Hopes, fears, and reality

A Research Study Hopes, fears, and reality What workers expect in retirement and what steps help them achieve the retirement they want Retirement Strategies

Background and methodology Overview This report presents the results of research conducted by Greenwald & Associates, on behalf of MassMutual, examining pre-retirees expectations and preparations for retirement, and how those plans and visions compare to the actual experiences people have after they retire. Note that percentages in the tables and charts may not total to 100 due to rounding and/or missing categories. Labels for percentages under 5% are not included. The research was conducted in two parts: a survey of 1,817 pre-retirees and retirees, and four focus groups (two of retirees only and two of pre-retirees only). In order to understand changes in expectations and planning as people get closer to retirement, as well as the changes in activities and feelings of financial security as retirees progress further into retirement, both the survey and focus group portions of the research are designed to include pre-retirees and retirees that are at varying distances from retirement. Additional details about the methodology follow this overview. The key findings and detailed results are presented next, organized around key themes. 3

Background and methodology (continued) Survey methodology 1,817 survey respondents include (equal portions) Focus group methodology Focus group consisting of four groups planning to retire in less than 5 years who retired less than 5 years ago 5 to 10 years 5 to 10 years ago 11 to 15 years 11 to 15 years ago planning to retire in who retired 7 years or less in the last 7 years 8 or more years 8 or more years ago Respondents were also required to be at least 40 years old, to have at least $50,000 in savings and investments, and to at least share a role in the household s financial decision making. The 15-minute survey was conducted online using ResearchNow s online consumer research panel. Fielding took place from September 10 to September 23, 2014. Each group had 9 to 10 participants, split evenly by gender. The pre-retiree groups had household assets between $100,000 and $600,000 and income between $50,000 and $150,000. had household assets between $250,000 and $600,000. The focus groups were convened in Chicago and Boston, on October 14th and 15th, 2014. A similarly-sized random sample of 1,817 respondents would have a margin of error at the 95% confidence level of plus or minus 2 percentage points. Subgroups would have larger margins of error, depending on their size the smaller the group, the larger the margin of error. 4

Key findings Retiree experience is very positive In general, retirees indicate having high levels of financial security, emotional well-being, and enjoyment in retirement. Six in 10 are very satisfied with their retirement lifestyle. Satisfaction with retirement is greatest among those who are in their 70s, in good health, married/living with partner, have at least $500K in assets, and have a pension. report enjoying themselves (82%), having more free time (80%), and having new experiences (69%). In fact, the degree to which retirees stay busy in retirement is one of the top positive surprises about retirement, according to retirees. over 70 are especially likely to think this. Positive emotions increase and negative emotions decrease in retirement. are happier and more relaxed than pre-retirees. Around 7 in 10 retirees report being extremely happy and extremely relaxed (72% and 67%, respectively). In comparison, only 6 in 10 pre-retirees feel extremely happy and only a third feel extremely relaxed (61% and 34%, respectively). are also, predictably, less stressed. Fortythree percent of pre-retirees report being at least moderately stressed. Amongst retirees, only 17% report a similar stress level. Most retirees feel financially secure and able to engage in the activities they enjoy at least as much as they had hoped, though 10-19% say they do not. Volunteering, however, is the exception, with 28% saying they have done less than they had hoped. For activities that cost money, almost all retirees report being able to afford to engage in these activities as much as they would like. describe retirement as an opportunity to reconnect with a spouse or partner, and even become closer. Positive surprises about retirement include having few time constraints (23%), and keeping busy and active (18%). 5

Key findings (continued) Unexpected paths to retirement Many enter retirement earlier than planned and the transition is less gradual than expected. Nearly half (45%) retired earlier than planned. The most frequently cited reasons for retiring early are changes at your company or place of work (44%) and being able to afford to retire (39%). Despite pre-retirees typically wanting to work as long as possible, retirees discover that often, and suddenly, work can retire you. The majority (79%) who retired early have no regrets about the decision to retire when they did. expectations about transitioning into retirement gradually are unlikely to be realized, given that the majority (71%) of retirees stopped working all at once. As pre-retirees approach their expected retirement date, the more likely they are to say they will stop working all at once (retiring in less than 5 years [52%], 5 to 10 years [35%], and 11 to 15 years [29%]). While many retirees expect to get back into the working world at some point, there can be unexpected barriers to doing so, including the pace of technology and age discrimination. Adaptation to retirement are able to adapt to the financial challenges of retirement. Satisfaction with retirement lifestyle increases between the first 5 years of retirement versus 5+ years since retiring (retired less than 5 years ago [56%], 5 to 10 years ago [63%], and 11 to 15 years ago [62%]). Concerns about retirement decrease as pre-retirees approach retirement. Thirty-one percent of pre-retirees who are 11-15 years away from retirement say they are looking forward to retirement with very few or no concerns, but this percentage grows to 43% for those less than 5 years away. In addition, 46% of retirees say that they had very few or no concerns in the year prior to retirement. Projected sources of income in retirement shift as pre-retirees approach retirement, and current sources of income change as needed throughout retirement. As pre-retirees approach retirement, the less likely they are to report employment as a projected source of income (retiring in less than 5 years [47%], 5 to 10 years [59%], and 11 to 15 years [61%]). Those who retired recently are more likely to report employment as source of income than those who have been retired 5 or more years (retired less than 5 years ago [36%], 5 to 10 years ago [28%], and 11 to 15 years ago [21%]). Many retirees are able to defer collecting their Social Security benefits. The longer individuals have been retired, the more likely they are to indicate Social Security benefits as a current source of income (retired less than 5 years ago [65%], 5 to 10 years ago [80%], and 11 to 15 years ago [91%]). 6

Financial security increases as pre-retirees get closer to retirement and as retirees progress in retirement. Only 63% of those retiring in 11-15 years feel they are on track toward being financially secure, but this percentage grows to a full 82% by the time individuals are less than 5 years away from their expected retirement date. This also matches retirees recollections about where they were prior to retiring. also adapt to a fixed income by finding creative ways to cut expenses but not forgo activities they enjoy. Lessons learned The experiences of current retirees provide a roadmap for how to get in a better position for a positive retirement experience. Given that nearly half retire earlier than expected, don t delay taking steps to prepare for retirement. Early preparation contributes to feelings of financial security in retirement. The most important steps to take early include calculating a target for how much money is needed in order to afford to retire, making efforts to increase savings, and calculating the best time to collect Social Security benefits. When asked what is one thing they wish they had done differently to prepare for retirement, many retirees say they would have saved more (20%) and prepared better financially (17%). Work with a financial advisor. Nearly everyone who has had a financial advisor found that person to be helpful for retirement planning (pre-retirees [96%]; retirees [93%]). Learn about effective ways to use home equity to increase financial security in retirement. Don t neglect to prepare for the social aspects of retirement such as strengthening the relationship with one s spouse/significant other, cultivating new friendships, and fostering old friendships. The earlier people can make it a priority to focus on the relationship with their spouse or significant other, the better. Those who do so 5 or more years before retiring tend to enjoy retirement more. Once retired, it can be especially difficult to make new friends, which is why it is important to have a strong social network prior to retiring. 7

Retiree experience is very positive Lifestyle Satisfaction with retirement is very high and increases after the first 5 years 82% enjoy themselves, 80% have more free time, and 69% have encountered new experiences in retirement indicate being able to afford the lifestyle they want Many report that being retired allows them to engage in the activities they enjoy Emotional well-being Compared to pre-retirees, retirees are happier, more relaxed, less stressed, and less frustrated Although both men and women see improved emotional well-being in retirement, women report more stress than men both before and during retirement Financial security feel financially secure Most retirees also feel able to engage in the activities they enjoy at least as much as they had hoped Satisfaction with retirement : How satisfied are you with your lifestyle in retirement? Six in 10 retirees report being very satisfied, and 3 in 10 report being at least somewhat satisfied. Very satisfied Somewhat satisfied Very satisfied Neither satisfied nor dissatisfied Somewhat satisfied Somewhat dissatisfied Neither satisfied nor dissatisfied Very dissatisfied Somewhat dissatisfied Very dissatisfied 30% 5% 30% 5% 60% 60% Subgroup analysis more likely to be very satisfied in their 70s (66% vs. 57%) Married/Living with a partner legend 5(63% vs. 53%) In better health (68% vs. legend 44%) 5 legend 4 At least $500K in assets (65% vs. 57%) legend 4 Has pension (64% vs. 53%) legend 3 legend 3 legend 2 legend 2 legend 1 legend 1 (n=905) 8

82% 80% 71% % Positive retiree experience Legend 2 : To what extent have you actually experienced the following in retirement? Legend 1 5-pt. scale: 5 = a great deal 1 = not at all 5 a great deal 4 3 More free time Ability to afford a comfortable lifestyle New experiences To feel financially secure More time for friends A slower-paced, relaxed lifestyle To feel fulfilled Opportunities opened up by retirement Friends and family to depend on if needed To enjoy yourself 45% 37% 82% To reinvent yourself 45% 35% 80% 32% 40% 71% 30% 39% 69% 32% 35% 66% 28% 37% 65% 28% 38% 66% 24% 39% 64% 21% 29% 50% 11% 17% 28% 9% 16% 25% Lege Lege To feel anxious about financial uncertainty To feel as though part of your identity is lost To be bored To lack a sense of purpose To feel lonely To not know what to do without your job To find it hard to relate to people who have jobs To feel as though you are a burden to your family 10% 19% 31% 6% 11% 19% 13% 19% 5% 10% 17% 5% 9% 16% 9% 14% 10% 14% 5% 5 a great d 4 3 (n=905) Eight in 10 retirees indicate enjoying themselves and having more free time. Around 7 in 10 retirees say they have been able to afford a comfortable lifestyle, and that they have had opportunities for new experiences in retirement. Only one-third of retirees have experienced financial uncertainty to some extent since retiring. Only one-fifth of retirees indicate feeling bored to some extent. 9

Positive emotions increase in retirement In general lately, I tend to feel... n Extremely/quite a bit Happy Determined Relaxed Excited n Moderately 50% 36% 34% 26% 31% 61% 72% 67% 44% 40% 45% 43% 39% 32% 23% 70% 71% 77% 25% 89% 81% 93% 95% Around 7 in 10 retirees report being extremely happy, compared with 6 in 10 pre-retirees. are particularly relaxed compared with pre-retirees, with the majority indicating feeling relaxed. 92% Subgroup analysis more likely to feel determined In better health Higher assets Higher income Has DC plan more likely to feel relaxed Men In better health Has pension Has DC plan (n=912); (n=905) Negative emotions decrease in retirement In general lately, I tend to feel... n Extremely/quite a bit n Moderately Stressed 6% 17% 26% 43% 11% 17% Frustrated Nervous Distressed Sad 10% 17% 27% 10% 14% 5% 15% 20% 8% 10% 6% 12% 18% 7% 10% 9% 12% 7% 11% Subgroup analysis Percentage at least moderately stressed Men Women 38% 49% 13% 20% Angry 8% 11% 5% 7% Lonely 7% 10% 6% 9% Compared with pre-retirees, retirees report feeling less stressed, frustrated, nervous, and distressed. More than 4 in 10 pre-retirees indicate feeling moderately to extremely stressed, compared with less than 1 in 5 retirees. (n=912); (n=905) 10

Lifestyle in retirement : To what extent have you been able to engage in each of these activities in retirement? n More than you had hoped you would n About as much as you had hoped you would n Less than you had hoped you would Travel/vacations 33% 49% 19% Free time to relax (e.g. reading/lounging) 31% 57% 12% Dining out 23% 67% 10% Excercise/recreation (e.g. golf, tennis, swimming, hiking) 23% 59% 18% Volunteering 18% 55% 28% Spending time socializing with family and friends 16% 70% 13% Engaging in hobbies (e.g. fishing, painting, cooking) 16% 67% 16% Attending events (e.g. sports, musicals/plays) 14% 70% 16% A third of retirees have been able to travel/take vacations even more than they had hoped. Around the same number of retirees have experienced even more free time to relax than they had hoped. (n=905) Affordability of activities in retirement : Since retiring, have you been able to afford to engage in these activities as much as you expected? n Yes n No n Does not apply Travel/vacations 86% 13% Engaging in hobbies/recreation that cost money (e.g. fishing, painting, golf) 79% 8% 13% Attending events (e.g. sports, musicals/plays) 82% 9% 9% Dining out 90% 8% have been able to afford travel/vacations and hobbies as much as they had expected. (n=905) 11

Hopes, fears, and reality : To what extent do you expect the following in retirement? : To what extent have you actually experienced the following in retirement? To enjoy yourself Pre-retiree expectation Retiree experience 49% 45% 41% 37% 82% 90% More free time Pre-retiree expectation Retiree experience 48% 45% 40% 35% 80% 88% New experiences Pre-retiree expectation Retiree experience 33% 30% 46% 39% 69% 79% More time for friends Pre-retiree expectation Retiree experience To enjoy yourself 45% 37% 82% A slower-paced, Pre-retiree expectation 25% 43% 68% relaxed lifestyle Retiree experience More free time 28% 45% 38% 35% 80% 66% Ability to afford a comfortable lifestyle 32% 40% 71% To feel fulfilled Pre-retiree expectation New experiences 23% 30% 39% 41% 69% 64% Retiree experience 24% 39% 64% To feel financially secure 32% 35% 66% Ability to afford a Pre-retiree expectation More time for friends 24% 28% 37% 43% 65% 67% comfortable lifestyle A slower-paced, Retiree experience relaxed lifestyle 32% 28% 38% 40% 66% 71% To feel Pre-retiree expectation To feel fulfilled 24% 24% 39% 38% 64% 62% financially secure Opportunities Retiree opened experience up by retirement 32% 21% 29% 35% 50% 66% Friends and family to depend on if needed 11% 17% 28% Opportunities opened Pre-retiree expectation 21% 38% up by retirement To reinvent yourself Retiree experience 21% 9% 16% 25% 29% 50% 60% Friends and family to Pre-retiree expectation 8% depend on if needed To feel anxious Retiree about experience financial uncertainty 11% To feel as though part of your identity is lost To reinvent yourself Pre-retiree expectation 7% Retiree experience To be 9% bored To lack a sense of purpose To feel lonely 25% 28% 21% 29% 10% 17% 19% 28% 31% 6% 11% 19% 22% 29% 16% 13% 19% 25% 5% 10% 17% 5% 9% 16% 68% 65% experiences To not have know not what quite to lived do without up to pre-retirees your job hopes 9% 14% and expectations for retirement with regard to enjoying themselves, more free time, and To find having it hard new to experiences. relate to people who have jobs 10% 14% Around 7 in To 10 feel retirees as though have you been are able a burden to afford to your a comfortable family 5% lifestyle in retirement. Almost as many pre-retirees have the same expectation. Only a quarter of retirees have experienced retirement as an opportunity to reinvent themselves. 43% 37% Legend 2 Legend 1 5-pt. scale: 5 = a great deal 1 = not at all 5 a great deal 4 3 (n=912); (n=905) 12

To enjoy yourself 45% 37% 82% More free time 45% 35% 80% Ability to afford a comfortable lifestyle 32% 40% 71% New experiences 30% 39% 69% To feel financially secure 32% 35% 66% More time for friends 28% 37% 65% A slower-paced, relaxed lifestyle 28% 38% 66% Hopes, fears, and reality (continued) : To what extent do you expect the following in retirement? To feel fulfilled 24% 39% 64% : To what extent have you actually experienced the following in retirement? Opportunities opened up by retirement 21% 29% 50% To feel anxious Friends about and Pre-retiree family to expectation depend on if needed 10% 11% 17% 30% 28% 44% financial uncertainty Retiree experience 10% 19% 31% To reinvent yourself 9% 16% 25% To not know what to Pre-retiree expectation 10% 18% 31% do without your job Retiree experience 9% 14% To feel anxious about financial uncertainty 10% 19% 31% To feel as though To feel part as though Pre-retiree part of expectation your identity is 7% lost 6% 16% 11% 19% 24% of your identity is lost Retiree experience To be bored 6% 11% 13% 19% 19% To lack a sense To lack a sense of purpose Pre-retiree expectation 6% 5% 10% 17% 17% 25% of purpose Retiree experience To feel lonely 5% 5% 10% 9% 17% 16% To not know what to do without your job 9% 14% To find be bored it hard to Pre-retiree relate to people expectation who have 6% jobs 10% 19% 14% 26% Retiree experience 13% 19% To feel as though you are a burden to your family 5% Legend 2 Legend 1 5-pt. scale: 5 = a great deal 1 = not at all 5 a great deal 4 3 To feel lonely Pre-retiree expectation Retiree experience 5% 14% 20% 5% 9% 16% To find it hard to relate to people who have jobs Pre-retiree expectation Retiree experience 16% 20% 10% 14% To feel as though you are a burden to your family Pre-retiree expectation Retiree experience 9% 11% 5% More than 4 in 10 pre-retirees fear financial uncertainty in retirement. Only one-third of retirees have experienced financial uncertainty to some extent since retiring. Nearly one-third of pre-retirees fear that they will not know what to do without their job, but few retirees (15%) have actually found this to be the case. One-quarter of pre-retirees indicate that they fear they will be bored in retirement. However, only one-fifth of retirees indicate feeling bored to some extent in retirement. (n=912); (n=905) 13

Retirement is better than expected : Overall, what type of experience do you expect to have in retirement? : Now that you are retired, overall, what type of experience have you had? 7-pt. scale: 7 = very positive 1 = very negative Pre-retiree expectation 24% 44% 68% 7 very positive 6 Retiree experience 41% 33% 74% Subgroup analysis Percentage rated 6-7 DB Plan DC Plan Has DB No DB Has DC No DC 69% 66% 69% 60% 77% 65% 75% 70% Four in 10 retirees report that their overall experience in retirement has been very positive, compared with only one-quarter of pre-retirees indicating that they expect to have a very positive experience in retirement. (n=912); (n=905) 14

Positive and negative retirement surprises What is one positive surprise about retirement? The joy of not being chained to a work calendar being able to do what I want, when I want! The variety of things to do, and not enough time to always do them. I m so happily busy that I wonder how I ever had time to work! No time constraints/having freedom Keeping busy/active Time with family/friends Financial (positive) Less stress/relaxing Travel Not missing work/boss Hobbies (new & old) Being able to volunteer/being politically active No positive surprises Better/more positive than anticipated Improving excercise/health Enjoying a new job/part-time work Time to oneself Moving/second home Learn something new Other/no answer 11% 10% 8% 7% 6% 5% 4% 4% 3% 3% 2% 1% 1% 1% 5% 18% 23% Subgroup analysis more likely to mention keeping busy/active in their 70s (22% vs. 15% of younger retirees) In better health Higher income Higher assets Has pension Nearly one-quarter of retirees indicate that freedom/no time constraints has been a positive surprise about retirement. Another 1 in 5 say that keeping busy and active has been a positive surprise about retirement. What is one negative surprise about retirement? Time disappears so rapidly, hard to keep up with the pace of life today. You must create a new life and interests but I don t find that a real negative. Few friends to golf with on with on Tuesday, Wednesday, Thursday mornings, though some are now retired as well after seeing my example... Financial problems Too busy No negative surprises Illness/disability (self and/or spouse) Loneliness/loss of purpose/depression/bored Missing work/work friends/loss of professional identity Lack of friends/don t see family or friends enough Hard to focus Not as much travel/activities Other s assumptions Widowhood/loss of family/friends Marital problems/no companion Not feeling as sharp Other/no answer 17% 13% 11% 10% 10% 10% 7% 5% 3% 3% 2% 2% 1% 14% Financial problems (17%) and being too busy (13%) were the top mentioned negative surprises indicated by retirees. However, slightly more than 1 in 10 said they have not experienced any negative surprises in retirement. (n=905) 15

Unexpected paths to retirement Many do not end up retiring how and when they want. It appears that hopes about work and method of retiring for the current generation of pre-retirees will very often not be realized. Almost half retired earlier than planned Changes in technology and changes within the company were frequently cited as reasons why people decided to retire earlier than planned. Also likely that expectations to transition out slowly, or to work and earn money through work after retiring from primary occupation will not be realized indicate that they want to work as long as possible, which means delaying retirement and transitioning to retirement gradually. This highlights the need to have a financial foundation well before the target age to retire. Retiring earlier than planned Did you retire...? Which of the following are reasons why you retired earlier than planned? n Earlier than planned n About when planned n Later then planned There were changes at your company/place of work You could afford to retire early The stress of the job or commute was too much 18% 39% 44% You lost your job 18% 3% You had a health problem or disability You had caregiving legend 3responsibilities Your spouse or partner wanted you to legend 2 Buy-out/incentive 16% 9% 9% 8% 52% 45% You wanted legend to do 1something else The job was too physically demanding 7% 5% Wanted to spend more time with family 1% Other 1% Subgroup analysis with under $100K in assets are actually the most likely to retire early: 53% report retiring early vs. just 43% of those with more assets. Of retirees, 45% retired earlier than planned. The top reasons for retiring early include changes at their company/place of work (44%), and being able to afford to retire early (39%). (n=905) who retired later (n=405) 16

Retiring later than planned Did you retire...? Which of the following are reasons why you retired later than planned? n Earlier than planned n About when planned n Later then planned 3% You decided to build up your savings more You enjoyed working Your job gave you a sense of identity You wanted to keep your benefits You needed the income 48% 48% 39% 35% 26% You enjoyed legend your 3 co-workers 23% You had less in savings than you expected to have legend 2 You had an unexpected non-health-related expense 13% 10% 52% 45% Loyalty to company legend 1 You had an unexpected health-related expense 10% 6% Loss of spouse 6% Of retirees, only 3% retired later than planned. The top reasons for retiring later than planned include; deciding to build up savings (48%), enjoying working (48%), job giving you a sense of identity (39%), and wanting to keep benefits (35%). (n=905) who retired later (n=31) [small sample size] Looking back at retirement timing : Looking back, do you think...? n Made the right decision about retiring when you did n Should have worked longer than you did n Should have retired earlier than you did n Not applicable/did not have a choice about timing of retirement 14% 6% legend legend legend Subgroup analysis 21% of those in poorer health feel that they should have worked longer, compared to just 11% of those in better health. 79% legend Of those who retired earlier than planned, nearly 4 in 5 believe they made the right decision about retiring when they did. Fourteen percent, however, wish they had worked longer than they did. (n=270) 17

Transition into retirement : How will you likely transition into retirement? : How did you transition into retirement? n Stop working all at once n Gradually reduce hours until no longer working n Continue to work part time but in a job outside of your primary occupation n Continue to work part time in the same primary occupation n Cycle between periods of working and not working until you are/were ready to permanently retire n Continue to work full time but in a job outside of your primary occupation (n=304) (n=305) [ (n=303) 29% 32% 16% 13% 9% 35% 25% 17% 14% 8% 52% 17% 15% 7% 8% (n=905) 71% 7% 8% 8% Of retirees, more than 7 in 10 made the transition into retirement by stopping working all at once. Of those who are less than 5 years away from retirement, half say that they will stop working all at once, compared with around one-third of pre-retirees who have 5 or more years until retirement. 18

Adaptation to retirement become better at managing spending the longer they are retired Although many delayed planning for retirement, most felt financially secure by the time they retired Sources of income shift the longer retirees are in retirement Employment becomes less of a viable option the further one is in retirement Many are able to defer collecting Social Security benefits until they are 5 to 10 years into retirement Although unexpected life events can occur, retirees adapt to a fixed income by finding creative ways to cut expenses while still participating in the activities they enjoy Satisfaction increases throughout retirement : How satisfied are you with your lifestyle in retirement? n Very satisfied n Somewhat satisfied n Neither satisfied nor dissatisfied n Somewhat dissatisfied n Very dissatisfied < 5 years (n=304) 56% 33% 6% 6% 5-10 years (n=301) 63% 26% 5% 11-15 years (n=300) 62% 30% Satisfaction is higher for those who have been retired more than 5 years, which suggests increased adaptability throughout retirement. 19

Financial security in retirement : To what extent do you feel you are on track toward being financially secure in retirement? : At the time you retired, to what extent did you feel financially secure? (% 4-5) Net Completely (n=304) (n=305) [ 63% 69% (n=303) RETIREMENT < 5 years ago (n=304) 5-10 years ago (n=301) [ 11-15 years ago (n=300) 82% 77% 83% 83% Among pre-retirees, more than 8 in 10 of those who expect to retire in the next 5 years feel they are on track toward financial security in retirement, compared with less than 7 in 10 of those who have 5 or more years until they expect to retire. Irrespective of how many years ago they retired, around 8 in 10 retirees felt financially secure when they retired. Preparations increase as people approach retirement : How good a job do you feel you are doing in terms of the following? : How good a job do you feel you did leading up to retirement in terms of the following? (% Excellent/very good) n (n=304) n (n=305) n (n=303) n (n=905) Managing investments for your retirement savings Picking good investments for your retirement savings Starting to save early enough for retirement Saving enough for retirement Getting good advice about saving for retirement 51% 57% 62% 67% 49% 51% 59% 62% 47% 50% 62% 64% 45% 52% 60% 67% 43% 51% 62% 60% The closer pre-retirees get to their expected retirement date, the better they feel about their preparedness in terms of picking good investments, managing investments, saving enough, starting to save early enough, and getting good retirement advice. 20

Expenses in retirement : Do you expect your expenses for the first 5 years of retirement to be... : So far in retirement have your expenses been... n Much lower n A little lower 40% 33% 7% 40% 30% 9% n Much higher n A little higher 18% 21% 18% 22% More likely to expect or have higher expenses Women Not married (or living with partner) In poorer health Lower assets No pension Four in 10 pre-retirees expect their expenses to be about the same in the first 5 years of retirement, whereas 3 in 10 expect their expenses to be a little lower. actual expenses in the first 5 years of retirement are similar to pre-retirees estimates, which suggests that pre-retirees are being realistic about their expenses in retirement. (n=912); (n=905) Ability to manage spending increases in retirement : How good a job do you feel you are doing now in terms of managing your spending? n Excellent n Very good n Good n Fair/poor < 5 years (n=304) 5-10 years (n=301) 11-15 years (n=300) < 5 years (n=304) 23% 45% 25% 7% 34% 43% 17% 7% 38% 39% 20% 23% 45% 25% 7% 5-10 years (n=301) (n=912) 34% 43% 17% 7% 37% 41% 19% : How much will the 11-15 planning years (n=300) you have done 38% help you achieve your 39% retirement goals? 20% : How much did the planning you (n=905) did before retiring 43% help you achieve 31% your retirement 18% goals? 7% n Will help/helped a great deal (5) n 4 (n=912) (n=905) 37% 41% 19% 43% 31% 18% 7% n 3 n Will do/did little help (net 1 to 2) Nearly 4 in 10 of those who retired 11 to 15 years ago say they are doing an excellent job managing their spending, compared with only about a quarter of those who retired within the last 5 years. are slightly more likely than pre-retirees to say that their planning helped a great deal in helping them achieve their retirement goals. 21

[ Perceived feelings about retirement : Are you... : In the year before you retired, were you... n More concerned than looking forward to retirement/not looking forward to retirement at all n Looking forward to retirement but have some concern n Looking forward to retirement with very few or no concerns 7% 11% (n=304) (n=305) [ 31% 33% 60% 59% 9% 8% 58% 42% (n=303) 43% 54% 36% 46% (n=912) (n=905) Nearly 6 in 10 pre-retirees are looking forward to retirement but have some concerns, whereas in the year before retirement, around 4 in 10 retirees estimate they were looking forward to retirement but had some concerns. Those who expect to retire within the next 5 years are more likely to report looking forward to retirement with very few or no concerns than those who expect to retire in 5 to 15 years. 22

Projected sources of income Pre-: What are your projected sources of income in retirement? Social Security benefits Withdrawals from an employer-sponsored retirement savings plan [e.g., 401(k)] Withdrawals from an IRA or Roth IRA Withdrawals from taxable investment or bank accounts Payments from a defined benefit pension plan Employment in retirement, including self-employment 47% 59% 61% 71% 70% 69% 69% 60% 59% 82% 81% 77% 94% 99% 96% 85% 89% 90% Guaranteed lifetime income payments from payout annuity Rental property or real estate (excluding primary home) 32% 30% 21% 20% 19% 26% A reverse mortgage or home equity loan 7% 4% 5% Among pre-retirees, Social Security benefits and withdrawals from an employer-sponsored retirement savings plan are the most common projected sources of income in retirement. Those who are closer to their expected retirement date are slightly more likely to expect that payments from a defined benefit pension plan will be a source of income in retirement. Compared with pre-retirees who are 5 or more years away from retirement, those who are less than 5 years away from their expected retirement date are less likely to indicate employment in retirement as a projected source of income. Among pre-retirees, some of the less common projected sources of income in retirement are payouts from an annuity, rental property or real estate income, or a reverse mortgage. (n=303); (n=305); (n=304) 23

Current sources of income : What are your current sources of income? Social Security benefits Payments from a defined benefit pension plan Withdrawals from taxable investment or bank accounts Withdrawals from an employer-sponsored retirement savings plan [e.g., 401(k)] Withdrawals from an IRA or Roth IRA Employment in retirement, including self-employment Guaranteed lifetime income payments from payout annuity Rental property or real estate (excluding primary home) < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago < 5 years ago 5-10 years ago 11-15 years ago 21% 21% 21% 14% 14% 12% 36% 28% 21% 46% 43% 44% 41% 39% 41% 39% 49% 57% 65% 80% 91% 64% 70% 72% A reverse mortgage or home equity loan < 5 years ago 5-10 years ago 11-15 years ago 5% Social Security benefits and payouts from a defined benefit pension plan are among the most common sources of income among retirees. Those who are 5 or more years into retirement are more likely to be collecting Social Security benefits than more recent retirees. More than one-third of recent retirees indicate employment in retirement as a current source of income, which is more than those who have been retired 5 to 10 years (28%) and 11 to 15 years (21%). Rental property income and reverse mortgages are among the least cited current sources of income. < 5 years (n=304); 5-10 years (n=301); 11-15 years (n=300) 24

Lessons learned How to get in a better position Don t delay preparations for retirement Earlier preparation contributes to feelings of financial security, particularly in terms of calculating a target for how much money is needed in order to afford to retire, making efforts to increase savings, and calculating the best time to collect Social Security benefits Work with a financial advisor Adjust expectations for the transition into retirement, as many do not end up retiring when or how they wanted Given the likelihood of retiring earlier than expected, it is critical to begin financial preparations as early as possible Retirement planning assistance : How helpful have the following been in terms of helping you to plan/ prepare for your retirement? : Prior to retiring, how helpful were the following in terms of helping you to plan/ prepare for your retirement? n Very helpful n Somewhat helpful n Net not helpful Your financial advisor (n=405) (n=496) 62% 60% 34% 33% 7% The plan provider of your (last) employer-sponsored retirement plan (n=763) (n=665) 21% 18% 45% 39% 34% 43% Your employer/the last employer you had before retirement (n=763) (n=665) 12% 17% 39% 31% 50% 52% Among retirees and pre-retirees who had a financial advisor, almost everyone saw their financial advisor as helpful for retirement planning. Employers were considered less helpful than financial advisors and plan providers. Still, about half of pre-retirees and retirees thought their (last) employer was helpful in planning/preparing for their retirement. 25

Steps to prepare for retirement : Have you taken any of these steps? : Did you take any of these steps before retiring? n Yes, did it n Planning to do/wish I had done Created a budget for retirement 20% 68% 22% 61% 33% 52% 48% 9% 20% 54% Created a written financial plan for retirement 28% 47% 33% 39% 36% 10% Calculated the best time to begin collecting Social Security benefits 36% 59% 49% 47% 60% 33% 70% 5% Calculated a target for how much money you need in order to afford to retire 48% 45% 54% 37% 64% 28% 61% 7% 58% 33% Made efforts to increase savings 64% 26% 60% 22% 48% 10% Perhaps surprisingly, around half of retirees did not create Retiring a budget in or 11-15 a written yearsfinancial plan for 37% retirement prior to 28% retiring. The percentage Used of pre-retirees financial/investment who indicate guidance taking steps to Retiring prepare in for 5-10 retirement years such as creating 37% a budget or written 31% financial plan or calculating retirement fund provided targets by or your determining employers the best time Retiring to begin < 5 collecting years Social Security 38% benefits increases 23% as the expected retirement date gets closer. retirement plan provider* 35% 10% Around 6 in 10 pre-retirees have made efforts to increase savings for retirement, compared with around half of retirees taking this step prior to retiring. 31% 54% Rebalanced stocks 43% 43% and bonds Retiring (n=304); in < 5 years 45% (n=305); 33% (n=303); (n=905) 47% 4% 26

Calculated the best time to begin collecting Social Security benefits 49% 47% 60% 33% 70% 5% Calculated a target for how much money you need in order to afford to retire 48% 45% 54% 37% 64% 28% 61% 7% Made efforts to increase savings : Have you taken any of these steps? : Did you take any of these steps before retiring? 58% 33% 64% 26% 60% 22% 48% 10% n Yes, did it n Planning to do/wish I had done Used financial/investment guidance provided by your employers retirement plan provider* 37% 28% 37% 31% 38% 23% 35% 10% Rebalanced stocks and bonds 31% 54% 43% 43% 45% 33% 47% 4% 40% 32% Worked with a financial advisor 44% 24% 50% 20% 55% 6% Increased contributions to an employer-sponsored retirement savings plan [e.g., 401(k)] 55% 23% 58% 19% 55% 6% 34% 8% Estimated your medical and dental expenses in retirement (including the cost of Medicare) 16% 75% 28% 62% 43% 47% 55% 10% The trend among pre-retirees is that the percentage who indicate Retiring taking 11-15 steps years to prepare 7% for retirement, 44% such as rebalancing stocks and bonds or working with a financial advisor, gradually increases as they Retiring get closer in 5-10 to years their expected 9% retirement 34% date. Downsized to a smaller house Nearly 6 in 10 pre-retirees have increased contributions to an Retiring employer-sponsored in < 5 years retirement 11% savings 38% plan to prepare for retirement, compared with only a third of retirees indicating that they took this step prior to retiring. 17% 6% Prior to retiring, more than half of retirees estimated medical and dental expenses in retirement. Although the majority of pre-retirees see this as a necessary Retiring step, in 11-15 those years who are less 6% than 529% years from retiring are more likely to have already taken this step. Made plans to establish 24% a new career 5% 19% (n=304); Retiring in 6% 5-10 years (n=305); (n=303); (n=905) *Only asked of those who had a employer-sponsored retirement plan Developed a new hobby 6% 53% 8% 44% 9% 46% 21% 9% 27

Worked with a financial advisor 44% 24% 50% 20% 55% 6% Steps to prepare for retirement Retiring in 11-15 (continued) years Increased contributions to an employer-sponsored retirement savings plan [e.g., 401(k)] 55% 23% 58% 19% 55% 6% 34% 8% Estimated your medical and dental expenses in retirement (including : Have you the taken cost of any Medicare) of these steps? : Did you take any of these steps before retiring? 16% 75% 28% 62% 43% 47% 55% 10% n Yes, did it n Planning to do/wish I had done Downsized to a smaller house 7% 44% 9% 34% 11% 38% 17% 6% 6% 29% Made plans to establish a new career 24% 5% 19% 6% 6% 53% Developed a new hobby 8% 44% 9% 46% 21% 9% Made house or apartment renovations 17% 37% 29% 33% 28% 33% 33% Nearly half of pre-retirees plan to downsize to a smaller house before retiring, compared with 8 in 10 retirees indicating that they did not need to take this step. The majority of retirees report that they did not need to make plans to establish a new career (88%). In contrast, one-third of those who are 5+ years away from retiring indicate that they plan to take this step prior to retiring. One-third of retirees made house or apartment renovations and one-fifth developed a new hobby prior to retiring. However, more than half of pre-retirees indicate that they have taken or plan to take these steps in the future. (n=304); (n=305); (n=303); (n=905) 28

55% 23% 58% 19% 55% 6% 34% 8% 16% 75% 28% 62% 43% 47% 55% 10% : Have you taken any of these steps? : Did you take any of these steps before retiring? 7% 44% 9% 34% 11% 38% 17% 6% 61% n Yes, did it n Planning to do/wish I had done Researched a new place to live 17% 43% 19% 30% 24% 32% 29% 14% 56% Made new friends/reconnected with old friends 22% 53% 18% 52% 45% 9% 55% 38% Focused on relationship with spouse or partner* 53% 33% 48% 41% 41% 7% About one-third of retirees researched a new place to live. Around 50% to 60% of pre-retirees have taken or intend to take this step. Nearly half of retirees indicate that they made new friends or reconnected with old friends to prepare for retirement, compared with less than a quarter of pre-retirees. Focusing on the relationship with one s spouse or partner is a step that 4 in 10 retirees took prior to retirement, whereas 48% to 55% of pre-retirees have already taken this step. (n=304); (n=305); Retiring in <5 years (n=303); (n=905) *Has spouse or partner 29

Early preparation is key Key to financial security Key to greater enjoyment Percentage of retirees who feel financially secure by how early they prepare Calculating a target for how much money is needed in order to afford to retire Calculating a target for how much money Making is needed efforts in to order increase to afford to savings retire Calculating Making efforts the best to increase time to savings collect Social Security benefits Calculating the best time to collect Social Security benefits Late preparation (n=297) Early preparation (n=257) Late Late preparation preparation (n=297) (n=140) Early preparation (n=257) Early preparation (n=292) Late Late preparation preparation (n=140) (n=531) Early preparation (n=292) Early preparation (n=106) Late preparation (n=531) Early preparation (n=106) 65% 74% 65% 56% 74% 71% 56% 67% 71% 77% 67% 77% Percentage of retirees who are enjoying retirement by how early they prepare Focusing on the relationship Late preparation (n=117) 84% with spouse/significant other Early preparation (n=120) 89% Focusing on the relationship Late preparation (n=117) 84% with spouse/significant other Early preparation (n=120) 89% Late preparation = < 5 years before retiring; Early preparation = 5+ years before retiring Those who prepare earlier for retirement tend to feel more financially secure in retirement. The key steps that contribute to financial security if taken 5 or more years before retirement are: Calculating a target for how much money is needed in order to afford to retire Making efforts to increase savings Calculating the best time to collect Social Security benefits Prior to retiring, strengthening the relationship with one s spouse or significant other leads to greater enjoyment in retirement. Taking this step earlier is better. Those who began focusing on their relationship with their spouse or significant other 5 or more years prior to retirement are more likely to enjoy retirement than those who took this step less than 5 years before retirement. 30

Timing of steps to prepare for retirement : Approximately when did you start taking each of these steps? Time before retirement n Less than 5 years n 5 to 10 years n 11 or more years Created a budget for retirement (n=432) 76% 17% 7% Created a written financial plan for retirement (n=322) Calculated the best time to begin collecting Social Security benefits (n=637) Calculated a target for how much money you need in order to afford retirement (n=554) 54% 63% 83% 29% 23% 14% 13% 4% 17% Made efforts to increase savings (n=432) 32% 36% 31% Used financial/investment guidance provided by your employers retirement plan provider (n=241) 53% 32% 16% Rebalanced stocks and bonds (n=426) 74% 20% 5% Worked with a financial advisor (n=496) Increased contributions to an employer-sponsored retirement savings plan [e.g., 40l(k)] (n=228) Estimated medical and dental expenses (including the cost of Medicare) (n=500) 25% 45% 82% 45% 26% 29% 31% 13% 5% Developed a new hobby (n=193) 83% 9% 7% Downsized to a smaller house (n=154) Retiring in 5-10 92% years (n=305); 7% (n=303); (n=905) Made house or apartment renovations (n=298) 83% 14% Made plans to establish a new career (n=58) Made new friends/reconnected with old friends (n=411) Focused on relationship with spouse/partner (n=274) Researched a new place to live (n=266) 51% 79% who took these steps 14% prior to 7% retiring often did so in 83% the 5 years leading up to their 11% retirement 6% date. Approximately 17% half of retirees 32% who took steps, such as used financial guidance provided by employers 80% 13% 7% retirement plan provider and worked with a financial advisor, started 6+ years before retiring. Nearly one-third of retirees who increased contributions to an employer-sponsored retirement savings plan [e.g., 401(k)] did so 11 or more years before retiring. 31

Created a budget for retirement (n=432) Created a written financial plan for retirement (n=322) Timing of steps to prepare for retirement 63% (continued) 23% Calculated the best time to begin collecting Social Security benefits (n=637) Calculated a target for how much money you need in order to afford retirement (n=554) Made efforts to increase savings (n=432) Used financial/investment guidance provided by your employers retirement plan provider (n=241) Rebalanced stocks and bonds (n=426) : Approximately when did you start taking each of these steps? Worked with a financial advisor (n=496) Increased contributions to an employer-sponsored Time before retirement savings plan [e.g., 40l(k)] (n=228) 25% retirement 45% 31% Estimated medical and dental expenses n Less than 5 years n 5 to 10 years n 11 or more years (including the cost of Medicare) (n=500) 82% 13% Developed a new hobby (n=193) 32% 54% 53% 76% 17% 7% 45% 83% 74% 83% 36% 26% 29% 32% 31% 20% 29% 9% 13% 14% 17% 16% 4% 5% 5% 7% Downsized to a smaller house (n=154) 92% 7% Made house or apartment renovations (n=298) 83% 14% Made plans to establish a new career (n=58) 79% 14% 7% Made new friends/reconnected with old friends (n=411) 83% 11% 6% Focused on relationship with spouse/partner (n=274) 51% 17% 32% Researched a new place to live (n=266) 80% 13% 7% (n=305); (n=303); (n=905) Of retirees who took steps such as developed a new hobby, downsized to a smaller house, made house/ apartment renovations, or made plans to establish a new career, the majority took these steps when their retirement date was within the next 5 years. The majority of retirees, who made it a point to make new friends/reconnect with old friends and those who researched a new place to live, did so within 5 years of retirement. Of retirees that focused on the relationship with their spouse/partner to prepare for retirement, the majority took this step within 5 years of retirement. 32

Value of each retirement step Among the steps one can take to prepare for retirement, how valuable do you believe each one is? (% valuable) Calculating a target for money needed in order to afford to retire Making efforts to increase savings Calculating the best time to begin collecting Social Security benefits Focusing on relationship with spouse/partner Increasing contributions to an employer-sponsored retirement savings plan Creating a budget for retirement Estimating medical and dental expenses in retirement Rebalancing stocks and bonds Creating a written financial plan for retirement Working with a financial advisor Using financial guidance provided by employers retirement plan provider Making new friends/reconnecting with old friends Researching a new place to live Downsizing to a smaller house Making house or apartment renovations Developing a new hobby Making plans to establish a new career 14% 11% 34% 25% 32% 21% 30% 22% 26% 26% 48% 41% 40% 42% 64% 53% 61% 57% 55% 59% 83% 80% 81% 74% 80% 76% 76% 68% 75% 71% 73% 68% 72% 70% In general, retirees and pre-retirees have similar beliefs about the value of each of these steps in preparing for retirement. Eight in 10 pre-retirees and retirees believe it is valuable to calculate a target for how much money is needed in order to afford to retire. Pre- (n=912); (n=905) 33

How the happiest retirees prepare 83% 80% Percentage who did preparation 81% n Happy retirees (n=652) n Less happy retirees (n=253) Difference Calculating the best time to begin collecting Social Security benefits 73% +9 64% Calculating a target for money needed in order to afford to retire 65% +12 53% Estimating medical and dental expenses in retirement 60% +17 43% Worked with a financial advisor 58% +10 48% Created a budget for retirement 51% +11 40% Made efforts to increase savings 51% +11 40% Rebalanced stocks and bonds 50% +9 41% Making new friends/reconnected with old friends 50% +18 32% Focused on relationship with spouse or partner (n=496; n=176) 44% +12 32% Creating a written financial plan for retirement 39% +11 28% Using financial guidance provided by plan provider (n=507; n=189) 37% +8 29% Developing a new hobby 23% +7 16% The happiest retirees make many social and financial preparations prior to retiring. The happiest retirees take key steps such as making new friends/reconnecting with old friends, focusing on the relationship with spouse/partner, calculating a target for the money needed to retire, and estimating medical and dental expenses in retirement. 34