SOA Aging and Retirement Research - Perspectives Across the Generations

1. SOA Aging and Retirement Research - Perspectives Across the Generations Chicago Actuarial Association Meeting – March 26, 2019

2. Agenda • Background on SOA Aging and Retirement Strategic Research Program • Overview of Generational Survey Findings

3. SOA Strategic Plan (excerpt)

4. Five Strategic Research Programs • Aging and Retirement – Launched Oct 2018 • Actuarial Innovation and Technology – Launching April 2019 • Mortality and Longevity • Health Care Cost Trends • Catastrophe and Climate

5. Program Umbrella Aging and Retirement Spans extensive SOA research on: • Retirement Plans • Post Retirement Needs and Risks, • Retirement Plan Mortality Tables, • Long Term Care, • Living to 100 Symposiums • Other aging/retirement issues

6. Aging and Retirement Program Launch Aging and Retirement • Program Launch highlighted by generational study/media attention • Created a Fact Sheet series on previous studies to further highlight findings for different audiences • New program research completing regularly

7. Launch Survey: Financial Perspectives on Aging and Retirement Across the Generations October 2018

8. SOA Research on Post Retirement Risks Long term goal of this research: Understand and improve post-retirement risk management Many lack adequate assets to maintain living standard in retirement Decisions will require trade-offs on living standards Consider multiple stakeholders Formed Committee on Post Retirement Needs and Risks to oversee this work in 2000

9. SOA Retirement Risk Surveys Started biennial Retirement Risk Survey series in 2001. 10th survey will be in 2019. Looks at workers nearing retirement (pre-retirees) and retirees understanding of post-retirement risks and their concerns Consistent findings – Top concerns for both pre-retirees and retirees are: keeping value of savings and investments up with inflation; paying for adequate healthcare; and paying for long term care or stay in a nursing home Periodic focus group research supplements the survey What about generations?

10. SOA Generational survey – Motivation • Prior work primarily focused on near-retirees and retirees (45-80) • Generational survey builds on the prior years’ work • Goal: Understand differences and similarities by generation • Goal: Help improve security and help stakeholders improve their offerings • Goal: Defining and understanding how financial fragility compares across generations

11. Definition of generations • Initial methodological decision – defining and choosing generations • Different sources use varying definitions of Generations • For purposes of survey defined by ages in 2018: • Millennials (ages 20-38), (birthyears: 1980 -1998) • Gen Xers (ages 39-53), (birthyears: 1965-1979) • Late Boomers (ages 54-63), (birthyears: 1955-1964) • Early Boomers (ages 64-72), (birthyears: 1946-1954) • Part of Silent Generation (ages 73-83), (birthyears:1935-1945) • Early and Late Boomers separated: different opportunities through their careers, etc.

12. Methodology • Online survey (conducted July 17 - July 27, 2018) • Used Research Now panel • Conducted by Greenwald & Associates for SOA • Sampled 2001 individuals, about 400 per generation • Demographics representative of US population • SOA Review Group (Carol Bogosian, Cindy Levering, Anna Rappaport and Andrea Sellars)

13. Generational inherent differences • Different characteristics: size, education level, labor force characteristics • Born and enter adulthood in different historic, technological and economic circumstances

14. Current Environment and Context • Major shift: DB to DC • Financial literacy challenges • Many Americans: limited access to unbiased financial advice except linked to employee benefits • Big increases over time: college costs, student loans, and housing • Demographic trends: life spans, family structures, number of children

15. Key Results and Areas of Focus

16. A Selection of Survey Areas of Focus • Financial Behaviors and Priorities • Retirement Savings and Planning • Financial Fragility

17. Financial Behaviors and Priorities

18. All generations feel similarly optimistic. Older generations more in control/satisfied What are your feelings when you are reviewing your financial situation and looking ahead for planning purpose? Please select as many words below that describe how you feel.Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400)

19. Millennials are more likely to be overwhelmed by their financial situation than older generations.

20. Most say affording everyday bills is a priority, Millennials more than others. Saving for retirement is most important to Gen Xers and Late Boomers. Thinking of your current financial situation, how much of a priority is each of the following? Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400)

21. Saving for a home and paying off student loans are higher priorities for Millennials. Thinking of your current financial situation, how much of a priority is each of the following? Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400)

22. Summary of Other Key Results Planning for their financial situation varies by generation • Half of Millennials and about 40% of Gen X’ers plan at most 2 to 3 months ahead. • About 25% of the other generations plan at most 2 to 3 months • Only 17% of Millennials plan for 10 years or more and increases by generational age up through 36% for the Silents.

23. Summary of General Takeaways All generations – General Takeaways • See themselves more as savers than spenders, but older generations say so more • See themselves as thrifty, but older generations say so more • Most individuals consider themselves planners • About half of each generation enjoy managing their finances • Few consider themselves investment pros

24. Retirement Savings & Planning

25. Roughly two in three Boomers, those closest to retirement, feel on track in planning for a financially secure retirement. Please indicate the extent to which you agree or disagree with the following statements. Millennials (n=398); Gen X (n=399); Late Boomers (n=403); Early Boomers (n=401); Silent (n=400)

26. Younger generations are more likely to work for an employer that offers a retirement savings plan. Does your employer offer a retirement saving plan such as a 401(k) or 403(b) plan, profit sharing plan or other type of retirement savings plan? [IF EMPLOYED] Millennials (n=280); Gen X (n=285); Late Boomers (n=199); Early Boomers (n=81); Silent (n=28*) *Caution: Low n-size (11-49)

27. Concern over Inflation in Retirement How concerned are you about each of the following in retirement? [IF RETIRED OR RETIRED FROM PREVIOUS CAREER] Late Boomers (n=175); Early Boomers (n=341); Silent (n=366)

28. Millennials, Gen Xers, and Late Boomers anticipate retiring at age 65. Median Expected Retirement Age Millennials: 65 Gen X: 65 Late Boomers: 65 At what age do you expect to retire or begin to retire from your primary occupation? [IF WORKING AND NOT RETIED] Millennials (n=304); Gen X (n=308); Late Boomers (n=191)

29. Early Boomers and the Silent Generation most often retire between the ages of 60 and 64. Median Retirement Age Early Boomers: 62 Silent: 62 How old were you when you retired or began to retire from your primary occupation? [IF RETIRED OR RETIRED FROM PREVIOUS CAREER] Late Boomers (n=175); Early Boomers (n=341); Silent (n=366)

30. Financial Fragility

31. Financial Fragility Index Methodology The financial fragility index is defined by assigning and weighting scores to the following characteristics: • Feelings about financial situation and planning • Level of Confidence in making financial decisions • How respondents would cover unexpected expenses • Feelings about being on track for a secure retirement Based on score, respondent assigned to one of 3 levels of fragility: Low, Moderate, High

32. Financial Fragility by Demographic Groups - Generations Age

33. Financial Fragility by Demographic Groups - Gender

34. Financial Fragility by Demographic Groups – Other • By marital status: Married least likely to have high fragility (15%). • By employment status: Retired (11%) and Employed (20%) much less likely to have high financial fragility than Unemployed (43%) and Disabled (46%) • High Financial Fragility decreases with greater education, income and savings.

35. Financial Planning Time Frame by Financial Fragility When you are reviewing your financial situation and looking ahead for planning purposes, what time frame do you tend to consider? Low Fragility (n=1,150); Moderate Fragility (n=484); High Fragility (n=367)

36. Current Debt Obligations by Financial Fragility What types of debt do you currently have? Low Fragility (n=1,150); Moderate Fragility (n=484); High Fragility (n=367)

37. Report Suggestions on Financial Fragility • Useful to recognize differences in planning behavior by fragility level • Financial wellness and education programs should understand the range of differences among financial fragility levels. • Avoid high-cost debt and know how to best use debt • Maintaining an emergency fund can an important tool • Small steps needed to move from shorter to longer range thinking.

38. Another interesting finding – Millennials • Special Report focused on Millennials • All generations believe Millennials have it the hardest.

39. Media Coverage • Forbes • Money Magazine • USA Today • Barron’s • Many local newspapers • Trade publications

40. Survey Reports • Full report and tabulated questionnaire: • Financial Perspectives on Aging and Retirement Across the Generations • Posted Questionnaire and Results • Six brief reports on specific topics: • Difficulty in Gaining Financial Security for Millennials • Financial Priorities, Behaviors and Influence on Retirement • Family Obligations Across Generations • Financial Risk Concerns and Management Across Generations • Financial Fragility Across the Generations • Family Obligations Across the Generations

41. research@soa.org @SOActuaries