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Pre-retirees Can Benefit From Recent Retirees' Valuable Lessons Learned
BOSTON, March 8, 2005 - Although many recent retirees (66%) report that they are
living the lifestyle that they had hoped in retirement, over half (57%) look back on the
years before leaving the workplace and wish they had done more to prepare, according to
a new study by Fidelity Investments.
At the top of the "wish list" for many recent retirees is wishing they had: created a
budget (21%); determined an asset allocation strategy (19%); developed an income source
withdrawal strategy (18%); and better understood 401(k) plan payout options (19%).
According to the study, which surveyed 755 retirees from large companies within three
years of having retired and 749 employees from large companies within one year of
retiring, nearly one in five retirees (17%) also wish they had retired later.
Workers preparing to retire within one year show a similar inconsistency between
confidence in their retirement readiness, and planning actions they actually have taken.
Although the vast majority of pre-retirees (81%) are confident they
will be able to live the lifestyle they want in retirement, many have yet to complete a
number of critical planning steps. Two thirds of pre-retirees (68%) have not completed a budget of anticipated income and expenses, while three quarters (74%) have not yet
determined an asset allocation strategy for managing their income in retirement while
seeking continued growth for their savings.
"Workers approaching retirement often look to their peers who have already gone
through the process for valuable lessons learned," said Steve Deschenes, executive vice
president, Fidelity Institutional Retirement Services Company, the nation's largest
provider of 401(k) plans. "Those living in retirement now can provide valuable insight to
people getting ready to make that transition -- from knowledge of the basic fundamentals
such as the key elements of a successful income plan, to identifying resources that can help
with critical decisions that need to be made. This can have a dramatic impact on the
quality of life today's pre-retirees will experience when they retire."
Workers nearing retirement also show a need for additional guidance and
education on fundamental financial issues surrounding retirement. Only one-quarter
(28%) reported that they fully understand how much they can spend monthly during
retirement without outliving their savings, and less than one-quarter (23%) say they fully
understand which retirement income sources to spend first to minimize taxes. Half (50%)
are also unsure of the age at which most people can withdraw money from a tax-deferred
savings plan without incurring a penalty.
"Retirement is a time in life that millions of Americans look forward to, but the
actual transition from saving for retirement to living off of those savings can be worrisome and more complex than expected, if you are not prepared," said Deschenes. "While it is
initially promising that so many Americans feel confident about their preparedness as they
enter retirement, our research indicates that these individuals can further add to their
retirement security by better utilizing existing workplace resources."
Employer Guidance: Highly Valued, But Underutilized
When recent retirees are asked what advice they would offer to a friend or family
member within a year of retiring, they most often recommended seeking guidance to help
with the retirement transition. Most retirees (77%) also report that they neglected to turn
to their employer for assistance and guidance throughout the retirement process. Those
who did, however, saw significant value in the guidance they received, with the vast
majority (92%) saying they found it to be valuable, including 32% who say that they
"could not have made the transition without it."
"Workers demonstrate a clear need for more assistance as they prepare to retire.
Employers can address this need by taking a more active role in helping their employees
successfully navigate the retirement transition," says Deschenes. "And, we believe we are
beginning to see an emerging trend toward meeting that need. New solutions, such as
Fidelity Retirement Income AdvantageSM, directly address these needs and have been
designed specifically to provide the comprehensive retirement planning, and investment
and income management support workers and retirees need to better prepare for and
transition into retirement and manage their income throughout their lifetime."
The Fidelity Investments Retirement Transition Study was conducted by Richard
Day Research, Inc. (RDR) in November and December 2004. RDR surveyed 749 preretirees
within one year of retiring and 755 retirees within three years of having retired
who work for, or have retired from, an employer with more than 5,000 employees and
hold a DC or DB plan from that employer.
About Fidelity Employer Services Company
Fidelity Employer Services Company provides benefits and human resources
administration, workforce effectiveness, payroll solutions and stock plan services to over
19 million employees in the U.S. as of January 31, 2005.
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services,
with custodied assets of $2.1 trillion, including managed assets of $1.1 trillion as of January
31, 2005. Fidelity offers investment management, retirement planning, brokerage, and
human resources and benefits outsourcing services to more than 19 million individuals
and institutions as well as through 5,500 financial intermediaries. The firm is the largest
mutual fund company in the United States, the No. 1 provider of workplace retirement
savings plans, one of the largest mutual fund supermarkets and a leading online
brokerage firm. For more information about Fidelity Investments, visit www.Fidelity.com.
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Fidelity Retirement Income AdvantageSM is a service of Fidelity Brokerage Services, LLC, member NYSE, SIPC, 100 Summer Street, Boston, MA 02110
Institutional retirement products and services are offered by Fidelity Investments Institutional
Services Company, Inc., 82 Devonshire Street, Boston, MA 02109
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