Benefits March 18, 2008

Pre-retirees Plan to Work Longer to Prepare for Retirement Costs

March 18, 2008 (PLANSPONSOR.com) - Unexpected health care costs and inflation are top concerns for pre-retirees and retirees, according to a retirement survey recently commissioned by MFS Investment Management.
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In a press release, MFS said pre-retirees and retirees alike view unexpected health care expenses (70% and 60%, respectively) and inflation (64% and 50%, respectively) in general as top concerns regarding retirement savings. In line with these concerns, according to the release, pre-retirees expect to work on average a full decade longer than those already in retirement, with nearly half expecting to work early in retirement and one in three working throughout retirement to bolster their savings.

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According to the survey, existing retirees retired at an average age of 58, with 40% relying on their pension as the primary source of income. Pre-retirees reported expecting to work on average a full ten years (age 68) later than current retirees, with roughly the same number relying on pensions (23%) as on workplace retirement plans (25%). While approximately one-quarter (24%) of today’s retirees continue to work or worked early in retirement, nearly half (47%) of pre-retirees expect to continue to work in the early phase of retirement. Of those surveyed, 32% of pre-retirees plan to work throughout their entire retirement as well.

Nearly half (46%) of pre-retirees and more than one-quarter (28%) of retirees surveyed reported that neither they nor their adviser have developed a formal retirement income plan. Survey results show that once a conversation about retirement income planning took place, both pre-retirees and retirees took action in the following ways:

• Half changed investment allocations (53% pre-retirees, 52% retirees);

• One-third (32%) of pre-retirees increased their savings; and

• About three in ten consolidated assets to one advisor (27% pre-retirees, 30% retirees).

The MFS investor survey was conducted in September 2007, with responses from 204 pre-retirees and 229 retirees, between the age of 55 and 75, who were either working full-time or retired, used a paid financial adviser, and reported at least $100,000 in investable assets (excluding retirement and real estate).

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