This page lists the three most recent items in each category with a link to past research in each category. These files are in pdf format and require Adobe Reader for viewing and printing.
Issue Briefs -- Updated June 4, 2008
May 2008 #317 - "Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement: Findings From a Simulation Model"
• Modeling retiree health costs: This Issue Brief examines the uncertainty of health care expenses in retirement by using a Monte Carlo simulation model to estimate the amount of savings needed to cover health insurance premiums and out-of-pocket health care expenses. This type of simulation is able to account for the uncertainty related to individual mortality and rates of return, and computes the present value of the savings needed to cover health insurance premiums and out-of-pocket expenses in retirement. These observations were used to determine asset targets for having adequate savings to cover retiree health costs 50, 75, and 90 percent of the time.
• Not enough savings: Many individuals will need more money than the amounts reported in this Issue Brief because this analysis does not factor in the savings needed to cover long-term care expenses, nor does it take into account the fact that many individuals retire prior to becoming eligible for Medicare. However, some workers will need to save less than what is reported if they keep working in retirement and receive health benefits as active workers.
• Who has retiree health benefits beyond Medicare? About 12 percent of private-sector employers report offering any Medicare supplemental health insurance. This increases to about 40 percent among large employers. Overall, nearly 22 percent of retirees age 65 and older had retiree health benefits in 2005 to supplement Medicare coverage. As recently as 2006, 53 percent of retirees age 65 and older were covered by Medicare Part D, 24 percent had outpatient prescription drug coverage through an employment-based plan. Only 10 percent had no prescription drug coverage.
• Individually purchased Medicare supplements, 2008: Among those who purchase Medigap and Medicare Part D prescription drug coverage at age 65 in 2008, men would need between $79,000 and $159,000 with median prescription drug expenses (50th percentile and 90th percentiles, respectively), and between $156,000 and $331,000 with prescription spending that is at the 90th percentile. Women would need between $108,000 and $184,000 with median prescription drug expenses (50th and 90th percentiles, respectively), and between $217,000 and $390,000 with prescription spending that is at the 90th percentile. The savings needed for couples would range from $194,000 at the 50th percentile to $635,000 at the 90th percentile.
• Employment-based benefits, 2008: Among those who have employment-based retiree health benefits to supplement Medicare, but who must pay their own premiums, men would need between $102,000 and $196,000 in current savings (50th and 90th percentiles, respectively) to cover health care costs in retirement. Women would need between $137,000 and $224,000, respectively, due to their greater longevity. The savings needed for couples would range from $154,000 to $376,000.
• Individually purchased Medicare supplements, 2018: Among those who purchase Medigap and Medicare Part D
prescription drug coverage at age 65 in 2018 (currently age 55), men would need between $132,000 and $266,000
with median prescription drug expenses (50th and 90th percentiles, respectively), and between $261,000 and $555,000 with prescription spending that is at the 90th percentile. Women would need between $181,000 and $308,000 with median prescription drug expenses (50th and 90th percentiles), and between $364,000 and $654,000 with prescription spending that is at the 90th percentile. The savings needed for couples would range from $325,000 at the 50th percentile to $1,064,000 at the 90th percentile.
• Retiree health may be driving longer time in the work force: The declining availability of retiree health benefits may partly explain the rising labor force participation rate among individuals ages 55–64. Between 1996 and 2006, the labor force participation rate increased from 67 percent to 69.6 percent for men and from 49.6 percent to 58.2 percent for women.
January 2008 #313 - "Listening to Consumers: Value-Focused Health Benefits and Education"
• Importance of education in consumer-directed health plans: Greater education of workers about health care and health insurance is widely viewed as critical to the success of consumer-directed health plans, since these rapidly growing health benefit plans typically require far greater responsibility and impose more direct costs on individual health plan participants.
• How can employers educate their workers about health coverage? Is there a payback? Since the vast majority of Americans who have health coverage obtain it through their (or a family member’s) employer, and with health benefits on track to become the single-largest expense of any employee benefit, the issue of education is important both to the sponsors and the beneficiaries of health insurance coverage. Among the key questions facing employers: What kind of education will work? And is there a payback for trying to educate workers about health coverage and care?
• “Top-down” efforts to control costs haven’t worked for long in the past. Trying to “activate consumerism” by promoting consumer-directed health plans seems little different from past managed care attempts to stem out-of-control health costs by changing consumer behavior. But past (and current) “top down” approaches, structured without a better understanding of what consumers need to know and what they value, are likely to be ineffective over time. There is no research consensus that consumer-driven health benefits alone will contain health care costs.
• Importance of consumer values: As marketers have known for years, consumers’ values are the powerful motivators in the psychology of decision making. They involve people’s perceptions about what constitutes life quality, reflect deeply held cultural and personal meanings, vary in importance from person to person, and they can appear to others as irrational and vague.
• The need for values-focused education and wellness outreach: In order to inspire consumers to choose healthy lifestyles and make cost-effective care decisions, they need help resisting some entrenched unhealthful dimensions of American culture and education that takes their psycho-social and income-security concerns into account. But consumers have little or no input into the “consumerism” discussed among policymakers and employers today, and few are receiving health education that addresses their psycho-social and income-security concerns.
• “Consumerism” in health care risks failure by ignoring consumer values. Should health education initiatives prove ineffective, the “consumer-driven health movement” could well be doomed, especially if it relies upon fully educated health consumers taking self-initiated actions. The perceived ineffectiveness of education in 401(k) plans resulted in legislation to add “defaults” to these plans so that they no longer relied upon positive employee action. In the health arena, the default approach is exactly what the consumer-driven health model seeks to move away from.
November 2007 #311 - "Employment-Based Retirement Plan Participation: Geographic Differences and Trends, 2006" --
Participation level: Among working age full-time, full-year wage and salary workers, 53 percent participated in a retirement plan.
--> Trend: This is down from approximately 55 percent in 2004. Participation trends increased significantly when the labor market was tight in the late 1990s, and decreased when unemployment went up in 2001 and 2002. With a more stable job market in 2003 and 2004, the participation trend flattened out. But even with the stable job market in 2005 and 2006, the retirement plan participation level declined; therefore, it appears a much tighter job market may be needed to push participation trends upward.
--> Age: Participation increases with age (60.1 percent for wage and salary workers age 54–64, compared with 29.3 percent for those 21–24).
--> Gender: Among all workers, men had a higher participation level than women, but among full-time, full-year workers, women had a higher percentage participating than men (54.4 percent for women, compared with 51.4 percent for men). Female workers’ lower probability of participation in the aggregate results from their overall lower earnings and/or lower rates of full-time work in comparison with males.
--> Race: Hispanic wage and salary workers were significantly less likely than both white and black workers to participate in a retirement plan. The gap between the percentages of black and white plan participants that exists overall narrows when compared across earnings levels; among workers earning $30,000–$39,999, black and white workers had a virtually identical level of participation. A key factor in Hispanic participation levels is whether the worker is native-born or nonnative-born; native-born Hispanics have participation levels closer to other minority groups.
Past EBRI Issue Briefs on retirement and savings
EBRI Notes -- Updated June 26, 2008
June 2008 - "The Number of Individual Account Retirement Plans Owned by American Families" -- Just over one-half of Americans do not have an individual account retirement plan–Half of families in the United States (50.9 percent) do not own an individual account retirement plan at all, but of those that do own at least one plan, most own only one. The minority of families that own more than one individual account plan tend to have a disproportionate amount of assets in these plans. Where the money is—Families that own more than one account tend to have family heads between the ages of 35–64, and family income of $50,000 or more. An accurate estimate of total retirement assets requires analysis of families’ current-job defined contribution plans, former-job defined contribution plans, and their individual account retirement plans.
May 2008 - "Ownership of Individual Retirement Accounts (IRAs) and 401(k)-Type Plans" -- Most recent data—This article uses the most recent SIPP data from the U.S. Census Bureau to examine the prevalence of IRAs and 401(k)-type plans among workers ages 21−64. Number of 401(k) plans and participants slows, IRA assets grow sharply—The number of 401(k)-type plans and the number of participants in those plans, which had grown sharply through the 1990s, have subsequently grown at a slower pace. Ownership of both 401(k)-type plans and IRAs has risen significantly, as have assets in 401(k)-type plans and IRAs. IRA growth from rollovers—While IRAs have become the largest single vehicle of retirement assets in the United States, the growth continues to be due to rollovers from other tax-qualified retirement plans, and not from new contributions. Roth IRAs get most growth, traditional IRAs have most assets—Most new IRA contributions are going to the tax-free-on-withdrawal (nondeductible) Roth IRAs, not traditional (taxable-onwithdrawal) IRAs. But traditional IRAs hold the bulk of IRA assets. Maximum IRA contribution—In 2005, about 27 percent of IRA owners contributed the maximum amount allowed by law, less than half the rate in 1996, when the contribution limit was half as much as it was in 2005. The data show that contributions to individual account retirement plans are strongly influenced by demographic factors—chiefly income, education, and race.
April 2008 - "Facts from EBRI—The Basics of Social Security: Updated With the 2008 Board of Trustees Report" -- The Social Security Board of Trustees released their 2008 update March 25 on short-range (10 year) and long-range (75-year) projections for the Social Security trust funds. Under intermediate assumptions, the combined OASDI trust fund expenses are expected to exceed income from taxes in 2017. By 2027, OASDI expenses are expected to exceed income from taxes plus interest income, and the trust fund is expected to be exhausted by 2041.
Past EBRI Notes articles on retirement and savings
Fast Facts from EBRI -- Updated June 25, 2008
June 25, 2008 “How Demographic Factors Affect IRA Participation”
June 18, 2008 “How Demographic Factors Affect 401(k)-Type Plan Participation”
June 11, 2008 “Expected Age of Retirement … and Working in Retirement”
Past Fast Facts from EBRI on retirement and savings
EBRI Surveys -- Updated April 17, 2008
April 2008 - "The 2008 Retirement Confidence Survey: Americans Much More Worried About Retirement, Health Costs a Big Concern" -- Americans’ confidence in their ability to afford a comfortable retirement has dropped to its lowest level in seven years, reflecting worries about health costs, the economy, and home values, according to the 18th annual Retirement Confidence Survey® (RCS). Decreases in confidence occurred across all age groups and income levels but were particularly acute among younger workers and those with lower income.
Additional information is at 2008 Retirement Confidence Survey.
March 2008 - "Preparing for Their Future: A Look at the Financial State of Gen X and Gen Y" -- Members of Generations X and Y, acknowledging that they need to pick up the slack when it comes to planning for their futures, are thinking about retirement and have defined financial goals according to a report released today by the American Savings Education Council (ASEC) and the Divided We Fail group (AARP, Business Roundtable, National Federation of Independent Business and the Service Employees International Union).
The on-line survey of 1,752 individuals between the ages of 19-39 was conducted between January 4 and 24, 2008.
March 2008 - "Finding from the 2007 EBRI/Commonwealth FundConsumerism in Health Survey" -- This Issue Brief presents findings from the 2007 EBRI/Commonwealth Fund Consumerism in Health Care Survey. The online survey of 4,217 privately insured adults ages 21–64 was conducted to provide nationally representative data regarding the growth of account-based health plans and high-deductible health plans (HDHPs), and their impact on the behavior and attitudes of health care consumers.
Past EBRI Surveys on retirement and savings
Databook -- see chapter for when last updated.
Chapter 6 -- Income Statistics of the Population Ages 55 and Over - Data is presented here on the following: percentage of the older population in poverty; real median income of the older population by gender; median and mean income of the population by education, marital status and race; real median income by age and source of income; comparison of the measurement of retirement income between the Current Population Survey, Annual Social and Economic (March) Supplement and the National Income and Product Accounts of the United States. The end of the chapter contains a reference section to other EBRI research on income statistics of the population ages 55 and over in a question and answer format.
Chapter 7 -- Sources of Income for Persons Ages 55 and Over - Data is presented here on the following: percentage distribution of population and income by detailed income source, mean income, and median income; aged income from private sector and public sector defined benefit plans; private sector and public sector defined benefit plans by age of recipient; median income from major sources, married couples and unmarried individuals aged 65 and over; percentage of individuals aged 55 and over with income from specified sources and percentage distribution of income from all sources by age; percentage of individuals aged 65 and over with income from specified sources and percentage distribution of income from all sources by income quintile. The end of the chapter contains a reference section to other EBRI research on sources of income for persons ages 55 and over in a question and answer format.
Chapter 8 -- Retirement Annuity and Employment-Based Pension Income - Data is presented here on the following: percentage receiving, median, and mean amount of retirement annuity and/or employment-based pension income recipiency. The data is presented for the following demographics: age, sex, industry, education, marital status, and income quintile. The end of the chapter contains a reference section to other EBRI research on retirement annuity and employment-based pension income in a question and answer format.
Chapter 9 -- U.S. Savings Rates - Data is presented on two government measurements of the personal savings rate in the United States, the National Income and Product Accounts of the United State and the Flow of Funds Accounts of the United States. The end of the chapter contains a reference section to other EBRI research on personal savings in a question and answer format.
Chapter 10 -- Aggregate Trends in Defined Benefit and Defined Contribution Retirement Plan Sponsorship, Participation, and Vesting - Data in this chapter is drawn from four sources: U.S. Department of Labor, Bureau of Labor Statistics, National Compensation Survey; U.S. Department of Labor, Employee Benefit Security Administration, Tabulations off the Form 5500; U.S. Department of Commerce, Bureau of the Census, Current Population Survey, Employee Benefit Supplement and Survey of Income and Program Participation ; U.S. Department of Commerce, Bureau of the Census, Current Population Survey, Annual Social and Economic (or March) Supplement. The end of the chapter contains a reference section to other EBRI research on personal savings in a question and answer format.
