2015/2016 global benefits attitudes survey u.s

© 2016 Willis Towers Watson. All rights reserved.

A delayed retirement? How employees are planning for retirement.2015/2016 Global Benefits Attitudes SurveyU.S.

2015/2016 Global Benefits Attitudes SurveySurvey of nearly 30,000 employees in 19 countries

Americas Responses Europe Responses Asia Pacific Responses

Argentina 1,508 France 1,007 Australia 1,006

Brazil 1,004 Germany 2,281 China 2,005

Chile 1,005 Ireland 758 India 2,003

Colombia 1,001 Netherlands 1,006 Japan 2,002

Mexico 1,011 Turkey 1,031 Philippines 1,010

Canada 2,013 United Kingdom 1,895 South Korea 1,000

United States 5,083

For over a decade Willis Towers Watson has surveyed employees about health and retirement. This survey fielded from June to August 2015 and is the second globally consistent survey. It includes representative samples at non-governmental employers.

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only. 2

Executive Summary

Financial situation improves and the numbers planning to retire later is moderating1Fears over reductions in standards of living in retirement are widespread2Employees are increasingly reliant on their employer retirement plan4Working longer is the main way employees overcome inadequate savings for retirement5One-in-four expect to work to age 70 or later6

Retirement security is an increasing area of focus for employees3

A. An opportunity – employees are more receptive around retirement issues. Can employers help them save for retirement given competing priorities?

B. Leverage segmentation and new technologies to connect to employees

C. Use tools that can help close the gaps in employee understanding about the savings required and costs in retirement.

D. “Hidden Pensioners”- a potential challenge. Do benefits programs support an orderly retirement that aligns with workforce needs?


Workers who expect to work into their 70s are less healthy, more stressed and less engaged7

Key findingsThe Road Ahead

Delayed retirement

4

How are employees planning for retirement?

How confident are they of having a comfortable retirement?

What age do they expect to be able to retire?

Retirementexpectations

The business impact

Are we seeing “hidden pensioners”– employees who want to retire, but cannot afford to do so?

What is the impact on job performance, health and stress?

Retirementplanning

What are employees’ priorities for saving for retirement?

Who do employees turn to for help in forming their retirement plans?

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.


Retirement confidenceLong-term financial worries linger

Short-terms financial worries ease

55%

Canada

48%

U.S.

54%

Europe

54%

Latin America

2013 2015 ChangeGlobal 44% 51% +7U.S. 41% 48% +7Canada 49% 55% +6Latin America 46% 54% +8Europe 50% 54% +4Asia Pacific 42% 50% +8


Financial satisfaction has risen slowly since 2013/14 as the economy has recovered … will 2016 call a halt to this improvement?

Thinking about all aspects of my financial situation, I am satisfied with where I am today

Percentage agree or strongly agreeSource: 2013/2014 and 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.

50%

Asia Pacific


Note: Percentage agree or strongly agree, not at all confident or not too confidentSource: 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.

Fears over reductions in Government benefits and declining standards of living in retirement are widespreadHalf lack confidence in having sufficient resources to fund their retirement

I often worry about my future financial state

Lack of confidence in having sufficient retirement resources - 15 years into retirement

Lack of confidence in having sufficient retirement resources - 25 years into retirement

-10% 0% 10% 20% 30% 40% 50% 60%

47%

34%

53%

49%

31%

50%

U.S. Global

When I come to retire Social Security will be much less generous than it is now

When I come to retire the medical benefits provided by the government will be worse

My generation is likely to be much worse off in retirement than my parents’ generation are/were

Long-term concernsGlobal U.S.

71%65%

70%58%

76%66%


Women report lower retirement confidenceRetirement confidence lower for females and those in their 30s and 40s

How confident are you that you will have enough financial resources to live comfortably for 25 years in retirement?

Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees.

% reporting confidence in having sufficient resources to last 25 years in retirement

20 to 29 30 to 39 40 to 49 50 or more

61%

50% 50%57%

46% 44% 45% 43%

Men Women♂ ♀

Retirement security is rising up the agenda

Canada

63%U.S.

67%

Europe

49%

Asia Pacific

48%Latin America

57%


Fears over the sustainability of Government retirement benefits and concerns over adequacy are leading to a greater focus on saving for retirement

Retirement security has become a more important issue for me over the last two or three years

Percentage agree or strongly agreeSource: 2015/2016 Global Benefits Attitudes SurveySample: All employees. Except U.S. and Canada, full-time employees only.

All respondents 67%

Generation

Boomers 77%

Gen X 66%

Gen Y 59%

GenderMale 66%

Female 68%

Salary

Low 62%

Middle 66%

High 70%

10

Europe, 54%Canada, 55%

59%

Asia Pacific; 62%

70%

Global, 65%

72%

Latin America, 66%67%

Australia, 69%

80%

U.S., 74%

79%

And employees are relying on their employer’s retirement plan

© 2016 Willis Towers Watson. All rights reserved. Proprietary and Confidential. For Willis Towers Watson and Willis Towers Watson client use only.

Source: 2013/2014 and 2015/2016 Global Benefits Attitudes Survey.Sample: All employees. Except U.S. and Canada, full-time employees only.

Despite reductions in plan generosity and a movement to DC, the importance of employer-sponsored plans is seemingly growing … an employer responsibility?

2010 2011 2013 201520%

30%

40%

50%

60%

70%

80%

56%

65%

74%79%

+23%

2013 2015

My retirement plan is the primary way I save for retirement


Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees.

Employees are on-board for employers taking a more active role in their retirement

0%

10%

20%

30%

40%

22% 21%18%

11%9% 10% 9%

Employers should activelyencourage employees to save for retirement

Employers should provide a basic retirement plan and

let employees do the rest

Strongly prefer Prefer Slightly prefer Neutral Slightly prefer Prefer Strongly prefer

61%


Retirement expectationsDelaying retirement

Lowest employment

(year)

Current employment

rate

Australia 8% (1993) 17%

Canada 9% (2001) 17%

France 1% (2006) 3%

Germany 4% (1991) 8%

Ireland 14% (2011) 15%

Japan 28% (2011) 29%

Netherlands 3% (1986) 12%

South Korea 39% (1989) 42%

U.K. 7% (2001) 13%

U.S. 15% (1993) 22%

In the past 20 years the employment rate amongst those aged 65 or older has grown by almost half


Source: OECD Dataset: LFS by sex and age - indicators

South Korea

Japan

U.S.CanadaAustraliaIrelandU.K.NetherlandsGermany

France

0

10

20

30

40

50

60

Percentage of men aged 65 or older who are in employment

The number of employees planning to retire later is slowing


A reaction to the strengthening economy during 2014-15? Will this trend persist?

1 out of every 3 employees are planning to retire later than previously.

32%

Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan.

2013 43%

2011 39%

2010 40%

2009 34%

The lowest incidence in the past years


Expected retirement ages showed some moderation since 2013

At what age do you expect to retire?

Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. “Don’t know” answers were not considered for the calculations.

But more than 1-in-4 still expect to work past age 70

2009 2010 2011 2013 2015UNDER AGE 65 35% 36% 40% 25% 30%

Younger than 55 5% 2% 3% 1% 2%55 to 59 10% 10% 12% 6% 7%60 to 61 8% 9% 11% 9% 10%62 to 64 12% 15% 13% 10% 11%

AGE 65 19% 20% 22% 23% 24%

OVER AGE 65 46% 44% 38% 52% 46%66 to 69 25% 30% 24% 19% 18%70+ 16% 11% 11% 25% 23%Never retire 6% 3% 2% 8% 5%

Expected retirement ages are close to current ones, but employees know the chances of working longer are significant


Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.

The average U.S. employee expects to retire at 65, but thinks there is a 50% chance of working to 70

Australia

Canada

France

Germany

Ireland

Japan

Netherlands

South Korea

UK

US

52%

41%

38%

32%

43%

41%

45%

51%

46%

50%

65.5

63.3

63.7

64.6

64.4

63.1

67.2

61

64.4

65.2

Average expected age of retirement What chance do you think there is that you will still be working at age 70?


Significant numbers now expect to work until their 70s or later in developed economies

37% 21%

12%

22%

10%

Australia UK

Ireland

Netherlands

Germany

15%

28%

South Korea

US

11%

JapanSource: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.

At what age do you expect to retire? Percentage reporting age 70 or above

10%

France

16%

Canada


Who plans to work later?And the links to employee performance

Late retirement out of necessity?


Working longer is the main way employees over 50 overcome inadequate savings for retirement

If someone told you that your income in retirement wouldn’t be as much as you wanted, which action do you think you would be most likely to take?


Age less than 5044%

Work longer

Save more

45% 9% 1%Accept a lower income in retirement

Do nothing and hope for the best

Age 50 or more 52%Work longer

Save more

26% 18% 3%Accept a lower income in retirement

Do nothing and hope for the best

Saving more is not a viable option for many employees

nearing retirement

All employees

47%

Work longer

Save more

Accept a lower income in retirement

Do nothing and hope for

the best

39%

12% 2%


41% 37%13% 10%

27% 29%

22%17%

19% 12%

21%15%

13% 21%44%

58%

70 or later66 to 69At 65Before 65


Financial worries drive people to work laterA hidden pensioner problem?

Employees with future worries or who are struggling financially are more likely to

retire later.

Money worries

Unworried Future worries

Current worries

Struggling


“Hidden pensioners”

employees of retirement age who hold onto their jobs because they cannot afford

to retire

Age

Salary

Gender

Differences in retirement expectations by groups

Women

Men

Below $35,000

$35,000 to $74,999

$75,000 or more

<30

30s

40s

50 plus

30%

27%

48%

28%

20%

24%

28%

33%

27%

At what age do you expect to retire? Percentage expecting to work to 70 or later.



All DC plans Less generous About the same More generous

30%38%

30% 25%

% expecting to work 70 or later by DC plan generosity

How does your DC retirement plan compare to other employers?

DB to DC transition: Impact on retirement age is being felt



Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan.

Open DB 11% 7% 10% 17%

DC only 19% 13% 22% 30%

Difference +8% +6% +12% +13%

Canada Ireland UK US

Before 65 At age 65 66 to 69 70 or older

Health status

Work stress

Sustainable engagement

I feel stuck in my job and would move somewhere else if I could

28% 30% 29%40%

64% 63% 60%47%

The links to employee performance


Employees expecting to work longer are less healthy, more stressed, less engaged and more likely to feel stuck in their jobs.


Expected Retirement Age

49% 45% 44% 37%

15% 16% 17%28%

Highly engaged

Disengaged

High or above average stress

Very good health

27% 28% 24%40% % agree or

strongly agree


Planning for retirementWhat are employees doing?

Saving for retirement a top financial priority for those over 40


But debts and housing loom heavily for the under 40s

What would you say are currently your top financial priorities?

Rank 20s 30s 40s 50 plus

1

2

3

4

5

Other planned saving

(saving for car, holiday, etc.)

Pay off debts

General costs

Saving for retirement

Housing

General saving(saving for a ‘rainy day’)




Tools and apps widely viewed as important to plan for retirementWidespread appreciation but limited set active users ... an opportunity?

Please indicate the importance of the following in helping you to manage your retirement savings.

20s 30s 40s 50 plusSavings Tracker: Tools to manage and track the value of my retirement savings

Adequacy Tracker: Tools to help me monitor when I can retire/project how much I can expect in retirement

Online Advice: Financial advice websites

Online Forums: Online forums that discuss retirement issues

5%

8%

17%

19%

18%

23%

45%

47%

4%

7%

15%

19%

17%

23%

40%

45%

3%

4%

13%

18%

11%

24%

42%

46%

3%

4%

15%

21%

11%

18%

39%

46%

Very important Important

Age


DiscussionEmployer considerations

A delayed retirement? How employees are planning for retirement.


Summary

1. Concerns linger on long-term financial security: Financial satisfaction has improved but concerns on retirement security remain. Employees are worried about their long-term financial security, but are they in a position to save for their retirement?

2. An employer responsibility? Fears of cuts in government benefits are pervasive and, despite reductions in generosity of employer benefits, employees are increasingly looking to their company plans to provide for their retirement.

3. Working longer: Planned retirement ages have fallen slightly but many employees anticipate longer careers and working longer is the chief safety valve in the face of inadequacy. Employees expecting to work longer are more likely to be unhealthy, more stressed and less engaged.

Employer considerationsFinancial security is a top-of-mind issue for employees. How can employers respond?


1. Saving for retirement: As short-term financial concerns ease, employees are more receptive around retirement issues. But how can employers help them save for retirement given competing priorities (such as housing and debt)?

2. Opportunity to enhance retirement education: Use segmentation and personalization to enhance impact.

3. Tools: Consider tools that can help close gaps in employee understanding about savings amount required and costs in retirement.

4. “Hidden Pensioners”: a potential challenge if employees extend their careers and productivity declines. Do benefits programs support an orderly retirement that aligns with workforce needs? Are there strategies to re-engage older workers?


Appendix50+ as alternative (closer to retirement, more realistic retirement ambitions)



Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more. “Don’t know” answers were not considered for the calculations.

Employees aged 50 or more

Expected retirement ages show slight moderation since 2013More than 1-in-4 expect to work past age 70

2009 2010 2011 2013 2015

UNDER AGE 65 32% 30% 31% 23% 29%Younger than 55 0% 0% 2% 0% 1%55 to 59 8% 6% 5% 4% 5%60 to 61 8% 6% 6% 5% 6%62 to 64 16% 18% 18% 14% 16%

AGE 65 15% 17% 18% 18% 18%

OVER AGE 65 53% 53% 51% 59% 53%66 to 69 32% 37% 35% 26% 26%70+ 16% 13% 12% 25% 23%Never retire 5% 3% 4% 8% 4%

Significant numbers now expect to work until their 70s or later in the developed economies


32% 12%

5%

8%

3%

Australia UK

Ireland

Netherlands

Germany

25%

27%

South Korea

US

10%

Japan

At what age do you expect to retire? Percentage reporting age 70 or above

2%

France

14%

Canada


Source: 2015/2016 Global Benefits Attitudes SurveySample: Members of a retirement plan. Except U.S. and Canada, full-time employees who are a member of a retirement plan. Aged 50 or more.

27% expect to work until their 70s or later; but the average employee thinks there is a 46% chance of still being working at age 70


What chance do you think there is that you will still be working at age 70?

51% 46% 45% 38% 35%

31% 28% 25% 18% 18%

South Korea US Australia Japan Canada

UK Ireland Netherlands France Germany



37% 43%

12% 10%

20% 13%

15% 15%

28%19%

32%15%

15% 24%40%

60%

70 or later66 to 69At 65Before 65



Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more.

Financial worries drive people to work laterA hidden pensioner problem?


Unworried Future worries

Current worries

Struggling

Money worries

Employees with future worries or who are struggling financially are more likely to

retire later.

“Hidden pensioners”

employees of retirement age who hold onto their jobs because they cannot afford

to retire

DB to DC transition: Impact on retirement age is being felt





Open DB 8% 0% 6% 17%

DC only 16% 9% 13% 29%

Difference +8% +9% +7% +12%

United StatesCanada Ireland UK

All DC plans Less generous About the same More generous

29%35%

29% 24%

% expecting to work 70 or later by DC plan generosity

How does your DC retirement plan compare to other employers?

The links to employee performance


Employees expecting to work longer are less healthy, more stressed, less engaged and more likely to feel stuck in their jobs.

Source: 2015/2016 Global Benefits Attitudes Survey, U.S.Sample: Full-time employees who are a member of a retirement plan. Aged 50 or more.


Before 65 At age 65 66 to 69 70 or older

Health status

Work stress

Sustainable engagement

I feel stuck in my job and would move somewhere else if I could

29% 30% 27%37%

63% 60% 59% 53%

Expected Retirement Age

46% 42% 47% 40%

18% 17% 15%27%

Highly engaged

Disengaged

High or above average stress

Very good health

22% 22% 19%29%

% agree or strongly agree

2015/2016 global benefits attitudes survey u.s

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