Merrill Lynch Survey Concludes Workers Ill-Prepared for Retirement

August 28, 2003

According to the Merrill Lynch Retirement Preparedness Survey, "The majority of Americans are ill prepared for retirement." The survey reports that many Americans have not adequately prepared a portfolio of substantial personal savings to replace their income upon retirement. Those few that are confident about their financial futures have had lifetime access to powerful compounding private markets and financial advisors.

Findings of the Merrill Lynch Retirement Preparedness Survey "show the median reported value of all household retirement savings is only $40,000, and one-fourth of respondents said they have no retirement account at all. According to the Merrill Lynch Retirement Group, an individual should count on having 70 percent of their pre-retirement annual income per year in retirement."

Cynthia Hayes, first vice president of Employer Plan Management for the Merrill Lynch Retirement Group states: "The results of our Survey illustrates that Americans are shockingly ill prepared when it comes to planning and saving for retirement. The financial challenge facing Baby Boomers as they look towards 2011 is enormous. We know that Americans have traditionally undersaved for retirement, but these 2003 survey results serve as a wakeup call—for plan sponsors, individual investors and financial services providers."

According to the release: "Boomers appear to be aware of their impending financial crisis…. [In 2003] only 47 percent of Americans are either somewhat or very confident that they will have saved enough for retirement. In addition, one-third of respondents believe they will not be able to retire at their desired age of 65 and only 20 percent are 'very confident' in their investing ability over all.

"The Survey data supports the fact that advice and planning provides results. Sixty-three percent of respondents with a financial plan say they are confident that they will have saved enough to retire versus 38 percent of those without a plan. In addition, having a financial advisor makes a significant difference in savings. Respondents with a financial advisor have total retirement plan assets about equal to their median household income versus only half of their income for those without an advisor."

Social Security as a source of retirement income replaces, on average, roughly 40 percent of pre-retirement income. However, Social Security will not be able to provide such substantial benefits in the future with out reform. This survey makes evident that individuals with opportunity to invest in powerful compounding private markets throughout their lives are more confident about their retirement futures. Low-income workers and individuals less able to invest will undoubtedly be overreliant on an insecure Social Security system.

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