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2015 Retirement Confidence Survey — 2015 Results

May 22, 2015 Comments off

2015 Retirement Confidence Survey — 2015 Results
Source: Employee Benefit Research Institute
From press release (PDF):

American workers and retirees are expressing higher confidence about their ability to afford retirement this year, even though there is little sign they are taking the necessary steps to achieve that goal, according to the 25th annual Retirement Confidence Survey—the longest-running survey of its kind.

A key factor in American’s outlook on retirement is whether or not they have a retirement savings plan. The 2015 RCS by the nonpartisan Employee Benefit Research Institute and Greenwald & Associates finds that as the nation’s retirement confidence continues to rebound from the record lows experienced between 2009 and 2013, the increasing optimism is a result of those who indicate they and/or their spouse have a retirement plan, such as a defined contribution (401(k)-type) plan, defined benefit (pension) plan, or individual retirement account (IRA).

A Look at the End-of-Life Financial Situation in America

May 21, 2015 Comments off

A Look at the End-of-Life Financial Situation in America
Source: Employee Benefit Research Institute

  • This report takes a comprehensive look at the financial situation of older Americans at the end of their lives. In particular, it documents the percentage of households with a member who recently died with few or no assets. It also documents the income, debt, home-ownership rates, net home equity, and dependency on Social Security for households that experienced a recent death.
  • Significant findings include that among all those who died at ages 85 or above, 20.6 percent had no non-housing assets and 12.2 percent had no assets left. Among singles who died at or above age 85, 24.6 percent had no non-housing assets left and 16.7 percent had no assets left.
  • Data show those who died at earlier ages were generally worse off financially: 29.8 percent of households that lost a member between ages 50 and 64 had no assets left. Households with at least one member who died earlier also had significantly lower income than households with all surviving members.
  • The report shows that among singles who died at ages 85 or above, 9.1 percent had outstanding debt (other than mortgage debt) and the average debt amount for them was $6,368.
  • The report also shows that the importance of Social Security to older households cannot be overstated. For recently deceased singles, it provided at least two-thirds of their household income. Couple households above 75 with deceased members received more than 60 percent of their household income from Social Security.

EBRI Notes — How Much Needs to be Saved for Retirement After Factoring In Post-Retirement Risks: Evidence from the EBRI Retirement Security Projection Model,® and Employer and Worker Contributions to Health Reimbursement Arrangements and Health Savings Accounts, 2006–2014

May 15, 2015 Comments off

How Much Needs to be Saved for Retirement After Factoring In Post-Retirement Risks: Evidence from the EBRI Retirement Security Projection Model,® and Employer and Worker Contributions to Health Reimbursement Arrangements and Health Savings Accounts, 2006–2014
Source: Employee Benefit Research Institute

How Much Needs to be Saved for Retirement After Factoring In Post-Retirement Risks: Evidence from the EBRI Retirement Security Projection Model

+ This analysis helps answer one of the most important questions that many defined contribution participants face before retirement: How much do I need to save each year for a “successful” retirement? It includes three of the major post-retirement risks (longevity, investment, and long-term care) while allowing the participant to also choose the probability of “success” that is best suited for their circumstances.

+ Given the assumptions used in this Notes article, a single male age 25 earning $40,000 with no previous savings would need a total contribution rate (employee and employer combined) of less than 3 percent per year until retirement (age 65) for a 50 percent chance of success. A 6.4 percent contribution rate would achieve a 75 percent success rate and a 14 percent contribution rate would achieve a 90 percent success rate. But if a male earning $40,000 were to wait until age 40 to begin saving, he would need a 6.5 percent total contribution rate for just a 50 percent chance of success and a 16.5 percent total contribution rate for a 75 percent chance of success; a 90 percent probability of success would be impossible even with a 25 percent contribution rate.

+ The analysis also shows how large a participant’s current account balance needs to be, by contribution rate, to be “on-track” for a particular level of retirement success.

Employer and Worker Contributions to Health Reimbursement Arrangements and Health Savings Accounts, 2006–2014

+ This report presents findings from the 2014 EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS), as well as earlier surveys, examining the availability of health reimbursement arrangements (HRAs) and health-savings-account (HSA)-eligible plans (consumer-driven health plans, or CDHPs). It also looks at employer and individual contribution behavior.

+ The percentage of workers reporting that their employers contribute to the account decreased in 2014 for the first time since 2009. Among individuals with individual coverage and employer contributions, the percentage with contributions between $200–$999 decreased while contributions of $1,000 or more increased in 2014.

+ Workers’ contributions to their HSAs decreased slightly in 2014.

Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006–2014

April 10, 2015 Comments off

Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006–2014 (PDF)
Source: Employee Benefit Research Institute

Executive Summary

  • In 2014, there was $22.1 billion in health savings accounts (HSAs) and health reimbursement arrangements (HRAs), spread across 10.6 million accounts, according to data from the 2014 EBRI/Greenwald & Associates Consumer Engagement in Health Care Survey (CEHCS). In 2008, there were only 4.2 million accounts with $5.7 billion in assets.
  • The average account balance was $2,077 in 2014, up from $1,356 in 2008.
  • An increasing number of individuals have held their account for three or more years. One-quarter (27 percent) had held their account for three to four years, up from 19 percent in 2008. Thirteen percent had held their account five or more years, up from 4 percent in 2008.
  • Accounts with an employer contribution had a higher average balance than those without an employer contribution. Accounts with an employer contribution had an average balance of $2,403, whereas those without an employer contribution had an average balance of $2,056.
  • Individuals who had held an HRA or HSA for five years or more had $3,092 in their account. Those who had held an account for less than a year had less than $1,500 in their account. In general, average account balances have grown over the longer term regardless of how long the account had been open.
  • Average rollover amounts increased from $1,165 in 2013 to $1,244 in 2014.
    $8.9 billion was rolled over in 2014, down from $9.4 billion in 2013.
  • Eleven percent of individuals had held an account for more than a year without a rollover in 2014.
  • Rollover amounts increased with the length of time an individual had held an account. In 2014, those who had held an account one to two years rolled over an average of $982; those who had held an account three to four years rolled over an average of $1,421; and those who had held an account five or more years rolled over an average of $1,428.
  • Accounts with an employer contribution had a higher amount rolled over than those without an employer contribution. Accounts with an employer contribution had an average rollover of $1,280, whereas those without an employer contribution had an average rollover of $1,069.

Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees

April 2, 2015 Comments off

Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees
Source: Employee Benefit Research Institute

Executive Summary

  • This study separates the more predictable health care expenses in retirement for older Americans (ages 65 and above) from the less predictable ones. Based on utilization patterns and expenses, doctor visits, dentist visits and usage of prescription drugs are categorized as recurring health care services. Overnight hospital stays, overnight nursing-home stays, outpatient surgery, home health care and usage of special facilities are categorized as non-recurring health care services.
  • The data show that recurring health care costs remain stable throughout retirement. The average annual expenditure for recurring health care expenses among the Medicare-eligible population was $1,885. Assuming a 2 percent rate of inflation and 3 percent rate of return, a person with a life expectancy of 90 would require $40,798 at age 65 to fund his or her recurring health care expenses. This does not include recurring expenses like insurance premiums or over-the-counter medications.
  • Usage and expenses of non-recurring health care services go up with age. Nursing-home stays in particular can be very expensive. For people ages 85 and above, the average and the 90th percentile of nursing-home expenses were $24,185 and $66,600 during a two year period, respectively.
  • Nursing-home stays, home health care usage, and overnight hospital stays are much higher in the period preceding death. More than 50 percent in every age group above age 65 received in-home health care from a medically trained person before death. For those ages 85 and above, 62.3 percent had overnight nursing-home stays before death and 51.6 percent were living in a nursing home prior to death.
    Some recurring and non-recurring expenses were also much higher before death.
  • Usage of recurring health care services generally go up with income and usage of non-recurring health care services—except outpatient surgery and special facilities—goes down with income.
  • The top income quartile spent significantly more on nursing-home and home health care expenses than the rest. This could be a result of Medicaid coverage for the lower-income, lower-asset groups.
  • Women above 85 have significantly higher nursing-home usage than men. The rest of the differences between men and women are small.

Retirement Savings Shortfalls: Evidence from EBRI’s Retirement Security Projection Model®

February 20, 2015 Comments off

Retirement Savings Shortfalls: Evidence from EBRI’s Retirement Security Projection Model®
Source: Employee Benefit Research Institute

Executive Summary

• EBRI previously published extensive analysis that focused on the EBRI Retirement Readiness RatingsTM —the probability that households will not run short of money in retirement. This Issue Brief expands the earlier analysis by providing similar analysis of the EBRI Retirement Savings Shortfalls (RSS)—the size of the deficits that households are simulated to generate in retirement

• The Retirement Savings Shortfalls show that for those on the verge of retirement (Early Baby Boomers), the deficits vary from $19,304 (per individual) for married households, increasing to $33,778 for single males and $62,734 for single females.

• While these RSS values may appear to be relatively small considering they represent the sum of present values that may include decades of deficits, it is important to remember that less than half of the simulated lifepaths modeled are considered to be “at risk.” Looking only at those situations where shortfalls are projected shows that the values for Early Boomers vary from $71,299 (per individual) for married households, increasing to $93,576 for single males and $104,821 for single females.

Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey and The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data (EBRI Notes, November 2014)

November 20, 2014 Comments off

Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey and The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data (EBRI Notes, November 2014)
Source: Employee Benefit Research Institute

Executive Summary

Views on the Value of Voluntary Workplace Benefits: Findings from the 2014 Health and Voluntary Workplace Benefits Survey

  • Three-quarters of workers state that the benefits package an employer offers prospective workers is extremely (32 percent) or very (44 percent) important in their decision to accept or reject a job.
  • Nevertheless, 34 percent are only somewhat satisfied with the benefits offered by their current employer, and 22 percent are not satisfied.
  • Eighty-six percent of workers report that employment-based health insurance is extremely or very important, far more than for any other work place benefit.
  • Workers identify lower cost (compared with purchasing benefits on their own) and choice as strong advantages of voluntary benefits. However, they are split with respect to their comfort in having their employer choose their benefits provider, and think the possibility that they may have to pay the full cost of any voluntary benefits is a strong or moderate disadvantage.

The Gap Between Expected and Actual Retirement: Evidence From Longitudinal Data

  • The 2008 economic recession sharply increased the gap between expected and actual retirement. Pre-September 2008, before the investment markets crashed, 83.9 percent of workers retired either earlier or no later than three years after their expected retirement—compared with only 59.3 percent who did so post-September 2008.
  • Longitudinal findings (comparing same cohort at different points in time) show that more people (35.9 percent) actually retired after 65 than expected (18.9 percent), and among those who expected to retire after 65, more than half (56.6 percent) did so. It also shows that 38.0 percent retired before they planned, 48.0 percent retired after they planned, and 14.0 percent retired the year they planned.
  • Longitudinal data also show that people who have a retirement plan tend to retire closer to when they planned, compared with those without a plan. It also found that the gap between expected and actual retirement is generally very small between those with defined benefit plans and defined contribution plans.
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