American’s Trust in Retirement Reaches a Tipping Point
Retirement confidence drops nearly 20% in 2011, hitting four-year low
One in five working Americans plan to never retire
Owners of annuities, long-term care insurance feel more confident
WELLESLEY, Mass. (October 19, 2011) American workers’ trust in their future retirement has reached a four-year low, according to today’s U.S. release of the Unretirement IndexSM, a poll of nearly 1,500 working Americans by Sun Life Financial Inc. (NYSE:SLF, TSX:SLF). After remaining stable for three years, retirement confidence dropped nearly 20% this September compared to a year earlier, according to the survey.
Sentiment compared to last year deteriorated in all five of the Index's components, with the greatest drop (-31.7%) occurring in confidence about the benefits needed to retire, including defined benefits plans and employee health benefits.
- Only 23% of working Americans feel very confident that they will meet basic living expenses in retirement—plunging from double that number (42%) last year.
- One in five working Americans say they will never retire.
- Confidence in the future of Social Security has plunged over the last four years, to 9% in 2011 from over double that (22%) in 2008.
- Confidence about Medicare benefits has also plummeted, to 8% in 2011 from over double that (20%) in 2008.
- On the positive side, at all wealth levels, respondents who expect to receive guaranteed lifetime income from annuities by age 67, or who own long-term care insurance products, feel significantly more confident about retirement.
“This represents the most significant drop in retirement confidence we've seen in the four years we've compiled the Sun Life Unretirement Index," said Wes Thompson, President, Sun Life Financial U.S. "Although the recession officially ended in 2009, average Americans feel that the downturn has not ended for them, which is substantially eroding their trust in their retirement future.”
“However,” added Thompson, “we believe the higher confidence of respondents across all wealth levels who own either variable annuities or long-term care insurance vehicles provides a positive wake-up call: Americans can take action to help secure their future and feel more secure about their golden years.”
More Trends in the Unretirement Index
The Unretirement Index is scored on a scale of 0 to 100, with 100 reflecting highest confidence about retirement. The Index score dropped from near the midrange (44) in September 2010 toward the bottom third of the scale (36) in September 2011, down 18.2%.
The overall Index is a composite score based on five subject areas, which all revealed declines in confidence compared to last year. On a year-to-year basis, confidence dropped as follows in the following subject areas: employee benefits (-31.7%), the economy (-25%), government benefits (-21.6%), personal finances (-13.9%), and personal health (-13.2%).
The fall in sentiment across all five subject areas in 2011 represents a stark contrast from 2010, when confidence dropped regarding the economy and personal finances yet rose regarding personal health and employee benefits.
Sun Life Financial created the Unretirement Index in 2008 to gauge how changes in the economy, financial markets, societal forces, and public policy affect working Americans’ confidence about retirement. The margin of error is +/-2.5% at a 95% confidence level.
In September 2011, Interviewing Service of America conducted telephone interviews using a random digit dial (RDD) sampling method. Quotas and weights were applied to gather a sample of 1,499 people working full-time, part-time, or in job transition, which was representative of the U.S. working population between the ages of 18 and 66. The sample was also representative in terms of gender and four-region census break. Analysis and construction of indices involved the application of factor analysis. Final indices were based on summated averages across the attributes making up an index.
About Sun Life Financial
Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China, and Bermuda. In the United States and elsewhere, insurance products are offered by members of the Sun Life Financial group that are insurance companies. Sun Life Financial Inc., the holding company for the Sun Life Financial group of companies, is a public company. It is not an insurance company and does not offer insurance products for sale in the United States or elsewhere, and does not guarantee the obligations of its insurance company subsidiaries. Product offerings may not be available in all states and may vary depending on state laws and regulations.
As of June 30, 2011, the Sun Life Financial group of companies had total assets under management of US$492 billion. For more information, please visit www.sunlife.com/us. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE), and Philippine (PSE) stock exchanges under the ticker symbol SLF.
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SLPC 23814 10/2011 (exp. 10/2016)