MetLife Retirement Readiness Index Study Indicates Pre-Retirees and Retirees Lag on Planning: A Smooth Transition, Successful Retirement at Stake

The newly released "MetLife Retirement Readiness Index: Are Americans Prepared for the Transition?” indicates that pre-retirees can learn valuable lessons from retirees on making retirement decisions and completing a series of 15 specific career tasks to help smooth the transition to retirement. The study is accompanied by a "Retirement Readiness Workbook” that is available free to the public to help them assess their own preparation.

The study respondents were asked to determine their progress on issues like: 1) when they’ll retire and, upon retirement, whether or not they’ll transition to part-time work and what they’ll do, 2) how they’ll balance leisure and work in retirement, 3) how retirement will affect their relationships, 4) how much money/income they’ll need and how much they’ll have, and 5) how much contingency planning they’ve done.

The study revealed that those with fewer than five years until retirement have higher scores than those further from retirement and that men have completed more retirement planning activities than women. Those who have already retired scored much higher than pre-retirees in all categories.

"While many seek the help of experts, retirement planning is often a do-it-yourself endeavor and many pre-retirees admit they have quite a way to go,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. "Deciding to retire without having substantially completed specific tasks can put a successful transition and satisfying retirement at risk. This type of planning can be complex and lengthy, so it’s important that people start preparing as early as possible, even as early as their 20’s, to ensure a more fulfilling and enjoyable retirement.

"Only a third of people who say they would like to do some type of work when they retire have explored alternate careers, and still fewer, 10%, have focused on their employment prospects. A third have not created a contingency plan in case of a financial setback. The financial risks surrounding retirement have increased dramatically because of longevity, low interest rates, the volatile stock market, business performance and employment conditions, among other issues, and everyone should further consider the fact that illness and other unanticipated issues can have an impact on any plans,” said Dr. Timmermann.

Key findings of the study include:

• Most people wait until the final few years prior to retirement to make significant decisions. Older workers, age 60–64, those within five years of retirement, and retirees have put significant effort into determining what’s necessary to receive corporate and government retirement benefits.
• 46% of respondents who are still working will delay their planned retirement age. However, of those who have already retired, 64% report they retired earlier than expected, while only 33% retired when planned. Only 3% report they retired later than expected.
• Males are much more likely than females to have thought about whether full-time retirement is financially feasible and how much they are willing to work in retirement. They are also more likely than females to have determined whether their retirement plans are adequate, identified what external factors could affect their retirement, and determined the steps necessary to receive the benefits due them.
• 52% of respondents are behind in their savings goals; 25% say they are significantly behind. Only 28% are confident they are on track or have reached their goals.
• Only a third (35%) of the 45- to 49-year-olds feel prepared for retirement, while 64% of the 60- to 64-year-olds and 81% of 65- to 70-year-olds feel prepared.
• 46% of respondents have considered the importance of relationships with co-workers in making the decision to retire and 45% have considered how various aspects of their retirement might positively or negatively affect their relationships with family and friends.

The MetLife Mature Market Institute notes that completion of the retirement tasks does not imply that one should retire or not, but that completion does serve as a benchmark to help pre-retirees prepare for the transition to retirement, using a holistic approach.

Methodology

Respondents rated their level of completion of 15 validated statement pairs related to completion of identified retirement planning activities in the areas of work, leisure and activity, income and benefits, relationships, and planning. Responses were recorded on a four-point scale from 1 (not at all completed) to 4 (fully completed). An additional set of questions measured current attitudes and retirement status. Index scores were calculated using the mean rating for each of the statement pairs as a benchmark. An Index score of 100 indicated the score was equal to the statement pair mean; below 100 was below the mean, and above 100 was above the mean. 1,048 respondents age 45–70 (80% not retired and 20% retired) completed the online questionnaire using Harris Interactive’s QuickScreener^SM service in December 2009. Responses were weighted to be representative of the U.S. population.

The MetLife Mature Market Institute®

Established in 1997, the Mature Market Institute (MMI) is MetLife's research organization and a recognized thought leader on the multi-dimensional and multi-generational issues of aging and longevity. MMI's groundbreaking research, gerontology expertise, national partnerships, and educational materials work to expand the knowledge and choices for those in, approaching, or caring for those in the mature market.

MMI supports MetLife's long-standing commitment to identifying emerging issues and innovative solutions for the challenges of life. MetLife, Inc. (NYSE: MET), through its subsidiaries and affiliates, is a leading provider of insurance, employee benefits and financial services with operations throughout the United States and the Latin American, Europe and Asia Pacific regions.

For more information about the MMI, please visit: www.maturemarketinstitute.com.

"MetLife Retirement Readiness Index: Are Americans Prepared for the Transition?” and the accompanying "Retirement Readiness Workbook” can be downloaded from www.maturemarketinstitute.com. They can also be ordered by e-mailing maturemarketinstitute@metlife.com or by writing to: MetLife Mature Market Institute, 57 Greens Farms Road, Westport, CT 06880.