Americans Choose Middle Lane of Retirement Highway; Allstate's retirement survey finds that just keeping up with peers isn't enough if others are saving too slowly

Business Wire, August 9, 2006

NORTHBROOK, Ill. -- Most Americans see themselves just cruising into retirement with their peers, regardless what kind of savings and spending habits they have in place now, according to Allstate's 2006 "Retirement Reality Check" survey.

The sixth-annual survey, which measures Americans' attitudes toward and savings for retirement, showed that, regardless of age, gender, education, income or geography, Americans generally consider themselves only "somewhat" prepared financially for retirement, and thus they have some fears about the years ahead. But when specifically asked, "If saving for retirement were like driving on the highway, where would you be?" almost half (48 percent) said they are "in the middle lane, keeping up." Other responses were:

--In the fast lane, passing others (20 percent of total respondents)

--On the on ramp, still getting started (14 percent)

--In the slow lane, watching others go by (13 percent)

--Lost and looking for a map (5 percent)

However, the Allstate survey did show clear links between the "lane" respondents say they are in, and specific actions they have taken--or not taken--to prepare financially and emotionally for retirement.

Life in the fast lane

For example, most people who describe their retirement savings as "in the fast lane" are saving aggressively, while those who are "lost" admit they aren't saving much at all. "Fast laners" are more aggressive than any other group in making sure they and their spouses or partners have adequate life insurance and in establishing an emergency fund that could support their families for at least three months. The only step that a majority of "losts" have taken in making sure they have adequate auto and homeowners insurance.

Among the "middle lane" respondents, 88 percent said they have secured adequate homeowners and auto insurance, and 55 percent said they've saved enough money to support their families for at least three months. And 69 percent said they've made sure that they and their spouse or partner have enough life insurance.

In addition, 57 percent of the "fast-lane" respondents say that in terms of their retirement readiness they are "very prepared," and another 38 percent say they are "somewhat prepared." Among those in the "middle lane," 78 percent say they're "somewhat prepared," and only 14 percent say they are "very prepared" financially for retirement.

Overall, 21 percent of respondents say they are "very prepared" and 59 percent say they are "somewhat prepared."

"The good news is that most people do have time to find a map and get on the right road," says Casey Sylla, president, Allstate Financial, a subsidiary of Allstate Corp. "As with driving, doing nothing won't get you to your destination. And to continue with that analogy, people should work to move over one lane at a time rather than thinking they need a plan to take them instantly from the on ramp to the fast lane."

On a road to nowhere

The "lost" respondents are a significant departure from the general optimism, with 1 percent calling themselves "very prepared" and 26 percent saying they are only "somewhat prepared." A sobering 57 percent of the "losts" say they are "very unprepared" financially, and another 17 percent say they are "somewhat unprepared."

At the same time, more than 70 percent of the "lost" drivers say they expect retirement to be fulfilling, fun and relaxing. More than 90 percent of respondents in the "slow lane," "middle lane" and "fast lane" say that, as well as more than 80 percent of those on the "on ramp."

Driving demeanors

Despite overall optimism, the Allstate survey did identify some attitudinal differences among those on the road to retirement. For example, "lost" respondents were significantly more likely to anticipate a retirement that is boring (39 percent), depressing (34 percent) or lonely (26 percent). All other groups were significantly less likely to describe retirement in this way.

"Fast-lane" respondents were more likely to call themselves disciplined (97 percent) compared with the overall (93 percent), and compared with the "lost" (81 percent) and "on-ramp" (91 percent) respondents. Respondents in the "middle lane," closely mirrored the overall figures, with 94 percent saying they are disciplined.

Differences among the various "lanes" were even more pronounced when questions concerned financial issues. Not surprisingly, the "losts" were most nervous, with 83 percent saying retirement will be "uncertain," and 87 percent saying it will be "financially difficult." A majority of "on-ramp" and "slow-lane" respondents said those things as well, but not to the extent of the "losts."

By comparison, 25 percent of the "fast laners" and 43 percent in the "middle lane" said retirement will be uncertain; 15 percent in the "fast lane" and 31 percent in the "middle lane" said retirement will be financially difficult.

The "losts" are clear on why they are so worried; 48 percent admit they are not saving at all for retirement, and another 38 percent say they're saving some money, but not seriously. That compares with the majority of "middle-lane" and "fast-lane" respondents, who say they are saving seriously for retirement. The majority of "on-ramp" and "slow-lane" respondents said they are saving, but not seriously.