Sun Life Financial Unveils UnretirementSM Index to Determine Future of Retirement
Initial Study Shows Only Half of Americans Plan to Retire at 67;
Staying Mentally Engaged Tops Extensive List of Drivers to Stay in the Workplace
WELLESLEY, MA (Oct. 1, 2008) - The U.S. division of Sun Life Financial Inc. (NYSE:SLF, TSX:SLF) today announced the Sun Life Financial UnretirementSM Index, a first-of-its-kind measure to track the changing attitudes and expectations American workers have regarding retirement. The Index, to be released multiple times each year, will gauge how economic, financial and societal forces are affecting working Americans, and will forecast their future retirement decisions that will impact individuals, the government, employers, and the broader economy.
Sun Life’s research uncovers surprising results as the median age of Americans rises and more Baby Boomers prepare for important decisions, like when to take Social Security and when to exit the workplace. Almost half (48%) of the American workforce believes it will still be working at the traditional retirement age of 67, and four of the five top reasons given were not financial in nature. Instead, the most cited reason for continuing to work (83%) was “to stay mentally engaged” – a finding consistent across all income levels, gender and age demographics.
“As our workforce evolves and attitudes are impacted by economic conditions and world events, the nature of retirement in America evolves as well,” said Bob Salipante, President, Sun Life Financial U.S. “Traditional views on retirement are quickly evolving and more Americans are choosing to be unretired. This Index for the first time shows how changes in the economy, politics, healthcare and lifestyle are all critical factors in more and more Americans choosing to continue working during traditional retirement years.”
Unretirement is defined as working at least 20 hours per week after the age when one is eligible to receive full Social Security benefits. Supporting data also show that a significant portion of those with the means to retire are instead deciding to stay in the workforce. Nearly 40 percent of workers surveyed with household assets of more than $500K still plan to work at least part-time, while overall, more than 77 percent of those planning to work beyond age 67 will do so to earn enough money to live well. Finances, however, are not the only driver to continue working past age 67. The study revealed that 83% plan to be working at 67 “to stay mentally engaged.”
"The Index findings reveal differing expectations between the generations. At the intersection of generational values and external influences, the attitudes of both older and younger generations regarding work and active lifestyles are evolving," said noted author and expert Dr. Carol Orsborn, Ph.D. "In particular, the Boomer generation is approaching the traditional age of retirement with their lifelong habit of challenging societal norms intact. They stand at the portal of advancing age more driven by their desire to stay engaged with achievements and family relationships than by the value of their portfolio."
The Sun Life Financial Unretirement Index also examined a broad array of factors including economics, healthcare, personal finance, and government benefits and their potential impact on Americans’ plans for retirement. Survey findings show dramatically different levels of optimism about when generational groups plan to retire and what they expect to rely upon in retirement.
Sun Life also found that only 46 percent of those surveyed are “very confident” that they will have enough money to take care of basic living expenses at the traditional retirement age of 67. Only 28 percent are “very confident” that they will be able to take care of medical expenses and 26 percent are “not at all confident” that they will be able to do so.
“Sun Life's Unretirement Index shows that retirement at an early age may soon be a thing of the past,” said Laurence Kotlikoff, Professor of Economics at Boston University. “According to the Index, half of today's workers plan to work beyond age 67 – a dramatic reversal of the postwar trend toward early retirement. These plans to delay retirement reflect a desire to stay mentally engaged, but also real anxiety about financing retirement. Workers are very worried about their ability to rely on two historic mainstays of retirement – Social Security benefits and employer-provided benefits. Indeed, fewer than half of workers express strong confidence in being able to cover the basics in retirement, let alone live it up in retirement. The Index also shows that retirement confidence varies considerably from worker to worker depending on economic and demographic factors. Older workers seem more aware of and concerned by a retirement-financing gap, but neither young or old workers are eager to work harder or longer to close this gap. Instead, they express a willingness to cut spending, which may signal a change in future saving behavior.”
At age 67, Americans can receive full Social Security benefits. While availability of government benefits has traditionally driven many Americans’ retirement decisions when to retire, the Unretirement Index shows this traditional view on retirement is evolving. Additional Index findings follow.
When do Americans plan to retire?
Almost half (48%) of America’s workers plan to work past the age of 67.
· Younger generations are more often planning to retire at age 67 than their older counterparts. Fifty-eight percent of workers age 30-39 believe they will be retired at 67 compared to only 45 percent of those aged 60 and over.
· Nearly one in three Americans plans to work at least part-time past the age of 67.
Why are Americans working later in life?
Four out of the five reasons cited for continuing to work past age 67 are not financial.
· The number one reason (83%) people don’t plan to retire at age 67 is to stay mentally engaged.
· Among those with total net assets of less than $100,000, 81 percent said they will continue to work to earn enough money to live well, virtually the same percentage that want to keep working to stay mentally engaged.
· Among those with total net assets of between $100,000 and $500,000, 72 percent will continue to work because they love their careers and 66 percent said they were not ready to end their careers.
What are the factors influencing retirement?
Americans have less confidence in factors influencing their retirement over which they have less control.
· Americans have lower confidence in the economy than any other factor measured by the Unretirement Index.
· The younger generations have little confidence that government benefit programs like Social Security and Medicare will be available when they retire. Sixty three percent of workers age 30-39 don’t believe that Social Security will be available and also cite employer healthcare benefits as a reason to work past age 67.
· American workers are much more likely to cut back on spending and reduce debt to improve their retirement prospects rather than seek to increase their income or change their investment mix. Eighty-two percent would reduce spending while only 58 percent would alter their investments.
· Only 46 percent of all workers are very confident that they will have enough money to take care of basic living expenses when they reach traditional retirement age, and only 28 percent are very confident they will be able to take care of medical expenses.
· Despite believing federal drug benefits will not exist in coming years, only 59 percent of those surveyed cited healthcare costs as a reason they plan to continue working.
ABOUT THE SUN LIFE FINANCIAL UNRETIREMENT INDEX
The Sun Life Unretirement Index measures attitudes and expectations American workers have towards issues that influence retirement. The index ranges from 0 to 100, and this inaugural study yielded an overall index score of 46. The lower the index number, the more negative or
pessimistic people's outlook are on issues that influence retirement. The overall index is a composite score based on the performance of five issue-specific indices, including: the "economic index" (score = 30), the "personal finance index" (score = 48), the "health index" (score = 69), the "government benefits index" (score = 42), and the "employer
benefits" index (score = 43).
The study was conducted between August 9 and 19 of 2008. Telephone interviews were conducted by Interviewing Service of America using a random-digit dial (RDD) sampling method. Quotas and weights were applied to gather a sample of 1,515 people working either full- or part-time, which was representative of the U.S. working population between the ages of 30 and 66. The sample was also representative in terms of gender and four-region census break. Analysis and construction of indexes involved the application of factor analysis. Final indexes are based on summated averages across the attributes which make up an index. For more information and detailed findings of the Sun Life Unretirement Index visit www.unretirementindex.com
Age groups were divided by workers in their 30s, 40s, 50s, and 60+ and by three ranges of total assets, not including the net worth of the person’s place of residence (less than $100K, between $100K and $500K, and greater than $500K). This sample has a margin of error of 2.5 percent at the 95 percent confidence interval.
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. As of June 30, 2008, the Sun Life Financial group of companies had total assets under management of US $404.7 billion. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol SLF. Visit Sun Life Financial's website at www.sunlife-usa.com.