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.

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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