Retirement Confidence Among Public Sector Employees Paul J. Yakoboski, Ph.D. Senior Economist, TIAA-CREF Institute NCSL Legislative Summit Retirement Income Security: Beyond the Three Legged Stool August 14, 2013
Retirement Confidence Survey of the State and Local Government Workforce Joint research by the Center for State and Local Government Excellence and the TIAA-CREF Institute • Telephone survey of state and local government workers • 1,251 employees 501 K – 12 teachers o o 139 firefighters o 111 police officers o 500 in other occupations • Responses were weighted to be representative of the aggregate public sector workforce 2
Agenda 1. Expectations regarding retirement 2. Planning and saving for retirement 3. Use of advice 4. Retiree health care 5. Converting savings to income 6. Overall retirement confidence Implicit message in the results: Public sector workers are anxious regarding their retirement income security, despite near universal pension coverage and personal saving. Funding retiree health care is a particular area of concern. 3 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
Expecting to work longer than preferred 70% 60% Expect to retire at preferred age 50% Expect to work longer 40% than preferred Expect to retire 30% sooner than preferred 20% 10% 0% S&L workers Under Age 45-54 Age 55 and age 45 older 4 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
Expecting pension to be a major source of retirement income Percentage expecting each resource to be a major source of retirement income S&L Police/ U.S. Teachers Workers Firefighters Workers Defined benefit pension 72% 79% 87% 28% Defined contribution plan 31 31 23 52 Social Security 27 22 11 29 IRA (Individual 16 16 10 21 Retirement Account) Other savings 15 15 10 23 Employment 15 14 15 21 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 5
Expectations vary with worker age Expectations for major sources of retirement income 80% 70% Age 55 & older 60% Age 45-54 Under age 45 50% 40% 30% 20% 10% 0% DB pension DC plan Social Security Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 6
Saving, but not confident 91% of state and local workers have saved for retirement 84% are currently saving Confidence among savers that they are saving the right amount State and Police/ Teachers Local Workers Firefighters Very confident 16% 16% 25% Somewhat confident 53 53 61 Not confident 31 31 13 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 7
Saving, but are they planning? Only 50% of retirement savers have How much income do you need tried to determine how much money to replace in retirement? they will need to accumulate for a comfortable retirement. • Even among these, many do not 12% 37% appear to have a realistic view of 37% how much income they will need to 9% replace in retirement. 5% less than 60% 60% to 69% 70% to 89% 90% or more Don't know 8 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
Greater confidence in investments than in the amount being saved Confidence among savers that they are … State & Local Police/ Teachers Workers Firefighters Investing their retirement savings appropriately Very confident 27% 22% 34% Somewhat confident 54 60 58 Not confident 18 17 7 Saving the right amount Very confident 16% 16% 25% Somewhat confident 53 53 61 Not confident 31 31 13 9 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
Use of advice among retirement savers S&L Under Age Age 55 Workers age 45 45-55 & older Received retirement planning 51% 45% 51% 54% advice within the past 3 years Received advice regarding… How much to save 79% 86% 78% 76% How to invest savings 83 80 83 84 When can afford to retire 67 61 69 70 Drawing income from savings 61 47 57 71 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 10
Advice received, but not necessarily followed Among those advised to Among those who received increase amount saved... investment advice... 54% 41% 18% 34% 34% 12% 7% Followed all the advice Increased as recommended Followed most of the advice Increased somewhat Followed some of the advice Followed none of the advice Did not change savings rate 11 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
Converting savings to income Have savers considered how to manage savings during retirement and draw income? S&L Age <45 Age 45-54 Age 55+ Workers A great deal 24% 14% 25% 30% Somewhat 52 50 52 54 Hardly at all 16 24 17 10 Not at all 6 11 5 4 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 12
Converting savings to income How confident are public sector workers that they will… (among savers age 55+) 100% 5% 13% 6% 80% 13% Not at all confident 60% 57% Not too confident 53% Somewhat confident 40% Very confident 20% 31% 16% 0% choose the best way to draw not outlive their savings income from savings Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 13
Retiree health care Confidence in ability to pay for medical care in retirement S&L Police/ U.S. Teachers Workers Firefighters Workers Very Confident 22% 17% 26% 13% Somewhat Confident 49 54 51 44 Not Too Confident 20 21 15 22 Not at all confident 9 7 7 19 Don’t know 1 1 <0.5 2 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 14
Preparing for retiree health care expenses? Planning (and saving) for medical expenses in retirement S&L Police/ Teachers Workers Firefighters A great deal 8% 6% 11% Somewhat 33 30 42 Hardly at all 23 29 25 Not at all 35 34 22 Don’t know 1 1 <0.5 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 15
Lack of confidence in Medicare Confidence in future Medicare benefit levels State and Local Employees U.S. Workers All Age<45 Age 45-54 Age 55+ Very Confident 5% 1% 2% 10% 5% Somewhat Confident 29 20 28 36 28 Not Too Confident 38 39 45 33 38 Not at all confident 26 38 24 20 29 Don’t know 1 2 1 1 <0.5 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE. 16
Retirement Confidence in the Public Sector Overall, how confident are you that you will have enough money to live comfortably throughout your retirement years? 55% 19% 18% 8% Very confident Somewhat confident Not too confident Not at all confident 17 Source: 2012 Retirement Confidence Survey of the State and Local Government Workforce , TIAA-CREF Institute and SLGE.
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