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The Aegon Retirement Readiness Survey 2017

Successful Retirement -Healthy Aging and Financial Security

United States Country Report

2 | The Aegon Retirement Readiness Survey 2017

ContentsIntroduction 3

Key Findings 4

The 2017 Survey

Part 1 The state of retirement readiness and aspirations for retirement 6

Part 2 Financial security 9

Part 3 Healthy aging 13

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

Recommendations 21

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%.

The Aegon Retirement Readiness Survey 2017 | 3

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.

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 healthcare-related 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.

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.

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.


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.

• 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.

• Almost three-in-five American workers are habitual savers compared with just two-in-five globally. Habitual savers are defined as those who say they always make sure they are saving for retirement.

• Habitual savers enjoy a brighter retirement outlook. Habitual savers are much more likely to be aware of the need to plan financially for retirement (89 percent compared to 79 percent among occasional savers), they are much more likely to know the value of their personal savings in retirement (80 percent compared to 57 percent among occasional savers) and as a result they are more confident that they will enjoy a comfortable retirement (56 percent compared to 38 percent among occasional savers).

• Almost one-third of American workers have a retirement strategy in writing. Thirty-two percent of American workers are strategists who have a written strategy in place for retirement. This compares to just 14 percent globally. Two-in-five (41 percent) American workers have a non-written retirement strategy, while a quarter have no retirement strategy at all. Women and those with low incomes are among those most likely not to have a written retirement strategy. Positively, the young (age 25 to 34) are among the most likely to be strategists (60 percent).

• American strategists are well-positioned to achieve retirement readiness. Almost all strategists are aware of the need to plan financially for retirement (93 percent) compared to 87 percent among those with a non-written retirement strategy and 64 percent among those with 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

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

• 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.

• American workers in excellent health are better positioned to achieve retirement readiness. American workers in excellent health are more aware of the need to plan financially for retirement (88 percent compared to 82 percent among those in good health and 68 percent among those in fair health). They are more likely to be saving habitually (68 percent compared to 53 percent among those in good health and 41 percent among those in fair health) and they are more likely to be confident that they will achieve a comfortable retirement (70 percent compared to 33 percent among those in good health and 19 percent among those in fair health). American workers in excellent health achieve a much higher ARRI score (8.0 compared to 6.6 among those in good health and 5.8 among those in fair health).

• American workers who consider themselves to be in excellent health expect to retire at age 60. American workers in excellent health expect to retire at 60 and live for 20 years in retirement. American workers in good health expect to retire at 66 and spend 20 years in retirement. American workers in fair health expect to retire at 67 but spend just 15 years in retirement.

• Yet, health in older age is of concern to nine-in-ten Americans. For half of Americans, health in older age is a primary concern (i.e., it is something they consider regularly and are actively working to prolong). For two-in-five Americans, it is a minor concern (i.e., something they sometimes consider however they would prioritize other things, like having enough income to live on when they retire).


• 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.


Part 1: The state of retirement readiness and aspirations for retirement The Aegon Retirement Readiness Index (ARRI) was developed to measure levels of retirement readiness across the participating countries and the ARRI methodology remains at the heart of the study. The ARRI provides an annual score based on responses to six separate questions: three broadly attitudinal (questions 1, 2, and 3) and three broadly behavioral (questions 4, 5, and 6). These questions are illustrated in the diagram below.

The ARRI ranks retirement readiness on a scale from 0 to 10. A high index score is considered to be between 8 and 10, a medium score between 6 and 7.9 out of 10, and a low score being less than 6. Achieving a score of 6.9 this year, the US has the second highest score. Of the fifteen countries surveyed India ranks first, with a score of 7.6.

6

25

34

Personal responsibilityTo what extent do you feel personally responsible for

making sure that you will have sufficient income

in retirement?

Income replacementDo you think you will achieve the level of income you

think you will need in retirement?

Financial understandingHow able are you to understand financial matters

when it comes to planning for your retirement?

Retirement planningThinking about your own personal retirement planning

process, how well developed would you say that your

personal retirement plans currently are?

Level of awarenessHow would you rate your level of awareness

on the need to plan financially for your

retirement?

Financial preparednessThinking about how much you are putting

aside to fund your retirement, are you saving

enough?

1

What factors shape the ARRI score?


With responsibility for funding retirement continuing to shift from employers and the government to the shoulders of the American people, the performance of DC plans will naturally be at the forefront, as it influences workers’ retirement outlook. In the US, where 401(k) plans and equity investing are more prevalent, the ARRI score in 2017 improved by 0.27 (compared to a global increase of 0.11). This coincides with a sustained period of strong performance in the US stock market where share prices have almost tripled since 2009. For those Americans with DC plans, this may translate into a growing optimism about their future retirement.

Chart 1: US ranks second in the 2017 Aegon Retirement Readiness Index

Chart 2: Performance of the Dow Jones Industrial Average since 2007¹

2016

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2008 2010 2012 2014 2016

1 Trading Economics, “Dow Jones Industrial 10-Year Average”, Accessed 26 April 2017

https://tradingeconomics.com/united-states/stock-market


In 2013, 21 percent of US workers were confident that they would achieve a comfortable retirement. This doubled over the following 5 years to reach 43 percent in 2017. Men (56 percent), those aged 25-34 (72 percent) and 35-44 (69 percent), and those with high personal incomes (72 percent) are among the demographic groups that are most confident about reaching a comfortable retirement. Conversely, those who expect over half of their retirement income to come from the government are among the least confident (26 percent confident). Those expecting over half of their retirement income to come from employer plans, and those expecting over half of their retirement income to come from their own savings and investments are much more confident about achieving a comfortable retirement (both 45 percent confident). Improved retirement confidence could be attributed to self-reliance and people feeling more in control of their retirement prospects.

The retirement aspirations of AmericansRetirement is seen as a period of leisure and a time set aside for enjoyment. More than half of Americans (52 percent) report that traveling is an aspiration they hold for their retirement and two-in-five (39 percent) will use their time to pursue new hobbies. Spending time with friends and family remains a key aspiration (53 percent), particularly among women (55 percent compared to 51 percent of men workers). A noteworthy 37 percent of Americans cite some form of business or paid work as a retirement aspiration.

Chart 3: Retirement aspirations among Americans

Don't know

None of the above

Living abroad

Studying

Continue working, but in another field

Starting a business

Continue working in the same field

Volunteer work

Pursuing new hobbies

Traveling

Spending more time with friends and family 53%

52%

39%

31%

19%

17%

13%

12%

11%

NET: Business/paid work 37%

5%

2%


It is important for workers to develop good saving habits at an early age. The survey identified triggers that get people started on the savings journey which can broadly be broken down into two categories. First, a nudge from employers can provide momentum for workers to take that first step toward habitual saving. Second, a change in life stage can provide the catalyst. For Americans, the survey found that employment-related triggers were more powerful than life-stage-related triggers. For example, half (51 percent) of American workers already saving for or intending to save for retirement were prompted by their employer (this compares with 41 percent globally). Employer retirement plans with matching contributions acted as the key employer prompt for 24 percent of American workers compared to 12 percent of workers globally. In contrast, turning a certain age provides the spark for a quarter of American workers starting to save for retirement (26 percent compared to 31 percent globally). Whatever inspires workers into saving, it is important that they form a robust saving habit over many years, which not only provides for increased savings, but also to extended exposure to the stock markets.

Chart 4: Expected proportion of retirement income by source

Chart 5 : What prompted retirement saving among savers and intenders

Part 2: Financial securityIn order to make their retirement aspirations a reality, workers need to accumulate sufficient retirement resources during their working lives. Typically, this is done through three broad sources: (1) the government (through Social Security and other government benefits), (2) employers (and previous employers) through workplace retirement plans, and (3) workers’ own savings and investments (including IRAs). However, the sustainability of retirement systems around the world, including that of the United States, is increasingly coming under question. The increased focus on long-term care in retirement adds a further dimension, placing additional strain on retirement funds. This means not only generating a retirement income but also having plans in place to deal with age-related healthcare and long-term care are necessary.

Faced with these sustainability challenges, Americans have similar expectations to the global average as to how their retirement will be funded. Americans expect the greatest portion of their retirement income to be funded by the government (42 percent). They then expect an equal split between their own savings and investments (29 percent) and employer plans (29 percent).

I got separated or divorced

I got married

I started a family

I turned a certain age

NET: Life stage reasons

I started a new (not first) job

I started my first job

Automatically enrolled into employer's retirement plan

Employer started paying into a retirement plan for me

Employer o�ered matching contribution retirement plans

NET: Employment reasons

Global

United States 8%5%

10%15%

26%16%

31%44%

47%

11%9%

15%11%

14%15%

22%17%

24%

41%51%

12%

13%

United States

GlobalYour own savings &Investments, including IRAs

Your employer/previous employers(through workplace retirement plans)

The government (through Social Security& other government benefits)

46% 24% 30%

42% 29% 29%


Habitualsavers

Occasional savers

Pastsavers

Aspiringsavers

Non-savers

Very/somewhat aware of the need to plan financially for retirement

89% 79% 76% 58% *

Strategists - Have a written plan for retirement 45% 21% 10% 5% *

Strongly/somewhat agree that they have a very good idea of the total value of all personal savings for retirement

80% 57% 59% N/A N/A

Extremely/very confident they will have a comfortable retirement

56% 38% 23% 12% *

Those who make saving a habit are far more likely to enjoy a brighter retirement outlook than those who do not. Eighty-nine percent of habitual savers are aware of the need to plan financially for their retirement, this compares to 79 percent of those who save on an occasional basis and 58 percent of those who are aspiring to save. Forty-five percent of American habitual savers are strategists – those identified in the survey as having committed their retirement strategy to paper. Four-in-five American habitual savers have a good idea of the total value of their personal savings for retirement, compared to just 57 percent among those who only save on an occasional basis. Having a closer more regular link to their savings means that they are more likely to know the total value held. Over half of American habitual savers (56 percent) are confident that they will achieve a comfortable retirement compared to just 38 percent among occasional savers and only 23 percent of past savers.

Chart 6: Approach to saving for retirement

Chart 7: Habitual savers in the spotlight

HABITUAL SAVERS - I always makesure that I am saving for retirement

OCCASSIONAL SAVERS - I only savefor retirement occassionally fromtime to time

PAST SAVERS - I am not saving forretirement now, although I havein the past

ASPIRING SAVERS - I am not savingfor retirement though I do intend to

NON-SAVERS - I have never savedfor retirement and don’t intend to

UnitedStates

Global

United StatesGlobal

57%

19%

12%

8%4%

39%

24%

12%

19%

6%

The best way for workers to achieve a secure retirement is to make sure that they are always saving for retirement, those who do are identified as habitual savers in this research. Almost three-in-five (57 percent) American workers are habitual savers. Men (63 percent), those aged 25-34 (69 percent) and those with a high personal income (76 percent) tend to be among the most likely to be saving habitually for their retirement.

* very low base size


Almost three-quarters (73 percent) of American workers have a retirement strategy compared to just 58 percent globally. A third of American workers (32 percent) can be defined as strategists – they have a written strategy for retirement compared to just 14 percent globally. Future retirees should consider what they want for their future, how much it will cost, how they will pay for it and – most importantly – track their progress against their aims, which having and maintaining a written strategy enables. Saving for retirement is a marathon rather than a sprint, and it requires commitment and a sustained level of engagement. Men (41 percent), those in upper level managerial work (60 percent) and intermediate level managerial work (32 percent), and those with a high personal income (55 percent) are among the most likely groups to be strategists. Only 23 percent of women are strategists. Reassuringly, 60 percent of 25-34 year olds are strategists. More could be done to help those more vulnerable to not achieving retirement readiness to formulate a plan in writing.

Strategists – those who commit their retirement strategy to paper – are better prepared for retirement across a range of measures, including being aware of the need to plan financially for their retirement (93 percent) compared with those with a non-written retirement strategy (87 percent) or those with no retirement strategy at all (64 percent). Strategists are also more likely to have a good idea about the value of their retirement savings (82 percent). Strategists are more likely say they always make sure they’re saving for retirement, and are the most confident in achieving a comfortable retirement (74 percent).

Chart 8: US workers with a retirement strategy

Chart 9: Strategists in the spotlight

UnitedStates

Global

United StatesGlobal

25%

3%

41%

32%

38%

4%

44%

14%Written plan

Unwritten plan

No plan

Don’t know

Written plan

Unwritten plan

No plan

Don’t know

Strategists - Have a written plan

Have a non- written plan

Have no retirement plan

Very/somewhat aware of the need to plan financially for retirement

93% 87% 64%

Habitual savers – I always make sure that I am saving for retirement

81% 61% 21%


82% 72% 55%


74% 39% 14%


What about unforeseen circumstances such as health issues or job loss? The survey found that fewer than half (47 percent) of American workers have a backup plan to provide them with an income should they become unable to continue working before they reach their retirement age. Often these plans might prove to be insufficient protection. The most commonly cited backup plan is to rely on savings (54 percent); however, this safety net may be quickly depleted. A third (32 percent) say they would rely on their partner, but this strategy may prove inadequate if the household is reliant on a double income. One-in-five (22 percent) say they would rely on early withdrawals from retirement accounts which would clearly result in simply shifting the income shortfall into retirement. Products specifically formulated to address the issue of forced early withdrawal from the workplace, such as disability insurance (16 percent) and critical illness insurance (15 percent) are greatly under-utilized.

Chart 10: Fewer than half of all US workers have a backup plan

Chart 11: Their backup plans include…

8%

45%

47%

Yes

No

Don’t know

Loans from bank, etc.

My savings 54%

My spouse / partner working 32%

Early withdrawals from my retirement account(s) 22%

Government disability insurance 20%

Downsizing my home/selling a second home 19%

Disability insurance from my employer or that I purchased 16%

Inheritance 16%

Critical illness insurance 15%

Government unemployment insurance 14%

Mortgage payment insurance 13%

Gifts/loans from family members/friends 13%

13%


Chart 12: Overall health status

Chart 13: Concerns about health in older age

Part 3: Healthy agingThe ability of American workers to achieve their retirement aspirations lies beyond accumulating sufficient retirement savings. Health also has an important influence on retirement planning and on retirement itself. The report later illustrates that the ability to sustain health throughout people’s lengthening working lives as well as their lengthening retirement lives is set to become one of the biggest issues relating to retirement of our times.

Americans are health-conscious and the majority self-report their health as either good or excellent, 87 percent, compared to 68 percent globally. Almost a third (30 percent) of Americans report their health as excellent, and 57 percent self-report their own health as good. At the other end of the scale, the remaining 13 percent say that their health is either fair (12 percent) or poor (1 percent). Health deteriorates as age takes a toll on the body. While three-in-five (59 percent) 25-34 year olds self-report their health to be excellent, this falls to just 11 percent among those aged 65 and above.

When asked about their view of their future health, 89 percent of Americans agree that their health in older age is of some concern (compared to 82 percent globally), including half who say it is their primary concern (i.e., it is something they consider regularly and are actively working toward prolonging), and 39 percent who say their health in older age is a minor concern (i.e., they sometimes consider it but would prioritize other things like having enough income to live on when they retire). One-in-nine (11 percent) just assume their health will be okay when they retire or haven’t given it any thought at all.

Excellent

Good

Fair

Poor

65+55-6445-5435-4425-3418-24UnitedStatesTotal

GlobalTotal

13%

73%

11%

18%

62%

20%

14%

66%

18%

7%

42%

50%

2%

39%

59%

15%

45%

40%

12%

57%

30%

29%

51%

16%

3% 1% 0% 0% 1% 3% 0% 3%

United States

Global 6%12%39%43%

4%7%39%50%

My primary concern - My health in olderage is something I consider regularly andam actively working toward prolonging

A minor concern - My health in older age is something I sometimes consider but Iwould prioritize other things, like havingenough income to live on when I retire

I take it for granted - I just assume that my health will be ok when retire. It’s notsomething I need to worry about

Back of my mind - I haven’t really itany thought


Half of Americans say that their health in old age is their primary concern and they are actively working to prolong good health. This is higher than the global average (43 percent). Americans in excellent health are even more likely to be concerned about their health in older age (61 percent). Americans are much more likely to say that their current behavior and choices will have a direct impact on their health in older age than the global average (66 percent compared to 52 percent globally). Again, Americans in excellent health are even more likely to recognize the link (80 percent).

Americans are also more optimistic about maintaining their health in retirement (68 percent optimistic compared to 56 percent globally) and again it is those Americans in excellent health that lead the way (81 percent optimistic). Americans have a very positive outlook on their health, with those currently enjoying excellent health among the most positive about their future health.

Americans are generally in line with the global average in terms of carrying out health-related behaviors. Around three-in-five Americans are taking basic day-to-day steps to maintain their health, such as eating healthily (58 percent compared to 57 percent globally), exercising regularly (56 percent compared to 50 percent globally) and avoiding harmful behaviors such as drinking too much and smoking (55 percent compared to 57 percent globally). Half are taking more strategic measures such as thinking about their long-term health when making lifestyle choices, e.g., trying to avoid stress (48 percent compared to 43 percent globally) and having regular medical check-ups and performing regular self-checks (50 percent compared to 42 percent globally).

While Americans overall are taking their health seriously, there are subgroups in America that are doing more to protect their health: Those who are currently in excellent health, those who say that their health in old age is their primary concern, and those who acknowledge that their current lifestyle choices will have a direct impact on their health in old age. Each of these groups is far more likely to carry out the more day-to-day healthy behaviors such as eating healthily and exercising regularly.

Chart 14: The link between current health and health in older age

Global Total United States TotalUS currently in

excellent health

My primary concern – My health in older age is some-thing I consider regularly and am actively working toward prolonging

43% 50% 61%

My behavior and choices today will have a direct impact on my health in older age

52% 66% 80%

Optimistic about maintaining good health in retirement - % optimistic

56% 68% 81%


Chart 15: Health and related behaviors

Global Total United States Total

US currently in excellent health

US health in old age is my

primary concern

US current lifestyle choices

will have a direct impact on my

health in old age

I eat healthily (e.g., five-a-day portions of fruit and vegetables)

57% 58% 76% 68% 67%

I exercise regularly 50% 56% 74% 66% 65%

I avoid harmful behaviors (e.g., drinking too much alcohol or smoking tobacco)

57% 55% 53% 55% 60%

I think about my long-term health when making life-style choices. For example, I try to avoid stress

43% 48% 49% 54% 50%

I practice mindful-ness regularly (e.g., meditation and relaxation exercises)

17% 24% 31% 27% 27%

I take my health seriously (e.g., have routine medical check-ups and do regular self-checks)

42% 50% 43% 55% 50%


Part 4: Making the link between health and retirement preparations Health has an important bearing on the individual’s ability to earn. A third (35 percent) of those in fair health earn less than $30,000 compared to just 14 percent of those in excellent health. Those in excellent health are more likely to be saving habitually for retirement (68 percent) than those in fair health (41 percent) and are more likely to be strategists (54 percent) than those in fair health (14 percent). Those in excellent health are also much more likely to have a good awareness of the need to plan financially (88 percent compared to 68 percent of those in fair health) and are more likely to strongly or somewhat agree that they have a good idea of the total value of their personal savings for retirement than those in fair health (75 percent and 60 percent respectively). The result is that those in excellent health are more confident in achieving a comfortable retirement (70 percent) than those in fair health (19 percent).

Given all these factors, the research finds a strong relationship between retirement readiness as measured by the ARRI and current health status. Those in excellent health achieve a high ARRI score (eight out of 10), those in good health achieve a medium ARRI of 6.6 and those in fair health achieve a low ARRI of 5.8.

Chart 17: Current health and retirement readiness

Currently in excellent health

Currently in good health

Currently in fair health

Very/somewhat aware of need to plan financially

88% 82% 68%

Strategists – Have a written plan for retirement

54% 22% 14%

Habitual savers - I always make sure that I am saving for retirement

68% 53% 41%


75% 72% 60%


70% 33% 19%

Fair Good Excellent

6.6

5.8

8.0

ARRI score

NOTE: Poor health not included in chart as base size is very low

NOTE: Poor health not included in chart as base size is very low

Chart 16: Current health and retirement planning


Chart 18: Working into retirement will become the norm for Americans

Part 5: Successful retirement – Healthy aging and financial security Less 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.

The implication is clear, many American workers expect increased choice, flexibility and control over how they will transition into retirement. The way that Americans view retirement is changing. Americans want to achieve many things in their retirement, as evidenced by their long list of retirement aspirations (see Chart 3 on page 8). Retirement is increasingly seen as a more active life stage and the ability to maintain health long into retirement will be an essential factor in determining whether this is achievable.

However, in looking at the experience of retirees, a sobering reality emerges. Almost two-thirds (61 percent) of American retirees say that they retired earlier than they had planned with ill health (31 percent) and unemployment (31 percent) topping the list of reasons given for taking early retirement. The reality is that while many American workers may want to work beyond the typical retirement age, their health and employment issues may take the choice out of their hands.

American workers expect to retire at age 65 and spend 20 years living in retirement. However, stark differences in expectations arise among workers based on their health status. Those in fair or good health expect to work longer (67 years and 66 years of age, respectively). While those who are currently in excellent health expect to retire the earliest at 60 (the group that, based on health grounds, should be considered the most able to work the longest). However, they do expect to live longer in retirement (20 years) compared to those in fair health (15 years).

Workers who say they are in fair health score much lower in retirement readiness based on the ARRI. Health issues may cause obstacles to access the labor market and may also reduce the number of hours that they are able to work, which can have an impact on income and the ability to save. Those in poor and fair health may potentially find themselves in a more vulnerable position when making plans for retirement - despite recognizing the need to work longer; by nature, those in poorer health may have no choice but to stop working earlier than planned..

9%

18%

11% 30%

33%

I will immediately stop workingaltogether and enter full retirement

Other / Don’t know

I will keep working as I currently do.Retirement age won’t make a di�erence

to the way I work

I will change the way I work (e.g., workingpart-time or on temporary contracts) and

I will continue paid work throughoutretirement in some capacity

I will change the way I work (e.g.,working part-time or on temporarycontracts) but only for a while before I eventually give up paid work altogether


Part 6: The important role of employers Occupational benefits can play a significant role in addressing the link between retirement planning and health. Employers are already making a significant difference in helping workers to become retirement ready. Retirement plans are offered to a vast majority of American workers, either with employer contributions 58 percent and/or without employer contributions (37 percent). Medical health insurance is offered to 68 percent, and 59 percent receive life insurance. Taken together, these benefits provide an effective retirement safety net for millions of workers. Given the importance that workers place on employer-sponsored retirement plans, there is still more that can be done to ensure that everyone has access to such plans to help turn retirement aspirations into retirement realities.

Chart 19: Median age expect to retire and number of years spent in retirement

Chart 20: Workplace benefits offered to American workers

Basic salary 78%

Convenient location of workplace 75%

Vacation/ paid time off 72%

Medical health insurance 68%

Ability to work past the normal retirement age 66%

Flexible working hours 63%

Life insurance 59%

Retirement plan with employer contributions 58%

Opportunities for career progression 57%

Overtime and bonus pay 53%

Access to good training provision 52%

Retirement plan without employer contributions 37%

Phased retirement or other employer programs providing for a transition into retirement

35%

Median numberof years expectto live in retirement

Median age expect to retire

Currently inexcellent health

Currently ingood health

Currently infair health

Total 82 years Total 86 years Total 80 years

66

20

67

15

60

20


Similarly, employers can play an important role in their employees’ health. With a greater focus on health and well-being, employers can potentially take steps to help keep their workforce economically active for longer. Workplace wellness programs enjoy the support of nine-in-ten (88 percent) workers. And there are small steps that employers can take to help improve the well-being of their workers. Short-term, more day-to-day benefits, such as providing healthy food or snack options in the office (45 percent) and access to exercise programs (42 percent) are the most sought after. These perhaps present employers with cost effective ‘easy-win’ options to consider. Around a third of workers would also be interested in health risk assessments (30 percent) and ergonomic workstations (29 percent).

American workers who cite health in their old age as a primary concern are more likely to want almost all employer health-related perks compared to all US workers – specifically: health risk assessments (34 percent vs. 30 percent), tools to monitor health goals/biometrics (33 percent vs. 28 percent), education on healthy behaviors (33 percent vs. 28 percent) and wellness coach to offer guidance and encouragement to help achieve health-related goals (26 percent vs. 22 percent).

Chart 21: American workers’ interest in health and wellness perks from employers

Employers can also play an important role in helping workers prepare for retirement by providing them with tools and resources throughout their careers. One-in-five (21 percent) American workers say that their employer provides no retirement planning services (compared to 37 percent globally). A further 15 percent say that they do not know what services their employer provides to allow them to transition into retirement (compared to 16 percent global).

Among the retirement planning-related services offered by employers to workers, the most commonly cited are retirement plan administrator website (29 percent), annual retirement plan statement (29 percent) and in-person meetings with a retirement plan or professional advisor (23 percent).

All workers

Workers stating myhealth in old age is my primary concernPrograms for substance or alcohol abuse

An app that can help you set wellness goals,measure progress and access information

Programs, counseling or therapiesto help with mental health issues

Programs to stop smoking

A wellness coach to o�er guidance and encouragementto help you achieve your health-related goals

Contests and opportunities to winprizes for health-related activities

Corporate-sponsored events (e.g., walks, runs, bicycle races)

Education on healthy behaviors(e.g., newsletters, e-mail communications, lunchtime lectures)

Tools to monitor health goals/biometrics(e.g., BMI/weight loss, cholesterol levels, blood pressure)

On-site health clinic available for routine visits

Ergonomic workstations (e.g., standing desks, adjustable workspace furniture)

Health risk assessment

Preventative screenings and vaccinations

Financial incentives for focusing on your health and wellness

Exercise programs – either on-site or discounts for local gyms

Healthy food or snack options at the o�ce46%

43%

39%

38%

34%

31%

26%

33%

33%

30%

27%

26%

25%

21%

21%

21%

45%

42%

40%

36%

30%

29%

28%

28%

26%

25%

22%

20%

18%

18%

15%

28%


The survey findings reveal an alarming disconnect between how many American workers envision transitioning into retirement and the business practices workers say that their employers have in place to support their transition.

Only 26 percent of workers say they are offered the option to transition from full-time to part-time work. Even fewer are offered the opportunity to take on more suitable work (e.g., less stressful or physically demanding) (23 percent) or flexible retirement plans that allow working beyond the usual retirement age (22 percent). Although these figures are low it should be noted that a higher proportion of American workers compared to workers globally say that their employers make these options available in all response options (with the exception of retraining or continuing education to keep skills up-to-date, which is in line with the global average of 15 percent).

Clearly there is more that employers, the government and individuals can do to ensure that workers get the retirement to which they aspire. The definition of retirement is changing and evolving. Retirement is no longer seen as a period of decline, it is seen as an active part of life, often involving working in a new capacity, embracing new hobbies and making time to enjoy old friendships, time with family or a time to travel. It is imperative that the individual’s wealth and health are able to support these retirement aspirations. This takes careful planning and consideration. Formulating a plan in writing and saving habitually over a sustained period offer the best route to retirement readiness.

Chart 22: Retirement planning services offered by employers

Chart 23: Workers who indicate their employers offer assistance in transitioning into retirement

Other

Don't know

None of the above

Webcast meetings/ seminars about your pension/ saving for retirement

Company sponsored blogs and/ or online network groups

Annual retirement plan income forecast

Online retirement modeling tool(s)

Digital access to view and manage my retirement savings

Educational materials

In person/ face-to-face meeting with a retirement plan or professional advisor

Annual retirement plan statement

Employer/ retirement plan administrator website

Global

United States

13%29%

29%

23%

22%

22%

18%

18%

13%

11%

21%

10%

12%

19%

13%

12%

10%

14%

6%

7%

37%

16%

2%1%

Global

United States None of the above

Don't know

Other

Retraining or continuing education to keep skills up-to-date

Flexible retirement plans which allow you towork beyond the usual retirement age

Financial advice

Work more suitable for older workers(e.g. less stressful or physically demanding work)

Employer provided healthcare in retirement

The option to move from full-time to part-time working 24%26%

18%24%

20%23%

14%22%

19%22%

15%15%

2%2%

16%15%

29%22%


Individuals are now required to take more personal responsibility in preparing for their retirement largely as a result of demographic and policy changes. Individuals, employers, and governments each have a role to play and a vested interest in helping people achieve retirement readiness by making it easier for people to save for retirement, while adopting and maintaining healthy lifestyles.

Recommendations

Role of Financial security Healthy aging

Individuals1. Develop a strategy and written plan to establish retirement

goals, to save toward those goals and manage retirement savings to last your lifetime. In so doing seek advice from friends, family and financial professionals and make use of modeling tools and calculators.

2. Start saving early and make saving a habit. Take advantage of opportunities such as workplace retirement plans, especially where an employer match is offered. Increase retirement savings when extra income or cash is available, for example a pay raise or bonus.

3. Develop a backup plan to make up some of the savings shortfall, or cover expenses in the event you retire earlier than planned. Insurance is a cost effective way to protect against lost income in the event of illness, disability, or death of a spouse or partner.

4. Invest in training opportunities to learn new skills and keep existing skills up-to-date so as to stay adaptable in a changing job market.

1. Develop a strategy to improve your health now if needed and to maintain a healthy lifestyle so that you can achieve your retirement goals. In so doing, seek out advice and support from friends, family and professionals (doctors, nutritionists and fitness trainers).

2. Make healthy behaviors a habit and way of life by incor-porating them into your daily routine. Take advantage of opportunities to bring healthy snacks and lunches to work, take the stairs and walk as instead of driving.

3. Invest in exercise and healthy cooking classes, as well as wearable technology to monitor your health and fitness goals and follow up with what you learn.

Employers1. Increase awareness about the need to save for retirement. Pro-

vide educational materials to help workers understand financial matters and build confidence about saving and investing.

2. Establish a workplace retirement savings plan into which workers can contribute by payroll deduction.a. Implement automatic enrollment to make it easy and pro-

vide for automatic increases at predetermined times such as pay raises or at a certain age or life events.

b. Provide for matching contributions to encourage participation.

c. Provide the opportunity for part-time employees to participate in the plan.

3. Provide workers the opportunity to purchase through the work-place - life, disability and critical illness insurance, as well as other financial security products to protect against unexpected events prior to retirement.

4. Maintain an age-friendly workplace that invests in training opportunities for older workers, values the experience of older workers, facilitates workers remaining longer in the workforce and phasing into retirement when the time is right.

1. Provide education and increase awareness of the advan-tages of maintaining good health and the relationship between good health and retirement readiness.

2. Implement a workplace wellness programs, prioritizing those that offer the greatest benefit for the company and the worker, considering factors like productivity, engage-ment, absenteeism, etc.

3. Provide financial incentives for healthy behaviors, such as subsidies for gym memberships, premium discounts for health insurance, etc.

4. Create a workplace environment that promotes healthy living and habits, for example, offer programs to stop smoking, use stand-up desks and offer healthy food options. Management should lead by example.

Governments1. Promote awareness about the need to save for retirement and

provide individuals with the tools and education needed to make informed decisions about saving and investing.

2. Maintain incentives for employers to establish retirement savings plans for workers, and for workers to participate in those plans. Incentives for employers include: tax credits to cover start-up costs of a plan and to match worker contributions; liability protection against investment losses, etc. Incentives for workers include tax incentives for saving in an employer plan.

3. Ensure that worker contributions into employer plans are preserved for retirement by, among other matters:a. Prevent leakage by maintaining financial penalties for

early withdrawals;b. Facilitate the offering of lifecycle funds and distribution of

retirement plan savings in the form of lifetime income. 4. Create incentives for or facilitate the ability of employers to offer

insurance in order to shift the burden of individuals coping with financial shocks like disability, critical illness and death of a fami-ly member away from the government.

5. Align policies to encourage active aging and the transition to retirement by facilitating phased retirement and encouraging individuals to work longer.

1. Promote awareness of the benefits of a healthy lifestyle and its relation to an active and secure retirement.

2. Undertake an impact assessment of the overall cost- benefit of supporting well-being, recruitment and retraining programs among older workers.


Disclaimer This report contains general information only and does notconstitute a solicitation or offer. No rights can be derived fromthis report. Aegon, its partners and any of their affiliates oremployees do not guarantee, warrant or represent the accuracyor completeness of the information contained in the report.


Contact informationHeadquarters Aegon N.V.Strategy & SustainabilityMike MansfieldManager Retirement StudiesTelephone: +31 70 344 82 64Email: [email protected]/thecenter

U.S. Media relationsTelephone: +1 952 346 6011Email: [email protected]

http://www.aegon.com/thecenter

http://www.transamerica.org

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