What Business Thinks—Are You Ready To Rock?

This time, our annual poll asks how Twin Cities Business readers are approaching retirement.
What Business Thinks—Are You Ready To Rock?

Overall, respondents to the What Business Thinks survey feel good about their pending retirements. But just more than half (52 percent) believe that they will have the same or an even better standard of living than their parents had.

The economy—both the recent state of markets and investment returns, and long-term issues, such as the high cost of health care—is casting a shadow. Only 32 percent of respondents believe that they will worry less about money than their parents did, and 11 percent are afraid that their lives will be diminished and that maintaining a home could be difficult in retirement.

Work will be in the picture for just more than half of respondents (51 percent). The social aspect is a stronger motivator than money is—52 percent of those who plan to work will do so to stay busy, but 43 percent say they’ll need the income or the health insurance, or that the income will ease their personal finances in retirement.

 

At what age do you realistically expect to retire—that is, no longer need to work for an income, but live on Social Security, savings, retirement accounts, or other sources of income?
Before I am 6014.3%
Between the ages of 60 and 6419.7%
Between the ages of 65 and 6940.2%
Between the ages of 70 and 741.8%
Not until I am 75 or older7.0%
I do not see that I will ever be able to not work3.5%
I have no idea3.5%

 

How likely will you be to do each of the following  in retirement?Very LikelySomewhat LikelyNot Likely
Leave a significant inheritance17.0%42.7%40.2%
Volunteer more for organizations I care about53.0%40.6%6.4%
Contribute more money to organizations I care about28.8%47.4%23.8%
Take up or start a new business11.0%37.7%51.3%
Take educational classes32.5%46.0%21.5%
Take up a new hobby, craft, or activity41.4%40.0%18.6%
Move to a warmer climate17.6%36.0%46.4%
Move where the cost of living is lower8.3%32.7%59.0%
Acquire an additional home, vacation cabin, et cetra17.2%30.6%52.2%
 

 

TCB readers plan to support favorite causes when they retire, but while they’ll give more of their time, most don’t plan to do the same with their money. A majority (53 percent) say they’re very likely to volunteer more for organizations they care about, while just 29 percent say it’s equally likely that they’ll contribute more money in retirement.

Many survey respondents likewise don’t plan to leave a big inheritance to children: 40 percent say that they are not likely to leave a significant inheritance. While a quarter say that they wish they could, only 17 percent say that it’s very likely to happen; another 43 percent say that it’s somewhat likely.

It seems that survey participants want the next generation to follow the good example that they’ve set by starting to save early. Two-thirds (67 percent) of survey respondents say that they started saving for retirement between the ages of 18 and 34.

 

What temptations keep you from saving more money for retirement?Respondents were asked to check all answers that apply
Keeping up with the lifestyle of my friends and neighbors7.7%
Impulse shopping10.6%
Cars or other vehicles10.8%
Travel, vacations27.1%
Hobbies9.5%
An expensive home15.3%
Entertainment15.9%
None of these56.1%

 

How old were you when you began saving for retirement? 
Before I was 183.7%
When I was 18 to 34 years old66.7%
When I was 35 to 44 years old19.9%
When I was 45 to 54 years old8.1%
After I was 55 or older0.8%
I really have not started0.8

 

In late 2006, Thrivent Financial gathered information from 2,500 baby boomers nationally through its Thriving in Retirement survey. Comparing the results of that survey with those from the What Business Thinks survey provided some interesting insights.

 

The good news is that it appears that most Minnesota business leaders have taken the issue of retirement preparation more seriously than the national sample has. Just more than half (51 percent) of respondents to the What Business Thinks survey have done serious calculations or planning on their own to estimate retirement income and needs, and 43 percent have gone through a formal retirement planning process with a financial advisor. That compares with 34 percent and 16 percent respectively in the national survey—which, by the way, targeted people who were 60 years old or older!

In addition, the obstacles that derail progress toward retirement saving are different between the two groups, probably reflecting a higher average income level among TCB readers. In Thrivent’s nationwide survey of boomers, top obstacles included starting to save and invest too late in life (35 percent), the cost of health care or health insurance (32 percent), and a low-paying job (29 percent). For What Business Thinks participants, top obstacles included paying for college (33 percent), poor-performing investments (30 percent), and the cost of health care or health insurance (21 percent).

 

What single issue might prevent you from accomplishing the things you wish in retirement? 
Lack of money55.3%
Health problems20.5%
Lack of time10.8%
Family obligations6.4%
Other7.0%

 

Which unexpected situation do you feel most concerned about that could impact your retirement plan and savings? 
An illness42.2%
A death in the immediate family3.5%
A need for additional college savings3.5%
A dive in the stock market20.1%
Losing my job (or my spouse/partner losing a job)21.5%
None of these9.1%

 

People worry, naturally, about the unknowns that retirement represents. Will there be enough money to last? Will health problems take away their ability to enjoy life? Those are the top two issues (55 percent and 21 percent, respectively) that respondents chose when asked what might prevent them from accomplishing what they want to during retirement.

They worry about the unexpected on their way to retirement, too. Illness (42 percent), loss of their own or a spouse’s job (22 percent), and a dive in the stock market (20 percent) are the top three concerns when respondents think about what could damage their retirement plans and savings. The cost of health care is a recurring worry in respondents’ survey answers, despite the relative affluence of TCB readers—a sign of how badly the system need fixing.

But those surveyed are facing their worries with pragmatism—and maybe with new motivation after getting socked by the stock market and the drop in home prices. Asked what they would do if they came into an unexpected $1 million, by far the top two responses were investing the money for retirement savings (57 percent) and dividing the money between charities, descendents/beneficiaries, and retirement income (35 percent). Buying a luxury home and going on a shopping spree barely registered.

 

If you suddenly had an unexpected $1 million, what would be the main thing you would do with the additional money? 
Invest it for my retirement56.9%
Give a majority to charity1.0%
Divide it between charities, my descendents/beneficiaries, and my own retirement income35.4%
Go on a shopping spree0.4%
Buy a luxury home1.2%
Start my own business4.8%
Head to the nearest casino0.2%

 

What kind of work do you expect to do during retirement years? 
Whatever will earn me a good income8.9%
Whatever will provide health insurance8.5%
Nothing too stressful—just something I can enjoy and keeping busy with39.9%
Something challenging or risky that I could not do before, like starting a business10.1%
Something meaningful, like working for a nonprofit organization20.2%
I am not sure12.5%
 

 

Which of these three statements is closest to how you feel about your future? 
I see retirement as a time to thrive. I expect to be able to do more things that I have always wanted to do, but never had the time.49.5%
When I retire, my life will not be that different expect for having more time. I will pretty much do the same things I have always done.32.5%
I am afraid that my life will be worse if/when I retire. It will be more difficult to do things like maintain a home, take vacations, support hobbies, or contribute money.11.2%
None of these.6.8%

 

Which of these is closest to your expectations for your standard of living in retirement compared with that of your parents in retirement? 
I will live more comfortably.51.6%
I will have about the same standard of living.30.8%
I will not be able to live as comfortably.8.5%
I am not sure.6.8%
Does not apply.2.3%

 

Compared to your parents, what do you think will be true of you during your retirement years?Respondents were asked to check all answers that apply
I will travel more.74.3%
I will have a wider range of activities and interests.62.9%
I will worry more about money.26.7%
I will worry less about money.31.9%
I will be in better in health.36.9%
I will have more difficulty affording health care.34.2%
I will spend more time with family members.43.5%
I will give more to charities and other organizations I care about.33.3%
I will spend more time volunteering.58.2%

 

Besides Social Security, from which of the following do you expect to have income during your retirement years?Respondents were asked to check all answers that apply
An employer pension (defined-benefit plan), which includes corporate, government, or military pensions33.5%
An individual retirement account (IRA)73.3%
Savings and investments outside of IRAs, such as 401(k), 403(b), mutual fund, or stocks91.7%
Winning the lottery3.1%
Employment, either full time or part time50.9%
Family members1.7%
Rental income from property I/we own14.5%
Income from a business or businesses I/we own27.3%
A reverse mortgage on a house (the bank gradually buys the house from you)2.5%
An inheritance from parents or other relatives25.7%
Anything else2.1%
I am not sure where I/we will get the income to live on in retirement3.1%

 

You choose employment as one source of income during your retirement years (see preceding question). Is that more because?: 
I/we will need the income13.3%
I/we will not necessarily need the income, but life will be easier if someone works19.8%
I/we will need the health insurance and benefits10.5%
I/we plan to stay busy by working52.0%
Not sure4.4%

 

How the Survey was Conducted

The 2008 Twin Cities Business What Business Thinks survey was conducted by Thrivent Financial for Lutherans. More than 11,000 subscribers to Twin Cities Business were sent an e-mail invitation to participate. Responses were gathered via an online survey between September 3 and 16, 2008. The overall response rate was approximately 4 percent (493 respondents), providing a margin of error of +/- 4 percent.

 

More about the respondents:

• The average age of TCB readers is 52.
• Their average household income is $227,000.
• Respondents were 36 percent female, 64 percent male—a slighter higher ratio of women to men than in TCB’s audience (27 percent female, 73 percent male).