Successful Retirement - Healthy Aging and Financial Security

United States Country Report

Successful Retirement Healthy Aging and Financial Security

The Aegon Retirement Readiness Survey 2017

Contents

Introduction 3

Key Findings4

The 2017 Survey

Part 1 The state of retirement readiness and aspirations for retirement

6

Part 2 Financial security9

Part 3 Healthy aging13

Part 4 Making the link between health and retirement preparations

16

Part 5 Successful retirement ? Healthy aging and financial security

17

Part 6 The important role of employers 18

Recommendations21

Note: Percentages are shown to zero decimal places. Rounding percentages to the nearest whole number may result in the percentages in some charts summing to slightly under or slightly over 100%.

2 | The Aegon Retirement Readiness Survey 2017

Introduction

Welcome to the sixth annual Aegon Retirement Readiness Report. The Aegon Center for Longevity and Retirement, together with nonprofits, Transamerica Center for Retirement Studies and Mongeral Aegon Instituto de Longevidade, is proud to present, "Successful Retirement ? Healthy Aging and Financial Security" the Aegon Retirement Readiness Survey 2017 US country report. This report, while specific to US, is based on research conducted in 15 countries spanning Europe, the Americas, Asia and Australia.

This report focuses on the responses of 1,000 people in the US including 900 workers and 100 retirees. The research evaluates the retirement readiness of American workers as well as their retirement aspirations. It examines what steps they can put in place to best save for retirement and the importance of maintaining good health in realizing retirement aspirations. It further looks at the important role employers play in helping workers prepare for the future and provides recommendations for individuals, employers and the government.

Countries around the world are facing unprecedented change. The concept of retirement is evolving; life expectancy continues to increase; pressures on governments and pension systems are intensifying; and greater responsibility is shifting to the individual. These factors present both new challenges and pressures, as well as opportunities that this report explores. Wealth has and will always play an important role in shaping the retirement outlook for workers once they decide to stop working. However, health is playing an ever more important role both in terms of how workers are able to build up the funds they need to for a comfortable retirement and in how able they are to enjoy their ever-increasing years in retirement and manage healthcarerelated and other costs during those years. Retirement is no longer seen as a period of decline but as a period of activity. Many plan to continue working throughout retirement, or carrying out other leisure activities such as traveling or pursuing new hobbies. Whatever retirement has in store for today's workers, it is likely that it will be more active, and longer-lasting than their grandparents and even parents could have imagined.

The Aegon Retirement Readiness Survey 2017 finds that American workers score second highest among the 15 countries surveyed when it comes to retirement preparedness. American workers also take their health seriously, with many establishing healthy habits today in order to safeguard their future health in older age. While American workers are doing well compared to their peers in other countries, there is more that can be done to make sure that they are retirement ready.

The Aegon Retirement Readiness Survey 2017 | 3

Key Findings

? The US ranks second in the 2017 Aegon Retirement Readiness Index. With a score of 6.9 out of 10, US workers have a medium level of retirement readiness. Only India with a score of 7.6 is more retirement ready than the US.

a comfortable retirement (74 percent are confident compared to just 39 percent among those with a nonwritten retirement strategy and 14 percent of those with no retirement strategy at all).

? American workers and retirees expect their government to fund a sizable portion of their own income in retirement. Americans will still depend on government funding, estimating that it will provide 42 percent of their income in retirement. But the remainder of their expected retirement income will be split evenly between the individual's personal savings and employer's workplace retirement plans.

? Health is a key factor in securing a comfortable retirement. Almost nine-in-ten (87 percent) Americans consider themselves to be in good or excellent health compared to 68 percent globally. Americans are very positive about their health. Fifty-nine percent of those aged 25-34 consider themselves to in excellent health. This gradually falls to 11 percent among those aged 65 and above.

? Almost three-in-five American workers are habitual

? American workers in excellent health are better

savers compared with just two-in-five globally.

positioned to achieve retirement readiness.

Habitual savers are defined as those who say they always

American workers in excellent health are more aware of

make sure they are saving for retirement.

the need to plan financially for retirement (88 percent

compared to 82 percent among those in good health and

? Habitual savers enjoy a brighter retirement outlook.

68 percent among those in fair health). They are more likely

Habitual savers are much more likely to be aware of

to be saving habitually (68 percent compared to 53 percent

the need to plan financially for retirement (89 percent

among those in good health and 41 percent among those

compared to 79 percent among occasional savers), they

in fair health) and they are more likely to be confident that

are much more likely to know the value of their personal

they will achieve a comfortable retirement (70 percent

savings in retirement (80 percent compared to 57 percent

compared to 33 percent among those in good health and

among occasional savers) and as a result they are more

19 percent among those in fair health). American workers

confident that they will enjoy a comfortable retirement (56

in excellent health achieve a much higher ARRI score (8.0

percent compared to 38 percent among occasional savers).

compared to 6.6 among those in good health and 5.8

among those in fair health).

? Almost one-third of American workers have a retirement

strategy in writing.

? American workers who consider themselves to be

Thirty-two percent of American workers are strategists

in excellent health expect to retire at age 60.

who have a written strategy in place for retirement. This

American workers in excellent health expect to retire at

compares to just 14 percent globally. Two-in-five (41

60 and live for 20 years in retirement. American workers

percent) American workers have a non-written retirement

in good health expect to retire at 66 and spend 20 years in

strategy, while a quarter have no retirement strategy at all.

retirement. American workers in fair health expect to retire

Women and those with low incomes are among those most

at 67 but spend just 15 years in retirement.

likely not to have a written retirement strategy. Positively,

the young (age 25 to 34) are among the most likely to be ? Yet, health in older age is of concern to nine-in-ten

strategists (60 percent).

Americans.

For half of Americans, health in older age is a primary

? American strategists are well-positioned to achieve

concern (i.e., it is something they consider regularly and are

retirement readiness. Almost all strategists are aware

actively working to prolong). For two-in-five Americans, it

of the need to plan financially for retirement (93 percent)

is a minor concern (i.e., something they sometimes consider

compared to 87 percent among those with a non-written

however they would prioritize other things, like having

retirement strategy and 64 percent among those with

enough income to live on when they retire).

no retirement strategy at all. Four-in-five (81 percent)

strategists are saving habitually for retirement compared

to just 61 percent of those with a non-written retirement

strategy and 21 percent of those with no retirement

strategy at all.

Strategists are more likely to feel confident about achieving

4 | The Aegon Retirement Readiness Survey 2017

? Financial plans typically don't incorporate contingencies for unforeseen circumstances. Fewer half (47 percent) of Americans have backup plans if they become unable to work and have to leave work earlier than planned. Among those who do have a backup plan, most are reliant on plans that have not been formally designed for such a purpose, including savings, relying on a partner working, or early withdrawals from retirement accounts.

? Fewer than one-third (30 percent) of American workers expect to stop working immediately upon reaching retirement age. A third (33 percent) expect to change the way they work by working part-time or taking on temporary contracts before eventually giving up work altogether. One-in-five (18 percent) also expect to change the way they work but to continue working in some reduced capacity throughout retirement. Eleven percent expect to continue working in the same capacity throughout retirement.

? Two-thirds of American workers say their employers offer the ability to work past normal retirement age. However, only 35 percent say they are offered phased retirement or other employer programs providing for a transition into retirement.

? Nine-in-ten American workers would be interested in one or more workplace health- or wellness-related perks. Healthy food or snack options (45 percent) and exercise programs (42 percent) are the two most frequently cited among American workers.

The Aegon Retirement Readiness Survey 2017 | 5

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