Outliving Retirement Savings a Global Employee Concern, MetLife Research Finds

Business Wire,  June 18, 2008  

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Many Workers May Be Under Prepared in India, Mexico, U.K., Australia and U.S.; Looking to Workplace for Solutions

NEW YORK -- Despite worries about funding a comfortable retirement or outliving their retirement savings, many full-time workers in developing and mature economies, including the United States, have taken few or no independent steps to plan for retirement, according to recent MetLife research. Two MetLife surveys - the inaugural Study of International Employee Benefits Trends (iEBTS), and the sixth annual U.S. Study of Employee Benefits Trends (EBTS) - document the challenges faced by workers around the world in preparing for a secure retirement.

The studies found that more than eight out of 10 Mexican (81%) and Indian (80%) employees; more than half of Australian employees (58%) and more than one-quarter of U.K. employees (31%) have done no retirement planning independent of any mandatory government plans. In addition, nearly half of U.S. employees (46%) have not taken any steps to determine income need in retirement.

"The widespread lack of independent retirement preparedness is especially worrisome in both developing and mature economies as life expectancies around the globe continue to rise and pension reform puts more responsibility on employees to fund their own retirements," noted William J. Toppeta, president of MetLife International.

Worries vs. Planning in Mexico and India

The divide between employee concerns about retirement readiness and employee actions to prepare for a successful retirement is particularly pointed in Mexico, and to a lesser extent, India.

For example, nearly three out of four Mexican employees (74%) say they are "concerned" that they will have to work full- or part-time to live comfortably in retirement years, and almost seven out of ten (67%) say they are "concerned" about outliving their retirement money. However, only 21% of Mexican workers say they have taken any steps to determine their households' retirement needs. Even fewer (19%) say they have begun any retirement planning. In spite of their concerns and insufficient planning, most Mexican workers expect to retire early. The survey revealed that most expect to stop working by age 58, and one out of four plans to retire between the ages of 30 and 50.

In India, while almost three out of four employees (71%) say they are "concerned" about outliving retirement money, only one out of every three (35%) say they have taken steps to determine retirement needs; only 20% say they have done actual planning for retirement.

"The very concept of retirement savings is new or distant to workers in many developing economies, such as Mexico and India," said Mr. Toppeta. "By tradition, typically a family would take care of its older members, but with the geographic mobility among more young people to locations far away from their family home base, leaving their families for jobs in different locations, the traditional family 'safety net' is becoming frayed in many fast-growing countries that lack national health or retirement systems."

In a sharp departure from the other countries surveyed, one-third (33%) of Indian employees say they never expect to retire - which may account for why 80% of all employees say they have not done any retirement planning.

Of those Indian workers who have planned for retirement, nearly six out of ten (58%) say they have either achieved or are on track to achieving their retirement goals.

U.K. Employees Most Prepared?

In terms of retirement preparedness, the U.K. may be the most financially fit of the countries studied. Indeed, 71% of U.K. workers surveyed say they have taken steps to determine their households' retirement needs and 69% have actually started to plan.

Further, of those who have planned, more than half (59%) say they have either reached or are on track to reach their retirement savings goals. About one-third (34%) of U.K. employees are "concerned" about outliving retirement money, contrasted to 55% of U.S. workers.

Australia: Under Prepared But Optimistic

Many Australians are optimistic despite their apparent lack of independent retirement preparation. When asked about their top retirement concerns, just under half (49%) of Australian employees say they are "extremely concerned" about outliving retirement money. Fifty-eight percent of Australians, however, have done no planning for retirement in addition to the country's "Superannuation Fund," a government-sponsored benefits and retirement program. The median Superannuation Fund balance among those Australians closest to retirement age (51 and older) is a meager $57,800 [AUS].

Australia also has the highest percentage of employees without retirement savings goals among the countries surveyed. While most workers plan to retire at around age 60, 15% of Australians say they do not have any retirement savings goals.

Helping Employees Manage Longevity Risk at the Workplace