Americans may have their differences with the rest of the world on such weighty issues as war and peace or global warming. However, on the subject of retirement, much unites them, including a view that life after the working years is a time of freedom, happiness and satisfaction.
This is one finding of the 2006 “HSBC Future of Retirement Global Survey: What the World Wants & What Employers Want.” Unveiled by the London-based banking and financial services organization during an audio-web conference last month, the report solicited the opinions of about 21,000 people worldwide (many of them boomers) in 20 countries and territories across five continents, representing 62% of the world’s population. The report additionally polled 6,000 private sector employees in the same countries and territories.
Among U.S. respondents, 66% said they should bear most of the financial costs of retirement, while 16% said the federal government should be responsible. Another 9% and 6%, respectively, wanted their employer and their children/family to foot the bill.
Yet, many respondents said they believe they can rely on their families in old age even if they do not expect family members to bear most of the financial cost of supporting them in retirement.
In the U.S., only 12% expect to be able to live with their children in old age (compared to 34% globally) and 37% expect their children to care for them (52% worldwide). Ten percent of U.S. respondents expect their children to help pay living expenses (compared with 29% globally). And 8% of Americans polled expect their children to help pay medical expenses (30% globally).
“We found it surprising that two-thirds of Americans feel individuals should bear the cost of retirement, while nearly three-fourths of our friends in Saudi Arabia believe family should shoulder the cost,” said Martin Glynn, CEO of HSBC Bank. “This is certainly a shift from what we know or believe to be the case in past years [when] employers were expected to carry that responsibility.”
A sizeable majority (64%) of U.S. respondents–the largest percentage of those surveyed in advanced economies–view retirement as an opportunity to pursue a “new chapter in life.” This contrasts with opinions in transitional economies, where individuals polled largely see retirement as a time of “rest and relaxation.” Just 9% of Americans defined retirement as “a continuation of what life was.” And 3% labeled it the “beginning of the end.”
Ken Dychtwald, president and CEO of San Francisco, Calif.-based AgeWave, which contributed to the survey’s development, observed that views respecting retirement among respondents in the U.S. and other advanced countries reflect these nations’ aging populations.
“Different parts of the world are in different states of evolution with regard to aging,” said Dychtwald. “The older the countries were, the more they were inclined to reject the notion of retirement as a time of rest and relaxation, and the more inclined they were to believe that retirement is an opportunity for a whole new chapter in life.”
In the U.S., 34% of individuals and 52% of private employers think government should enforce private savings. Just 22% of individuals and 26% of private employers want to see the retirement age raised. Still smaller percentages of the two groups (17% and 7%, respectively,) suggest raising taxes to finance an aging population; 10% and 5% of the respondents want to see pensions reduced.
“What people were saying [regarding enforced private savings] was they’d like to be self-reliant,” said Dychtwald. “They don’t want the government or their employer to control all this money and then wait and see if they’ll take care of them. But they need help in helping themselves.”
The survey found that many respondents want to work beyond the retirement age. Twenty-nine percent of U.S. respondents (25% globally) cited financial need as the most important reason for doing so. Nearly two-thirds of Americans cited nonfinancial reasons. Among them: have something meaningful or valuable to do (21%); keep physically active (22%); connect with others (7%); and mental stimulation (15%).
Most U.S. respondents (82%) associate retirement with “freedom.” Similarly, 80% and 79% of those polled equated retirement with “happiness” and “satisfaction.” (Worldwide, approximately two-thirds of respondents described retirement in these terms.) Far smaller percentages invoked negative concepts like boredom (27%), loneliness (20%) and fear (22%).
For most individuals, “freedom” means an opportunity to travel. Seventy percent of U.S. respondents (75% worldwide) want to spend their retirement years traveling. Sixty-five percent and 58%, respectively, want to devote the time to family and friends and spend down savings. Smaller percentages expect to take up new hobbies (55%); do voluntary work (54%); get involved with new kinds of work (40%); and continue their education (30%).
For advisors, such diversity of activity will require that they build greater flexibility into clients’ financial plans–starting with the leading edge of boomers now transitioning to retirement.
“People are demanding more choices in retirement,” said Geoff Brooks, HSBC’s senior vice president of retirement services. “Clearly, advisors will have to deal with a lot of complex issues to meet the growing lifestyle demands of boomers.”