A House Divided: Americans Have Two Distinct Views Of Retirement

Once upon a time, Americans shared a singular view of retirement as a time to kick back and enjoy the good life. Retirement was a vision of optimism.

Today, on the heels of a deep recession and volatile equity markets, America’s confidence is on the wane, replaced for many by worry and anxiety. Those concerns are especially prevalent for those who have not taken the time or made the effort to plan for retirement and who now doubt their financial wherewithal to retire, according to the 2009 Investments and Retirement Survey by The Hartford Financial Services Group, Inc. (NYSE: HIG). This is the fourth year the survey has been conducted in the United States.

The No. 1 financial concern in retirement – simply meeting everyday expenses – dominates all other concerns, the survey found. Keeping up with daily expenses for food, shelter and other basic needs spiked in 2009 to 65.2 percent. In 2008, 49.7 percent identified meeting daily expenses as their top financial concern in retirement, doubling from 24.5 percent in 2007.

"The financial turmoil of the past few years has taken a huge toll on America’s confidence about the future and apparent readiness for retirement,” said Jamie Ohl, senior vice president and director of The Hartford’s Retirement Plans Group. "Increasingly, people fear they may face serious financial issues in retirement and are therefore uncertain about when or even if they can retire.”

The Planning Dynamic

"But The Hartford’s research shows that people who have taken the time to plan their retirement are generally in a better place financially and are significantly more optimistic about the future than those who have not planned,” Ohl said. "Today, America’s vision of retirement is a house divided.”

The Hartford’s research found people who had created a financial plan for retirement were decidedly more confident and optimistic about the future:

• Those who planned for retirement were three times more likely to be confident that they will have sufficient income in retirement as compared to those who have not planned. Nearly one-third (31.5 percent) of those who had planned (planners) said they were "very” or "extremely” confident of having sufficient income for retirement as compared to 10 percent for those who had not planned (non-planners).
• Nearly three in five planners (57.7 percent) said they were on target to retire as planned compared with 38.7 percent of those who did not take planning steps. Forty-four percent of those who did not plan said they had no idea as to when they might retire and 17.3 percent said they would have to delay retirement up to two years or more.
• Overwhelmingly, those who did not plan were uncertain as to where to obtain financial advice. Of those who had not created a financial plan, 42.5 percent said they did not know where to turn as compared to 9.6 percent for planners.
• Those who described themselves as planners were three times more likely to rely on an independent financial expert for credible financial advice than those who said they did no planning (39.9 percent vs. 13.4 percent); were more likely to rely on a bank representative (19 percent vs. 12. 5 percent) or securities firm (16.5 percent vs. 5.7 percent) or insurance agent (10.2 percent vs. 4.4 percent) for planning advice.
• Few people are confident in their financial planning capabilities. In 2009, 82.7 percent of survey respondents said they were less than confident in their financial planning knowledge and abilities, with 34.2 percent indicating they were "not too” or "not at all” confident.
• Retirement and/or financial planning are viewed as too complex or too difficult by one in two Americans (50 percent). The number of people who have taken steps to plan for retirement remains relatively unchanged from 2008.
• Nearly one in five (18.4 percent) planners said their investment earnings had increased as compared to 4.8 percent of non-planners. Planners were twice as likely as non-planners to have increased their net worth (12.2 percent vs. 5.3 percent) and 32.7 percent of planners said they save more while 22.4 percent of non-planners could say the same.

Insecurity Over Security

The Hartford’s research identified growing concerns about financial security and the ability to find the path to financial security in retirement:

• The correction of the financial markets, despite a pronounced rebound during the summer and early fall, has created uncertainty over the future. Nearly a third of all respondents (31.6 percent) said they have no idea as to when they will be able to retire and 19.3 percent indicated they will have to postpone retirement for up to two years or more in the aftermath of market meltdown.
• Confidence about having enough money for retirement remains low. Nearly four in five people (78.3 percent) are less than confident that all of their sources for retirement income, including employer-sponsored pension plans, government-sponsored pension plans and personal savings and assets, will be adequate to maintain their standard of living in retirement. That compares to 74.6 percent in 2008, 78.5 percent in 2007 and 69.2 percent in 2006, indicating a longer-term decline in confidence.
• The prospect of enjoying life in retirement appears to have grown ever more elusive for many people. The goal of enjoyment declined to 14.4 percent in 2009 from 26.2 percent in 2008 and 43.2 percent in 2007.
• Confidence in employer-sponsored pension plans plummeted. More than one-third of all survey respondents (34.4 percent) said they were "not at all confident” that the income from their employer-sponsored pension plan would be guaranteed for as long as they lived in retirement. Fully 45.4 percent were either "not too confident” or "not at all confident.” In the previous three years, the highest response rate for "not at all confident” was 5 percent and the highest total for "not too confident” and "not at all confident” combined was 15.1 percent in 2008.

"The Hartford’s research demonstrates definitively that now more than ever, it’s critical to work with a financial planner or financial advisor to prepare for the future, especially when it comes to retirement,” said John Diehl, a certified financial planner and senior vice president with The Hartford’s Investment and Retirement Products Division. "Americans have seen their financial houses buffeted and bumped by financial storms. With planning, discipline and time, it’s possible to get back on track and still reach the seemingly elusive financial goal we call retirement.”

The Hartford’s fourth annual retirement survey was conducted this summer and polled 751 consumers age 45 and older. The survey has a margin of error of +/- 3.5 percent.

About The Hartford

Celebrating nearly 200 years, The Hartford (NYSE: HIG) is an insurance-based financial services company that serves households, businesses and employees by helping to protect their assets and income from risks, and by managing wealth and retirement needs. A Fortune 500 company, The Hartford is recognized widely for its service expertise and as one of the world’s most ethical companies. More information on the company and its financial performance is available at www.thehartford.com.

HIG-L

Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2008 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.