes
Potential impact on retirement saving and situations
How do they interact with financial products, resources
and situations
Where do they focus their attention, what do they think
is important
How confident are they about their own situations
New Landmark Study from ING
Focuses specifically on State and Local government
workers
Government Workers
“Understanding how people think and feel,
about themselves, their situations, about money and finances, is
key to helping encourage, facilitate
and enable productive retirement savings
behavior.”Public Employees in Focus Report. © 2010
ING North America Insurance Corporation available at ingretirementresearch.com
Retirement - Insurance - Investments 3
1,026 State and Local Government Employees responded to the survey.
• Government Employees work for state or local government entities. This group excludes K-12 educators.
• Employees included in this study are employed full-time and between the ages of 20 and 70.
Quotas were set for Government Employees. Invitations were sent to a representative sample of full-time employees age 20-70. All responders to the survey invitation, regardless of their study qualification status, were weighted to be representative of full-time employees age 20-70. This resulted in a representative sample of those who actually qualified for the study and completed the interview.
The study was conducted 5/27/10 – 6/1/10. Results are reported at +/-3% at the 95% confidence level.
Survey conducted for the ING Institute for Retirement Research through Synnovate
© ING North America Insurance Corporation
Survey Methodology
Retirement - Insurance - Investments 4
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
State and Local Government Employees
Retirement - Insurance - Investments 5
State and Local Government Employees
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
AGE n=1,026
20-34 18%
35-50 41
51-70 41
Mean (years) 46.5
GENDER
% Male 46%
HOUSEHOLD INCOME
<$50k 38%
$50k - < 75k 27
$75k - < $100k 20
$100k - <$200k 14
$200k+ 1
Mean (000s) $71.4
Demographic Profile
Q.SA3. What is your age? [Numeric entry]Q.33. What is your gender? [Select one]Q.34. Which of the following ranges best describes your annual household income? [Select one]
The Government workforce is slightly more female than male, and the majority are 35 or older. Well over half have a household income less than $75k per year; a significant percentage less than $50k.
6Retirement - Insurance - Investments
MARITAL STATUS
Married/Domestic Partner 56%
Widowed/Divorced/Separated 24
Never Married 20
HOUSEHOLD SIZE
Mean 2.6
PRESENCE OF CHILDREN IN HOUSEHOLD
% Have Children <18 in HH 34%
UNION MEMBER n=1,026
% Yes 32%
Demographic Profile (cont’d)
Q.48/Sample data. Which of the following best describes your current marital status? [Select one]Q.45. Which best describes your race / ethnic origin? [Select one]Q.49/Sample data . What is your current household size? [Select one]Q.50/Sample data. Do you have children in your household? [Select all that apply]
On average, Government Employees live in 2+ person households, with approximately one-third having children under 18 in their household. More than half are married or have a domestic partner.
7Retirement - Insurance - Investments
PENSION ELIGIBLE n=1,026
% Yes 71%
HAVE EMPLOYER-SPONSORED RETIREMENT PLAN n=1,026
% Yes 64%
CURRENTLY INVESTING IN ESRP (Base = Own ESRP) n=667
Yes 74%
No 16
Not Sure 10
ESRP BALANCE (Base = Investing in ESRP) n=496
<$50k 50%
$50k - < $100k 14
$100k+ 16
Not sure 20
Mean (000’s) $71.5
2009 ESRP CONTRIBUTION (Base = Investing in ESRP) n=496
Mean (000’s) $4.8
Financial Profile – Employer Related
Q.35. Will you be eligible for pension retirement income from your employer ? [Select one]Q.SA9. Which of the following financial products do you currently own? [Select one]Q.40. Are you currently investing in your employer’s defined contribution retirement plan? [Select one]Q.41. What is the approximate balance within your employer’s defined contribution retirement plan [Select one]Q.42.Approximately how much did you contribute to your employer’s defined contribution retirement plan in 2009? [Select one]
Most Government Employees state that they are pension-eligible. The majority also have an Employer-Sponsored Retirement Plan (ESRP).
8Retirement - Insurance - Investments
FINANCALPRODUCT OWNERSHIP n=1,026
Own retail or ESRP investments 81%
Own employer-sponsored retirement plan 64
Own retail investments 51
Own checking/savings account 89
HAVE FORMAL, WRITTEN FINANCIAL PLAN
Yes 13%
No – but plan to create one 53
No – and I do not plan to create one 34
TOTAL HOUSEHOLD INVESTABLE ASSETS
<$10k 27%
$10k - < $50k 26
$50k - < $100k 15
$100k - <$250k 18
$250k+ 15
Mean (000’s) $140.4
Financial Profile – General
Q.SA9. Which of the following financial products do you currently own? [Select one]Q.13. Do you currently have a formal, written financial plan for managing your income and expenses during retirement? [Select one]Q.46. What would you estimate to be the total amount of your household’s investable assets? Please include money in checking, savings, employer sponsored retirement plans (such as 401(k), 403(b), 457) and investments (such as mutual funds, individual stocks and bonds, annuities, CDs, IRAs, etc.). [Select one]
Most do own retail or Employer Sponsored Retirement Savings Plan (ERSP)investments. Few have a formal, written financial plan – but more than half plan to create one. Just over half have investable assets of less than $50k.
9Retirement - Insurance - Investments
TOTAL HOUSEHOLD RETIREMENT SAVINGS (Base = Own ESRP)
n=667
Nothing 7%
<$10k 25
$10k - < $50k 30
$50k - < $100k 13
$100k - < $250k 15
$250k+ 10
Mean (000’s) $106.9
PROPORTION OF HOUSEHOLD RETIREMENT SAVINGS IN ESRP (Base = Currently investing in ESRP)
n=496
Proportion in ESRP 67%
Financial Profile – General (cont’d)
Q.47. What would you estimate to be the total amount that your household has saved for retirement? Please include retirement savings including employer retirement savings plans (401(k), 403(b), 457), IRAs, annuities, and any other investments that you intend to use for retirement. [Select one]
The ERSP makes up approximately two-thirds of total household savings for those who do have investments.
10Retirement - Insurance - Investments
Retirement - Insurance - Investments 11
State and Local Government Employees
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
Risk Taker Personality
Most Government employees would not classify themselves as risk takers in their personal lives. Correspondingly, “relater” is the most commonly self-assessed personality type.
Q.31. Would you [Select one you are a risk taker in your personal life? [Select one] Q.32. Which personality type would you say best describes you?
Risk Taker
Relater: Good team player, prefer stability to risk, cares greatly about the feelings and needs of others, likeable, not a risk-takerThinker: Self-controlled and considerate, prefer analysis to emotionSocializer: Outgoing, optimistic, enthusiastic, like to be in the center of things, loves to talkDirector: Firm, forceful, confident, competitive, decisive, determined, risk-taker
Relater Thinker Socializer Director
12Retirement - Insurance - Investments
Risk Personality
It follows that very few consider themselves “aggressive” investors; fully half consider themselves “conservative”.
6%
44%50%
Aggressive Moderate Conservative
Aggressive – Willing to accept a high level of risk to possibly achieve high asset growthModerate – Willing to accept a moderate level of risk to possibly have moderate investment growthConservative – Want to protect savings and avoid any possible losses
Q.XX. Which of the following best describes your retirement investment philosophy?
13Retirement - Insurance - Investments
Retirement - Insurance - Investments 14
State and Local Government Employees
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
Retirement - Insurance - Investments 15
Top 5 Issues Facing America Today
Government employees feel that employment and healthcare costs are the top issues facing America today. Retirement security is the next most important issue.
#2 ranking
#1 ranking
Cost of health-
care
Retire-ment
security
Employ-ment /
unemploy-ment
Education budgets
State/municipal budgets
Financial literacy
Global warming
Child-hood
obesity
Crime rates
Cost of higher
education
Future of Amer-
ican bus-inesses
Military efforts in Iraq and Afghan-
istan
Controlling drugs / the
war on drugs
Poverty
100% 99% 99% 99% 99% 99% 98% 98% 99% 87% 96% 97% 94% 95%% Think is an issue at
all
Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]Q.2 How optimistic or pessimistic are you that America will be able to address these issues effectively within the next 3 to 5 years? [Select one]
Think a #1 or #2Issue
15Retirement - Insurance - Investments
America’s Ability to Address Issues Effectively in Next 3 – 5 Years*
These employees are generally not very optimistic about America’s ability to address most issues effectively within the next three to five years. Retirement security is one of the issues with the greatest pessimism.
Cost of health-
care
Retire-ment
security
Employ-ment /
unemploy-ment
Education budgets
State/municipal budgets
Financial literacy
Global warming
Child-hood
obesity
Crime rates
Cost of higher
education
Future of Amer-
ican bus-inesses
Military efforts in Iraq and Afghan-
istan
Controlling drugs / the
war on drugs
Poverty
36% 6% 1% 5% 19% 3% 5% 3% 5% 8% 2% 1% 3% 3%% Ranking issue #1
Pessimistic
Somewhat Optimistic
Very Optimistic
Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]Q.2 How optimistic or pessimistic are you that America will be able to address these issues effectively within the next 3 to 5 years? [Select one]
*Base: Respondents who consider it an issue
Optimistic
16Retirement - Insurance - Investments
Financial Literacy as Part of School System
Although very few employees rank financial literacy in the top two issues facing America today, virtually all believe that financial literacy should be a part of education in the school system. More than half feel that it should be an important part.
Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]Q.3 Please read the following statements and select the one that best describes your feelings. [Select one]
Should be an important part of education taught to children in the school systemShould be a part of education taught to children in the school system, but does not need to be a priorityDoes not need to be included in education taught to children in the school system
95%
3% rank financial literacy in the top 2 issues facing America today
17Retirement - Insurance - Investments
Retirement - Insurance - Investments 18
State and Local Government Employees
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
Trust of Others
Government employees’ trust of banks/financial services companies is quite low – higher than only their trust in car salespeople! They have more trust in their immediate supervisors than in their employers as entities / organizations.
Q.4 In matters that are relevant to your relationship, how much do you trust…?[Select one]Q.5 In general, how much do you trust… ?[Select one]
Spouse/ partner
Friends /co-
workers
ChildrenParents People who
help you at car
dealer-ships
Primary doctor
Insurance agent
Banks / Financial services
companies
Hairdresser / barber /
stylist
Dentist Financial advisor
Immediate supervisor
Employer
Trust In General (Top 2 Box)*Trust in Matters Relevant to Relationship (Top 2 Box)*
*Base: Have a Relationship
Trust “in general” correlates closely with “trust in relevant matters”
19Retirement - Insurance - Investments
Retirement - Insurance - Investments 20
State and Local Government Employees
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
Amount Spent on Single Biggest Purchase in Past 12 Months
Slightly more than half have spent more than $1,000 on a single purchase in the past 12 months… but one-third (32%) are more frugal.
18%
14%
15%22%
8%
12%
11% <$250
$250 - < $500
$500 - < $1,000
$1,000 - < $5,000
$5,000 - < $10,000
$10,000 - < $25,000
$25,000 or more
Q.25 How much did you spend on it? [Select one]
$1000+ (net): 53%
21Retirement - Insurance - Investments
Single Biggest Purchase in Past 12 Months
Q.24. What was your biggest single purchase in the past 12 months? [Open End]
<$250“Clothes dryer”“Device to back up my computer”“A mix master to make holiday cookie baking easier”
$250 - $499“Massage package”“An airline ticket from Yuma to MN”
$500 - $999“Flat screen TV” “Tires”“Central Air conditioner”
$1,000 - $4,999“Dental implant!““Washer and dryer”“Home improvement materials”
$5,000 - $9,999“Home repairs”“New (used) car”
$10,000 - $24,999“New car”“Vacation”
$25,000 or more“Swimming Pool”“$35,000 Certificate of Deposit”“New home”
Single biggest recent purchases made by employees range from the practical (tires, dental work) to the non-essential (swimming pool, massages, vacation).
22Retirement - Insurance - Investments
8%
4%
6%
12%
13%
26%
29%
31%
33%
34%
44%
46%
Resources Used to Make Appliance/Vehicle Purchase Decision
More depend on their friends/family/colleagues and spouses/partners than on other resources when making appliance/vehicle purchase decisions. Sales professionals fall into the second tier of resources.
Q.26. Which, if any, of the following resources have you used when making a purchase decision on the following areas? – Appliances or Vehicles [Select one]
79% use at least one of these
resources
Sales professionals
Spouse/Partner
Friends/Family/Colleagues
TV/Radio/Public Personalities
Websites/Financial Websites
Social Networks/Online communities
Employer
Educational / reference materials
Technical materials
Advertising
Seminars
Other Resource
First Tier
Second Tier
23Retirement - Insurance - Investments
17%
51%43%
51% 57% 55% 53%
30% 31% 33% 30% 37%
78%
38%45%
37% 31%19%
10%
15% 13% 8%6%
16%
95%89% 88% 88% 88%
74%
63%
45% 44% 41%36%
53%
Importance of Resources Used to Make Appliance/Vehicle Purchase Decision*
Spouses/partners are considered to be a very important resource by most for appliance/vehicle purchase decisions. Sales professionals are important for many of these, but not to the extent of several other resources.
Q.27. How important are each of the following resources when making purchases such as appliances or vehicles? [Select one]
Gov’t Employees Non-K-12 Educators
*Base: Use resource for appliance/vehicle purchase decision
Sales prof.
Spouse/Partner
Friends/Family/
Colleagues
TV/Radio/Public Pers.
Social Net/Online Comm.
Employer Techmaterials
Adv.Ed / ref materials
Websites Seminars Other resource
Somewhat ImportantVery Important
24Retirement - Insurance - Investments
Resources Used to Make Financial Product Purchase Decision
With financial product purchase decisions, in addition to utilizing friends/family/colleagues or their spouse/partner, financial advisors are also top resources… and these employees have also used their employer as a resource more frequently… but fewer report using any resource in financial product decisions.
Q.26. Which, if any, of the following resources have you used when making a purchase decision on the following areas? – Financial Products [Select one]
Financial advisor
Spouse/Partner
Friends/Family/Colleagues
TV/Radio/Public Personalities
Websites/Financial Websites
Social Networks/Online communities
Employer
Educational / reference materials
Technical materials
Advertising
Seminars
Other Resource
68% use at least one of these resources… fewer resources used in making financial decisions than other
major purchase decisions!
Employers more frequently used when making financial decisions than other purchase decisions
(20% vs. 6%)
25Retirement - Insurance - Investments
18%34%
46% 53% 46%38%
51% 52% 45%30% 37%
29%
77%56%
43% 34%39%
45% 20% 18%15%
18% 7% 18%
95%90% 89% 87% 85% 83%
71% 70%60%
48% 44% 47%
Importance of Resources Used to Make Financial Product Purchase Decision*
Q.28. How important are each of the following resources when purchasing financial products? [Select one]
Somewhat ImportantVery Important
*Base: Use resource for financial product decision
Financial Advisor
Spouse/Partner
Friends/Family/
Colleagues
TV/Radio/Public Pers.
Social Net/Online Comm.
Employer Techmaterials
Adv.Ed / ref materials
Websites Seminars Other resource
Spouses/partners are considered to be a very important resource by most for financial product purchase decisions, followed by financial advisors. Employers are important for many, but not to the extent of several other resources.
26Retirement - Insurance - Investments
30% 32% 32%44% 46%
55% 49%36% 35%
60% 57% 55%39% 36%
26%30%
7% 11%
90% 89% 87%83% 82% 81% 79%
43% 46%
Contributor to Financial/Investment Product Purchase Consideration*
People who invest – own financial products -- state that fees/costs, company reputation, and performance are the strongest contributors to their financial purchase decisions.
Q.22. When choosing a financial or investment product, to what extent do each of the following contribute to your consideration of purchasing the product? [Select one]
Rec. fromfinancial
professionals
Rec. from other
sources
Company rep./trust-worthiness
Prior exp. with
company
Investment options
Investment perf/interest
rates
Fees/costs
Company advertising
Other
Plays Somewhat of a rolePlays very strong role
*Base: Own retail investments, ESRP, and/or checking/savings account
27Retirement - Insurance - Investments
8% 8% 9% 11% 18% 22% 22%
27% 29% 31% 38% 36% 40% 45%
35% 34% 34%33% 31% 21%
21%
30% 29% 26% 18%15%
17% 12%
92% 92% 91% 89%82% 78% 78%
Attention Paid to Financial Documents
Q.23. When you’re deciding to purchase a financial product, what level of attention do you pay to the following documents or information from the offering company, if they are available to you? [Select one]
Prospectus and legal
documents
Descriptions of the
products/funds
Marketing materials
Summary of risks
and limitations
Summary of features
and benefits
Educational materials,
supplementary materials
Web site descriptions
*Base: Own retail investments, ESRP, and/or checking/savings account and Available to you
I read it allI read most of itI skim itI don’t read it
% Read at least some of it:
% Do not read it:
Of the documents/information included in this research, marketing materials are the least read, followed by prospectuses/legal documents and web descriptions. Less than one-third “read all” of any sort of financial document. They are more likely to read more of summaries than details.
28Retirement - Insurance - Investments
Retirement - Insurance - Investments 29
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
State and Local Government Employees
How Often do you…
Government employees more frequently participate in other life habits than they do in activities related to their retirement-related financial needs.
Mean times per year (including ‘Never – 0’)
Have a routine dental
checkup
Go to a gym or
exercise
Read your (paper) mail
Plan and write down
your grocery list
Read your e-mail
Get a physical
Go out to dinner or to
a movie
Take a day trip
Take a vacation
Take your car in for servicing
99% 97% 66% 88% 96% 91% 94% 94% 94% 91%
% Do Activity
Q.30. How often do you… ? [Select one]
Figure out how much you need
to retire on
Look at your budget
Check your bank
account *
Check your retirement account **
Change how you invest your retirement account**
Examine your life insurance needs
FINANCIAL HABITS
OTHER LIFE HABITS
98% 88% 93% 69% 72% 73%
*Base: Have checking/savings account**Base: Have ESRP, annuities, and/or IRA
% Do Activity
30Retirement - Insurance - Investments
Retirement - Insurance - Investments 31
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
State and Local Government Employees
Comfort Level in Financial Ability
Q.14. How comfortable are you in your financial ability today to…? [Select one]
Uncomfortable
Somewhat comfortable
Very comfortable
Feed yourself
/your family
Pay your regular
monthly bills
Pay for basic healthcare
Pay for moderate
extras
Put a little something away for
retirement
Make a basic
household appliance purchase
Pay for more
substantial extras
Make an electronics household appliance purchase
Take a vacation this year
Deal with an unexpected
financial emergency
Save what you think is enough for retirement
Most feel they can cover the day-to-day basic expenses, but discomfort increases in other areas – in particular, with covering an unexpected financial emergency and saving for retirement.
85%79%
68%
32Retirement - Insurance - Investments
Feel comfortable
Financial Confidence Change Compared to Before Market Decline
Many have had their confidence shaken in their current financial ability to cover many areas of savings and expenses – particularly an unexpected financial emergency and saving enough for retirement.
Q.14. How comfortable are you in your financial ability today to…? [Select one]Q.15. Compared to before the financial market decline that began in 2008, has your confidence level changed in your financial ability to…? [Select one]
No change – about same
Yes, less confident today
Yes, more confident today
Comfortable in Financial Ability Today (Top 2 Box)
39% 44% 56% 52% 49% 52% 53% 68% 69% 79% 85%
Feed yourself
/your family
Put a little something away for
retirement
Save what you think is enough for retirement
Take a vacation this year
Pay your regular monthly
bills
Make a basic household appliance purchase
Make an electronics household appliance purchase
Deal with an unexpected
financial emergency
Pay for basic healthcare
Pay for moderate
extras
Pay for more substantial
extras
33Retirement - Insurance - Investments
Generational Financial Comparison
One-third of employees in these sectors consider their present financial situation to be on par with that of their parents at a similar age. Nearly half think it is better.
Q.17. When you compare your own overall financial situation today to what you think your parents’ was at a similar age, what is your impression? [Select one]
I’m better offAbout the sameI’m in worse shape
76%
34Retirement - Insurance - Investments
Retirement - Insurance - Investments 35
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
State and Local Government Employees
Amount of Thought Given to Retirement Income
Most have given at least some thought to how they will get income during retirement; two-fifths say they have thought about it a lot.
Q.6. How much thought have you given to how you will actually get income during retirement? [Select one]
A lotSomeA littleNone
96%
They think about
retirement, yet…
They think about
retirement, yet…
36Retirement - Insurance - Investments
Last Time Calculated Amount Needed to Retire
Despite this, almost one-third have never calculated how much they may need to retire.
Q.7. When was the last time you and/or your spouse/life partner calculated how much you will need to retire? [Select one]
Mean = 2.4 years ago and excludes Never/Don’t Know
Unsure, never or 10+ years
37Retirement - Insurance - Investments
Expected Retirement Age
This uncertainty extends to planned retirement age… One-quarter do not know when they will retire.
Q.8. At what age do you expect to retire? [Select one]
Mean = 63.4 years
38Retirement - Insurance - Investments
Changes as a Result of Financial Market Decline
Nearly three-quarters say they did not change the amount they invest for retirement as a result of the financial market decline. Perhaps to compensate, however, for various reasons, two-fifths say they now expect to retire at an older age.
58%
2%
41%
Q.9. Has your expected retirement age changed compared to before the financial market decline that began in September of 2008? [Select one]Q.10. Which of the following, if any, contributed to the change in your planned retirement age? [Select one]Q.11. Have you changed the amount you invest for retirement as a result of the financial market decline that began in 2008? [Select one]
Expected Retirement Age Changed Contributor to Increased Expected Retirement Age*
*Base: Expected Retirement Age
Increased
Yes – gone up Yes – gone downNo change
72%
10%
18%Retirement Investment Amount
Changed
39Retirement - Insurance - Investments
Comfort with Current Financial Ability – Retirement Related Needs
One-third of government employees are uncomfortable with their current financial ability to save enough for retirement. The financial market decline has caused roughly four-in-ten to be more uncomfortable with their ability to save for retirement.
Q.14. How comfortable are you in your financial ability today to…? [Select one]Q.15. Compared to before the financial market decline that began in 2008, has your confidence level changed in your financial ability to… [Select one]
Gov’t Employees Non-K-12 Educators
Put a little something away for retirement
27% 38%
32% 28%
24%
11%
Save what you think is enough for retirement
Comfort Level in Financial Ability Today to….
Uncomfortable
Compared to Before Market Decline, has Confidence Level Changed in Financial Ability to….
Somewhat comfortableVery comfortable
Yes – more confident Yes – less confident No change
Put a little something away for retirement
Save what you think is enough for retirement
40
Employer Pension
Nearly three-quarters of Government employees say they are eligible to receive a pension, but strikingly, over one-third of those eligible are willing to admit that they lack knowledge of how the benefit will be calculated.
Q.35. Will you be eligible for pension retirement income from your employer? [Select one]Q.36. How confident are you that your pension plan and your income from it will remain unchanged throughout retirement? [Select one]Q.37. Do you know how your pension plan benefit will be calculated? [Select one]Q.38. What percentage of your household’s retirement income do you expect to come from your pension plan? [Select one]
71% say they are eligible for pension Retirement Income
Yes No
Know Pension Benefit Calculation*
13%
19%
36%
32%<25%
25-<50%
50-<75%
75% or more
Percent of Household Retirement Income Expected from Pension*
Mean = 54.7%
41Retirement - Insurance - Investments
Expectations and Confidence: Social Security and Pension Income
Only half are confident that their pension income will remain steady. The majority expect that Social Security will be a source of retirement income.
Q.39. Do you expect to receive retirement income from Social Security? [Select one]
Confidence that Pension Plan Income Will Remain Unchanged Throughout Retirement*
*Base: Eligible for Pension Retirement Income
51%
49%
Expect Social Security Income
42Retirement - Insurance - Investments
Investing in ESRP
The majority of ESRP owners are currently investing in their plans, but over half of those currently investing would like to be contributing more than they are presently.
Q.40. Are you currently investing in your employer’s defined contribution retirement plan? [Select one]Q.43. Please read the following statements and select the one that best describes your feelings about the amount you currently contribute to your defined contribution retirement plan. [Select one]
Currently Investing in ESRP*Feeling About Current ESRP
Contribution Level**
*Base: Own ESRP**Base: Currently investing in ESRP
43Retirement - Insurance - Investments
Why Not Investing in Employer-Sponsored Retirement Plan*
Some are not participating in an employer-sponsored retirement plan for technical reasons, such as employer not offering it or ineligibility. Others offer a varietyof reasons for why they are not participating – including lack of knowledge about the plan/investments, preference for other types of investments, and lack of money.
Q.44. You indicated that you are not currently participating in your employer’s defined contribution retirement plan. Why not? [OPEN END]
“It's not available to me yet”“Not offered”
“I do not like the fees and fund choices.”“Funds are used for daily living costs”
“Know I should - but can barely pay today's bills”“Prefer to do this on my own.”
“Have personal plans”“Employer never stressed it”
“I feel it is too risky, does not perform as indicated. I just don't trust someone else messing with my money.”
“Don't know how it works”“CD's are better investment”
“Right now debt reduction is my biggest concern”“I do not know what it is.”
“I am new to my current employer. Have participated in the past for years.”
“No matching funds”“Didn't know that we had it until recently.”
*Base: Do not own ESRP or own but are not currently investingComments have not been coded to quantify, but rough estimates are that one-third of those who own an ESRP but are not currently investing say it is because they prefer to invest elsewhere or already have other investments; roughly 20% say they cannot afford to contribute; 10% say they are not sure what the plan is or what it entails.
44Retirement - Insurance - Investments
Retirement - Insurance - Investments 45
Who are these employees?
Who are these employees?
What is their personality?What is their personality?
What do they think about America’s issues?
What do they think about America’s issues?
Who do they trust?Who do they trust?What do they buy and
how do they make purchase decisions?
What do they buy and how do they make
purchase decisions?
How do their financial habits compare to other
habits?
How do their financial habits compare to other
habits?
What does their retirement picture look
like?
What does their retirement picture look
like?
What are their financial confidence and
experience levels?
What are their financial confidence and
experience levels?
What are financial communication
expectations… employer role and preferred
method?
What are financial communication
expectations… employer role and preferred
method?
State and Local Government Employees
Employer Involvement in Financial Education
Few look to their employer for financial education. Among the one-quarter who do, they would primarily like more retirement savings ideas.
Q.18. Please read the following statements and select the one that best describes your feelings. [Select one]Q.19. What type of additional financial education would you like to be receiving through your employer? [Select one]Q.20. How would you like to receive additional financial education? [Select one]
Fund performance
info
Investment options info
Investment strategies
info
Ideas for saving for retirement
Ideas for saving, in general
Other
Employer Role in Providing Financial Education
Additional Financial Education Wanted Through Employer*
*Base: Want employer to make more financial education available
Seminars / meetings
Printed materials
Online Other
Method Wanted for Receiving Additional Financial Education Through Employer*
46
Preferred Method of Receiving Investment Information*
Two-fifths who own retail and/or employer-sponsored retirement plans prefer to receive investment information in the mail – while just over half prefer an on-line method. Very few would like it to come via phone.
Q.21. What is your most preferred method of receiving information about your investments? [Select one]
*Base: Own retail investments and/or ESRP
47Retirement - Insurance - Investments
51% prefer an electronic method
Retirement - Insurance - Investments 48
Questions / Comments
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