Attachment 1

**Retirement Readiness Study**

**Results of Federal Employee Survey**

This paper summarizes the findings from a survey of the Federal
workforce to examine attitudes and actions towards planning for
retirement. The information from this effort, as well as other research
being conducted by the Office of Personnel Management (OPM) and the
International Foundation for Retirement Education (InFRE), will be used
in the development of the retirement readiness profile index.

Some of the key findings are:

-   The majority of Federal employees (more than eight in ten) state
    they are on track or ahead of schedule in planning and saving for
    their retirement years.

-   More than half of workers expect to retire before age 62, with
    almost four in ten expecting to retire at age 59 or earlier.

-   Nine in ten workers participate in the Thrift Savings Plan.

-   Nine in ten Federal employees say they have given their retirement
    lifestyle at least some thought, and almost nine in ten of those who
    have given thought to their likely lifestyle have given at least
    some thought to its cost.

-   Only one in four workers expects not to work for pay during
    retirement.

-   Less than half have calculated how much they need to save for a
    comfortable retirement; almost four in ten employees who have
    calculated this need have estimated/guessed or used a self-created
    worksheet.

-   Only two in ten workers have a primary professional financial
    advisor whom they use to help them with their retirement plan and
    investment decisions.

-   When asked to rank their [most]{.underline} trusted sources for
    information about planning, half of the workers identify financial
    professionals (50%), followed by material provided by the employer
    (38%).

-   Almost eight in ten workers would be very or extremely interested in
    their employer providing additional information about preparing for
    retirement.

-   Workers appear to understand the impact of debt on their retirement
    savings as almost seven in ten workers have given this significant
    thought.

-   Almost four in ten workers are not confident about their ability to
    make investment decisions, while less then two in ten believe they
    have a lot or great deal of knowledge about investing.

-   About three-fourths of workers describe themselves as moderate to
    conservative investors, with less than one in ten (7%) stating a
    willingness to take substantial investment risks.

**[OVERVIEW]{.underline}**

InFRE is working with the Office of Personnel Management to develop
tools and identify educational resources that will help Federal workers
be better prepared for their retirement years. The first step in this
project was to survey a representative sample of Federal workers to
explore their state of preparedness and retirement financial literacy.
This report identifies the findings from this effort.

Incorporating input from a team of more than 30 experts from the
retirement and financial fields, InFRE developed a survey instrument
that addressed a balanced approach to retirement planning. Questions
were designed to address issues of physical wellness and the
psychological and social aspects of retirement, as well as financial
preparation.

Survey results were segmented and analyzed by career stage because the
concept of being retirement ready is dependent on how many more years an
employee has left to plan. Career stage was calculated by subtracting
the respondents current age from the age they said they would retire
from the government. 

-   Early Career -- *25 or more years before planned retirement.*

-   Mid Career -- *10 to 24 years before planned retirement.*

-   Late Career -- *less than 10 years before planned retirement.*

The results from this survey will be valuable in the development of the
retirement readiness profile index that can be used by Federal agencies
in two ways. First, the profile can be used as a tool to identify the
general readiness of their employees and plan specific programs to
address the identified issues; second, it can also be used by individual
employees to create their own retirement readiness profile and take
necessary steps to strengthen any identified weaknesses.

# Methodology

These findings are part of the Federal Worker Retirement Readiness
Survey, conducted by the International Foundation for Retirement
Education (InFRE) on behalf of the Office of Personnel Management as
part of the process to measure the retirement readiness of civilian
Federal workers. The survey was conducted between May and September 2005
through a 20-minute Internet survey sent to 22,701 Federal workers email
addresses. A total of 9,229 surveys were completed but 1,935 couldn't be
used because they couldn't be matched with OPM data. The final sample
size was 7,294 usable surveys (a response rate of 32%). A stratified
sampling design was used to select workers for participation in the
study, in an effort to obtain sufficient responses from minority and
lower-income groups. The final sample obtained was then weighted by age,
gender, pay, and race/ethnicity to match the actual proportions in the
Federal civilian workforce. Data presented in tables in this report may
not total to 100 due to rounding and/or missing categories.

In theory, an unweighted sample of 7,294 yields a statistical precision
of plus or minus 1.1 percentage points (with 95 percent certainty) of
what the results would be if all civilian Federal workers were surveyed
with complete accuracy. The weights used in this study decrease this
precision slightly to plus or minus 1.4 percentage points. There are
other possible sources of error in all surveys, however, that may be
more serious than theoretical calculations of sampling error. These
include refusals to be interviewed and other forms of nonresponse, the
effects of question wording and question order, and screening. While
attempts are made to minimize these factors, it is impossible to
quantify the estimation error that may result from them.

**[ATTITUDE ABOUT READINESS]{.underline}**

When it comes to planning and saving for retirement, Federal workers are
considerably more likely to believe they are on track or ahead of
schedule than American workers in general.[^1] Five in ten Federal
workers, but less than one in ten American workers, report they are
ahead of schedule in planning and saving for their retirement. On the
other hand, less then two in ten Federal employees, compared to more
than five in ten American workers, think they are behind schedule.

**Perceived Progress in Planning and Saving for Retirement**

When it comes to planning and saving for retirement, would you say you
are . . . ?

  ---------------------------- --------------------- ---------------------
                               **Federal\            **American\
                               Workers\              Workers^1\
                               (n=7294)**            ^(n=1001)**

  A lot ahead of schedule      16%                   3%

  A little ahead of schedule   33                    4

  On track                     33                    37

  A little behind schedule     9                     23

  A lot behind schedule        5                     32

  Don't know                   4                     1
  ---------------------------- --------------------- ---------------------

Not surprisingly, attitudes about retirement preparedness are strongly
linked to affluence among American workers overall, with higher-income
workers tending to believe they are better prepared than lower-income
workers. Within the Federal workforce, however, this trend is reversed.
In fact, those employees identified with household wealth or pay below
\$50,000, regardless of where they are in their career, are more likely
to say they are "a lot ahead of schedule" than those with household
wealth or pay of \$50,000 or more. Household wealth is the total amount
of personal savings and workplace retirement savings accounts for the
respondent and his or her spouse.  It does not include the value of
their home or employer provided defined benefit pension plans. 

**Perceived Progress in Planning and Saving for Retirement by Household
Wealth**

When it comes to planning and saving for retirement, would you say you
are . . . ?

  ------------------- --------------- -------------- --------------- -------------- --------------- --------------
                      **Early                        **Mid Career**                 **Late Career** 
                      Career**                                                                      

                      **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                      (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  A lot ahead of      21%             3%             29%             8%             23%             6%
  schedule                                                                                          

  A little ahead of   39              30             38              32             38              26
  schedule                                                                                          

  On track            26              40             20              39             25              46

  A little behind     6               17             6               14             7               12
  schedule                                                                                          

  A lot behind        5               9              2               5              2               9
  schedule                                                                                          

  Don't know          3               1              4               2              3               2
  ------------------- --------------- -------------- --------------- -------------- --------------- --------------

**Perceived Progress in Planning and Saving for Retirement by Pay**

When it comes to planning and saving for retirement, would you say you
are . . . ?

  ------------------- --------------- -------------- --------------- -------------- --------------- --------------
                      **Early                        **Mid Career**                 **Late Career** 
                      Career**                                                                      

                      **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                      (n=349)**       (n=339)**      (n=890)**       (n=1842)**     (n=926)**       (n=2930)**

  A lot ahead of      22%             11%            28%             15%            19%             11%
  schedule                                                                                          

  A little ahead of   36              34             34              35             34              30
  schedule                                                                                          

  On track            22              35             22              32             29              40

  A little behind     9               10             7               11             8               9
  schedule                                                                                          

  A lot behind        5               7              2               4              4               7
  schedule                                                                                          

  Don't know          7               3              6               4              7               3
  ------------------- --------------- -------------- --------------- -------------- --------------- --------------

**[RETIREMENT AGE AND LONGEVITY]{.underline}**

One of the first steps in adequately planning for retirement includes an
estimate of when this might occur. Nearly six in ten Federal workers
have given significant thought to when they would like to retire. As can
be expected, the amount of thought given to this date increases the
closer employees get to retirement age, with more than seven in ten late
career workers giving their retirement date serious thought, compared to
less then three in ten early career employees.

**Thought Given to Timing of Retirement**

How much thought have you given to when you would like to retire?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  A great deal of thought  30%          10%         23%          43%

  A lot of thought         27           16          27           32

  Some thought             30           41          36           21

  Only a little thought    10           26          11           3

  No thought               2            7           3            1
  ------------------------ ------------ ----------- ------------ ------------

While most American workers believe they will work until at least age
65, Federal workers anticipate a much earlier retirement. In fact,
almost seven in ten Federal workers expect to retire before age 65. Late
career employees are especially likely to identify an earlier retirement
age, with almost half predicting their retirement from the Federal
government will begin before age 60.

**Expected Age at Retirement**

Realistically, at what age do you think you will be able to retire?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  Under 55                 7%           1%          8%           9%

  55-59                    31           13          30           37

  60-61                    15           20          14           14

  62-64                    15           9           14           18

  65                       12           24          13           7

  66 or older              10           18          10           7

  Never retire             1            2           2            1

  Don't know               10           14          10           8
  ------------------------ ------------ ----------- ------------ ------------

While some Federal workers may underestimate how long they can expect to
live in retirement, it appears workers are roughly on target. While both
men and women expect to retire at age 60 on average, men say they will
spend about 22 years in retirement (to age 82) and women think they will
spend about 24 years (to age 84). In general, a 60-year-old man can
expect to live until age 82, while a 60-year-old woman can expect to
live until age 85.[^2]

Still, two in ten say they do not know how long they can expect to spend
in retirement. Moreover, late career workers (21%) are as likely as mid
(19%) and early (23%) career workers to have neglected giving
consideration to this key component of retirement planning.

**[RETIREMENT LIFESTYLES AND COST]{.underline}**

In order to determine preparedness, it is important for workers to have
an idea of what their life will be like in retirement. What they
envision their retirement will be like, and what steps, if any, they are
taking to prepare for the day they retire was explored in the survey.
Not surprisingly, workers who are closer to retirement are more likely
to have given considerable thought and planning to their expected
lifestyle.

Nine in ten Federal workers have given at least some thought to their
lifestyle in retirement, with almost six in ten saying they have given a
great deal or a lot of thought to this issue. The proportions reporting
a great deal or a lot of thought increase from less than four in ten
among early career workers to seven in ten among late career employees.

**Thought Given to Desired Lifestyle in Retirement**

How much thought have you given to the type of lifestyle you would like
to have in retirement, that is, where you would like to live in
retirement, how you would like to live, and the things you would like to
do?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  A great deal of thought  27%          12%         22%          36%

  A lot of thought         31           24          31           34

  Some thought             32           42          36           25

  Only a little thought    8            15          9            4

  No thought               2            6           2            1
  ------------------------ ------------ ----------- ------------ ------------

Almost all of those who have thought about the type of lifestyle they
would like to have in retirement also say they have given at least some
thought to the cost of that lifestyle (88%). Late career employees are
twice as likely as early career workers to indicate they have given a
great deal or a lot of thought to this cost (65% vs. 32%).

**Thought Given to Cost of Desired Retirement Lifestyle**

How much thought have you given to how much this retirement lifestyle
would cost? (Among those having thought about their desired lifestyle in
retirement)

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7139)**   Career\     Career\      Career\
                                        (n=642)**   (n=2670)**   (n=3827)**

  A great deal of thought  23%          10%         18%          31%

  A lot of thought         29           21          27           34

  Some thought             36           44          40           29

  Only a little thought    11           20          13           5

  No thought               2            4           2            1
  ------------------------ ------------ ----------- ------------ ------------

While a few workers (14%) dream of having a standard of living in
retirement higher than their working years, nearly two-thirds of Federal
workers who have considered their retirement lifestyle say they
realistically prefer a retirement standard of living the same as their
working years. A very small percentage of employees (6%) state they
prefer a standard of living that would be lower than their working
years.

The data suggest some workers may adjust their expectations downwards as
they approach retirement age. Early career employees, particularly those
with household wealth under \$50,000, are more likely than those in
other career stages to say they prefer a higher standard of living in
retirement. At the same time, the percentage willing to settle for a
lower standard of living either initially or after 10 years of
retirement increases from 14% among early career employees to 25% of
those late in their career.

**Preferred Standard of Living in Retirement by Household Wealth**

*Would you realistically prefer a standard of living in retirement that
is . . . ?*

(Among those having thought about their desired lifestyle in retirement)

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7139)**   (n=424)**       (n=129)**      (n=1201)**      (n=1066)**     (n=1319)**      (n=1880)**

  Higher than in    14%          26%             17%            16%             14%            12%             8%
  your working                                                                                                 
  years                                                                                                        

  The same as in    64           57              75             65              65             60              66
  your working                                                                                                 
  years                                                                                                        

  The same as in    15           12              6              12              15             20              17
  your working                                                                                                 
  years for the                                                                                                
  first 10 years of                                                                                            
  your retirement,                                                                                             
  and then lower                                                                                               
  for the remaining                                                                                            
  years                                                                                                        

  Lower than in     6            3               2              5               6              7               7
  your working                                                                                                 
  years                                                                                                        
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Despite the thought workers say they have put into the cost of their
retirement lifestyle, they may not be doing a good job of estimating the
income needed to support it. The data suggest many employees may be
assuming they can maintain the same standard of living as their working
years at a reduced monthly income in retirement. In fact, almost half of
all workers estimate they will need less than \$4,000 per month
(\$48,000 per year) to maintain their desired lifestyle in retirement.

These findings are most troubling for late career employees,
three-quarters of whom expect to maintain the same standard of living or
better in retirement. More than half with pay of at least \$50,000
expect to need less than \$4,000 per month to maintain their desired
lifestyle, while almost half with less than \$50,000 in pay think they
will be able to maintain their lifestyle with less than \$3,000 per
month (\$36,000).

**Amount of Monthly Income Needed in Retirement by Pay**

After you retire, what is your best estimate of the amount of money you
will need as income each month to maintain your desired lifestyle?

+-----------------+------+------+------+------+------+------+------+
|                 |      | **E  |      | *    |      | **   |      |
|                 |      | arly |      | *Mid |      | Late |      |
|                 |      | Care |      | Care |      | Care |      |
|                 |      | er** |      | er** |      | er** |      |
+-----------------+------+------+------+------+------+------+------+
|                 | **To | *    | **\$ | *    | **\$ | *    | **\$ |
|                 | tal\ | *\<\ | 50,0 | *\<\ | 50,0 | *\<\ | 50,0 |
|                 | (n   | $50, | 00+\ | $50, | 00+\ | $50, | 00+\ |
|                 | =729 | 000\ | (    | 000\ | (n   | 000\ | (n   |
|                 | 4)** | (    | n=33 | (    | =184 | (    | =293 |
|                 |      | n=34 | 9)** | n=89 | 2)** | n=92 | 0)** |
|                 |      | 9)** |      | 0)** |      | 6)** |      |
+-----------------+------+------+------+------+------+------+------+
| ### Le          | 3%   | 4%   | 2%   | 5%   | 2%   | 11%  | 2%   |
| ss than \$2,000 |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| \$2,000-\$2,999 | 18   | 18   | 10   | 30   | 12   | 36   | 16   |
+-----------------+------+------+------+------+------+------+------+
| \$3,000-\$3,999 | 25   | 29   | 23   | 27   | 23   | 28   | 24   |
+-----------------+------+------+------+------+------+------+------+
| \$4,000-\$4,999 | 19   | 20   | 21   | 16   | 20   | 9    | 21   |
+-----------------+------+------+------+------+------+------+------+
| \$5,000-\$6,999 | 15   | 9    | 18   | 6    | 19   | 6    | 19   |
+-----------------+------+------+------+------+------+------+------+
| \$7,000-\$9,999 | 6    | 2    | 7    | 2    | 9    | 1    | 9    |
+-----------------+------+------+------+------+------+------+------+
| \$10,000 or     | 4    | 1    | 4    | 2    | 6    | 1    | 3    |
| more            |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Don't know      | 9    | 17   | 14   | 12   | 9    | 8    | 6    |
+-----------------+------+------+------+------+------+------+------+

Where employees will live and the availability of home equity (i.e.,
they own their own home at the time of retirement) to support their
retirement lifestyle is also an important issue in retirement planning.
Seven in ten (69%) Federal workers say it is extremely or very likely
they will own their primary home at the time they retire, and another
13% believe it somewhat likely they will own their home at that time. As
might be expected, the likelihood of owning their home at retirement
increases with income and wealth. Married workers are also more likely
than unmarried workers to expect to own a home at retirement.

Federal workers who expect to own their home at retirement cite a
variety of plans for that home. The plurality---more than
one-third---have no expectations of moving and intend to stay in their
same home for the rest of their lives. However, two in ten say they will
sell their home and buy a home of lesser value. More than one in ten
thinks they will sell their home and buy a home of the same value.
Virtually no employees who are likely to own a home at retirement expect
to sell it and rent a home in their retirement years. The expectation of
staying in place increases with career stage and is inversely related to
household wealth.

**Plans for Home at Retirement by Household Wealth**

When you retire, which of the following are more likely to do? Select
all that you think will realistically apply. (Among those likely to own
their primary home at retirement)

+-----------------+------+------+------+------+------+------+------+
|                 |      | **E  |      | *    |      | **   |      |
|                 |      | arly |      | *Mid |      | Late |      |
|                 |      | Care |      | Care |      | Care |      |
|                 |      | er** |      | er** |      | er** |      |
+-----------------+------+------+------+------+------+------+------+
|                 | **To | *    | **\$ | *    | **\$ | *    | **\$ |
|                 | tal\ | *\<\ | 50,0 | *\<\ | 50,0 | *\<\ | 50,0 |
|                 | (n   | $50, | 00+\ | $50, | 00+\ | $50, | 00+\ |
|                 | =574 | 000\ | (    | 000\ | (    | 000\ | (n   |
|                 | 9)** | (    | n=12 | (    | n=95 | (    | =157 |
|                 |      | n=37 | 1)** | n=96 | 4)** | n=89 | 3)** |
|                 |      | 7)** |      | 0)** |      | 6)** |      |
+-----------------+------+------+------+------+------+------+------+
| ## Primary home |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Stay in your    | 35%  | 30%  | 23%  | 37%  | 30%  | 43%  | 38%  |
| current home    |      |      |      |      |      |      |      |
| for the rest of |      |      |      |      |      |      |      |
| your life       |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Sell your       | 19%  | 14%  | 24%  | 16%  | 23%  | 17%  | 21%  |
| current home    |      |      |      |      |      |      |      |
| and buy a home  |      |      |      |      |      |      |      |
| of lesser value |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Sell your       | 12%  | 8%   | 11%  | 11%  | 14%  | 11%  | 14%  |
| current home    |      |      |      |      |      |      |      |
| and buy a home  |      |      |      |      |      |      |      |
| of the same     |      |      |      |      |      |      |      |
| value           |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Sell your       | 7%   | 9%   | 2%   | 10%  | 8%   | 5%   | 6%   |
| current home    |      |      |      |      |      |      |      |
| and buy a home  |      |      |      |      |      |      |      |
| of greater      |      |      |      |      |      |      |      |
| value           |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Sell your       | 1%   | 0%   | 0%   | 1%   | 1%   | 1%   | 1%   |
| current home    |      |      |      |      |      |      |      |
| and rent a home |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| ## Second Home  |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Buy a second    | 14%  | 18%  | 24%  | 11%  | 18%  | 10%  | 13%  |
| home            |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Sell a          | 4%   | 3%   | 6%   | 3%   | 3%   | 3%   | 6%   |
| currently-owned |      |      |      |      |      |      |      |
| second home     |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Rent a second   | 3%   | 3%   | 7%   | 1%   | 3%   | 1%   | 3%   |
| home            |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
|                 |      |      |      |      |      |      |      |
+-----------------+------+------+------+------+------+------+------+
| Don't know      | 21%  | 31%  | 29%  | 22%  | 20%  | 18%  | 16%  |
+-----------------+------+------+------+------+------+------+------+

Understanding how extended family responsibilities could potentially
impact retirement income needs is important in planning. With the delay
of childbearing and increased life expectancy, future retirees are more
likely than previous generations of retirees to find they must devote
some of their financial resources toward aging parents, children, or
other members of their extended family. Federal employees are fairly
evenly split between those who say there is some (or more) likelihood
and those who feel there is little (or no) likelihood they will provide
financial support for an extended family member in their retirement
years. The likelihood of stating this eventuality as not too or not at
all likely increases as their career approaches retirement.

**Financial Support for Family Members During Retirement**

How likely is it that you will be providing financial support for an
extended family member, such as parents, parents-in-law, dependent
children or grandchildren during your retirement?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  Extremely likely         6%           7%          6%           6%

  Very likely              12           17          12           10

  Somewhat likely          29           34          30           25

  Not too likely           36           29          37           37

  Not at all likely        13           5           10           19

  Don't know               4            8           4            2
  ------------------------ ------------ ----------- ------------ ------------

**[SOURCES OF RETIREMENT FUNDING]{.underline}**

Retirement planning also requires an awareness and realistic
expectations as to employees' sources of retirement income, from
employer-sponsored benefits to equity in their home.

Seven in ten Federal workers report they will qualify for monthly
benefits from Social Security in retirement, however only six in ten
late career employees expect to receive these benefits. This result is
largely driven by employees covered by the Civil Service Retirement
System (CSRS). Only three in ten (29%) late career CSRS employees expect
to qualify for benefits from Social Security. CSRS does not include
Social Security as part of the government retirement plan. Only those
employees with Social Security coverage outside their Federal employment
will be eligible for benefits. Eight in ten (83%) early career employees
covered by the Federal Employees Retirement System (FERS) expect to
qualify for monthly Social Security benefits.

Of concern is the fact that almost three in ten (27%) FERS employees
state they don't know if they will qualify for Social Security. Ten
percent of mid career and 5% of late career FERS workers also are
unaware of whether they qualify for these benefits.

Pensions and employer-provided benefits generally provide a major source
of retirement funding, and half of all workers say they have given a
great deal or a lot of thought to the amount of monthly income they can
expect from these sources. Another third have given some thought to how
much they can expect. Late career employees tend to have given this the
most thought (67% a great deal or a lot), particularly those with
savings and investments of \$50,000 or more (72%).

**Thought Given to Amount of Income From Retirement Plans by Household
Wealth**

How much thought have you given to the amount of monthly income you can
expect to receive in retirement from retirement plans and defined
benefit pension plans?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  A great deal of   22%          6%              8%             15%             18%            30%             36%
  thought                                                                                                      

  A lot of thought  27           18              19             22              26             34              35

  Some thought      33           37              36             41              40             27              24

  Only a little     11           22              25             14              13             6               4
  thought                                                                                                      

  No thought        5            14              11             7               2              2               1
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Accumulated savings from "at work" savings plans also provide an
important resource for retirement income. On a national basis, eight in
ten workers offered a plan by their employer report they contribute a
portion of their pre-tax income to it, according to the 2005 Retirement
Confidence Survey.[^3] Federal worker participation is higher, with nine
in ten employees reporting they contribute to the Thrift Savings Plan.
This impressively increases to between 94% and 100% participation for
employees who have household wealth of \$50,000 or more at each career
point.

**Participation in Thrift Savings Plan by Household Wealth**

Do you contribute to the Thrift Savings Plan at work?

  ------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                             **Early                        **Mid Career**                 **Late Career** 
                             Career**                                                                      

                **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Yes           91%          91%             100%           90%             99%            81%             94%

  No            9            9               0              10              1              19              6
  ------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Successful planning must also take into consideration the family
resources available in retirement, including the spouse's employer
benefits and savings accumulations. Fewer indicate their spouse
participates in an "at work" retirement plan. Among married workers with
employed spouses, only about six in ten identify the availability of
employer-sponsored savings plans, with less than five in ten
contributing to these. Only one-third of employed spouses have a
pension/defined benefit plan as part of their employer benefits, and
just one in twenty are provided a profit sharing plan at work.

**Spouse Participation in Employer Retirement Plan**

Which of the following types of retirement plans does your spouse
participate in? (Among workers with an employed spouse)

+---------------------------+---------+---------+---------+---------+
|                           | *       | **Early | **Mid   | **Late  |
|                           | *Total\ | Career\ | Career\ | Career\ |
|                           | (n=     | (n      | (n=     | (n=     |
|                           | 3578)** | =318)** | 1461)** | 1799)** |
+---------------------------+---------+---------+---------+---------+
| **A savings plan, such as | 63%     | 58%     | 65%     | 62%     |
| a 401(k), 403(b), 457 or  |         |         |         |         |
| Thrift Savings Plan**     |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
| > Contributed to plan in  | 48%     | 38%     | 50%     | 49%     |
| > 2004                    |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
| > Employer contributed to | 41%     | 36%     | 45%     | 39%     |
| > plan in 2004            |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
|                           |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
| **Traditional pension or  | 33%     | 18%     | 28%     | 42%     |
| defined benefit plan**    |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
|                           |         |         |         |         |
+---------------------------+---------+---------+---------+---------+
| **Profit-sharing plan**   | 6%      | 5%      | 6%      | 6%      |
+---------------------------+---------+---------+---------+---------+

Federal workers were also asked about savings they are accumulating for
retirement in addition to the Thrift Savings Plan or their spouse's "at
work" plan. More than half noted that they are currently saving for
retirement on a regular basis outside of work. The likelihood of
reporting these additional savings increases with career stage and
household wealth.

**Saving for Retirement Outside of Work by Pay**

Not including money you save through your employers' retirement plans or
Social Security taxes, are you personally saving money on a regular
basis for retirement?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=349)**       (n=339)**      (n=890)**       (n=1842)**     (n=926)**       (n=2930)**

  Yes               54%          31%             53%            38%             52%            55%             66%

  No                45           66              47             60              47             42              33
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

While only 6% of Federal workers say they have no savings not reserved
for routine bills and expenses, more than four in ten of those who
provided this amount in the survey say they have between \$1 and
\$49,999 (including 35% of late career workers). One-quarter have
between \$50,000 and \$149,999, and just over one-quarter report having
accumulated \$150,000 or more. Not surprisingly, accumulated savings
increase as pay rises.

**Total Amount Accumulated That Is Not Otherwise Earmarked for Routine
Bills and Expenses by Pay**

As of today, how much money have you accumulated in total that is not
earmarked for routine bills and expenses? (Among those providing a
dollar amount)

  --------------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                     **Early                        **Mid Career**                 **Late Career** 
                                     Career**                                                                      

                        **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                        (n=6206)**   (n=425)**       (n=488)**      (n=746)**       (n=1882)**     (n=576)**       (n=2074)**

  No savings            6%           14%             1%             14%             5%             11%             4%

  \$1-\$4,999           15           41              13             28              9              19              8

  \$5,000-\$9,999       9            13              13             17              6              12              6

  \$10,000-\$49,999     19           26              27             22              18             24              15

  \$50,000-\$99,999     14           4               24             11              15             15              13

  \$100,000-\$149,999   10           1               9              4               14             7               11

  \$150,000-\$249,999   11           \<0.5           9              2               14             5               16

  \$250,000-\$499,999   10           0               3              1               13             4               15

  \$500,000 or more     6            \<0.5           \<0.5          1               6              3               12
  --------------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

The expectation employees will work in retirement is a growing trend
among all Americans and provides an additional source of revenue when
personal savings is not sufficient. The 2005 Retirement Confidence
Survey[^4] identified that two-thirds (66%) of workers expect to work
for pay in retirement. Only one in four Federal workers expects not to
work for pay during retirement. Workers closer to retirement are more
likely than those earlier in their career to say they will continue
working, while those with household wealth under \$50,000 are also
slightly more likely than more affluent workers to expect to work in
retirement.

**Plans To Work for Pay in Retirement by Household Wealth**

Do you (and/or your spouse) plan to work for pay after you retire?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Yes               38%          35%             24%            39%             34%            45%             41%

  No                25           22              20             22              31             24              28

  Don't know        38           43              56             39              35             32              31
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Among those stating they intend to work for pay in retirement, almost
half of workers say the length of time they intend to continue
employment is five to fourteen years, while one in four state for "as
long as possible." The length of time the spouse is expected to work in
retirement is generally less than that of the Federal employee who is
responding.

Understanding how home equity may be used as a source of retirement
income is critical in planning for retirement. Although almost three in
ten workers planning to sell their home at retirement state it is
extremely or very likely they will use money from the sale to help
finance retirement, close to four in ten think it not too or not at all
likely. Workers closer to retirement are more likely than those further
from retirement to say it is extremely likely that they will use money
from the sale of their home. At the same time, however, late career
workers are also more likely than early career employees to say it is
not too or not at all likely.

**Likelihood of Using Money from Sale of Home To Finance Retirement**

*How likely do you think you will be to use the money from the sale of
your home to help finance your retirement? (Among those likely to sell
home* at retirement)

  ------------------------ ------------ ----------- ----------- -----------
                           **Total\     **Early     **Mid       **Late
                           (n=1259)**   Career\     Career\     Career\
                                        (n=108)**   (n=477)**   (n=674)**

  Extremely likely         10%          5%          8%          13%

  Very likely              18           19          17          18

  Somewhat likely          33           44          34          27

  Not too likely           29           21          28          31

  Not at all likely        9            5           9           9

  Don't know               2            6           3           1
  ------------------------ ------------ ----------- ----------- -----------

Few workers (only about one in ten) are anticipating an inheritance to
help provide financial support in retirement. Of those who believe they
are likely to receive an inheritance, only one in ten expect this to be
an important part of their financial future in retirement. More affluent
workers (household wealth of \$50,000 or more) are somewhat more likely
to expect an inheritance, while those less affluent (household wealth
under \$50,000) are more likely to count on the inheritance to help them
in retirement.

**Likelihood of Inheriting Money To Help Fund Retirement by Household
Wealth**

How likely are you to inherit money to help you fund your retirement?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Extremely likely  5%           3%              7%             3%              7%             3%              8%

  Very likely       8            7               9              5               11             5               10

  Somewhat likely   17           17              29             15              22             13              16

  Not too likely    27           31              30             31              30             24              23

  Not at all likely 39           36              18             41              28             53              42

  Don't know        4            6               7              5               2              2               1
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

**Importance of Inheritance in Helping To Fund Retirement by Household
Wealth**

How important a role will an inheritance play in helping to fund your
retirement? (Among those expecting an inheritance)

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=2047)**   (n=121)**       (n=62)**       (n=276)**       (n=411)**      (n=277)**       (n=624)**

  Extremely/very    12%          13%             5%             14%             8%             19%             13%
  likely                                                                                                       

  Somewhat likely   26           22              25             29              29             27              25

  Not too/not at    60           61              70             55              63             52              61
  all likely                                                                                                   

  Don't know        2            4               0              3               1              2               1
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

#### PERSONAL PLANNING

Determining how much money will be needed to save for retirement isn't
easy to do. Only four in ten (42%) American workers have tried to
calculate this amount, according to the 2005 Retirement Confidence
Study.[^5] This is fairly consistent with the findings from the Federal
worker survey, where slightly less than five in ten have tried to figure
out their retirement income needs. Federal workers with \$50,000 or more
in accumulated household wealth are more likely than less affluent
workers to report performing this calculation, with affluent late career
workers being the most likely to have done so.

**Doing a Retirement Savings Needs Calculation by Household Wealth**

Have you tried to figure out how much money you will need to have saved
by the time you retire (in addition to whatever you will get from Social
Security and pension benefits) to live comfortably in retirement)?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Yes               48%          29%             52%            31%             58%            47%             71%

  No                46           63              48             62              38             47              26

  Don't know/don't  6            7               \<0.5          8               3              6               3
  remember                                                                                                     
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Of those who have tried to calculate their retirement savings needs, six
in ten say they have done this within the past year. Mid and late career
workers with at least \$50,000 in accumulated savings are more likely
than their less wealthy counterparts to have conducted a needs analysis
within the past year.

**Timing of Retirement Savings Needs Calculation by Household Wealth**

When did you (most recently) calculate how much you would need to save
for retirement? (Among those doing a retirement calculation)

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=3511)**   (n=118)**       (n=64)**       (n=367)**       (n=603)**      (n=605)**       (n=1339)**

  Within the past 6 36%          36%             36%            22%             35%            33%             49%
  months                                                                                                       

  6-12 months ago   24           29              33             25              29             20              22

  13-24 months ago  14           18              14             20              16             14              10

  More than 2 years 17           10              14             23              16             23              15
  ago                                                                                                          

  Don't know/don't  8            7               4              10              4              10              5
  remember                                                                                                     
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

There are many different methods for calculating retirement savings
needs, from professional financial advisors to guessing. Early and mid
career workers most often use an on-line calculator (43% and 32%
respectively), while more than four in ten late career workers estimate
income needs by guessing or using a self-created worksheet.

**Method Used for Calculating Retirement Savings Needs**

Which of the following comes closest to describing the method you used
to do the calculation? (Among those doing a retirement calculation)

  ------------------------- ------------ ----------- ------------ ------------
                            **Total\     **Early     **Mid        **Late
                            (n=3511)**   Career\     Career\      Career\
                                         (n=199)**   (n=1074)**   (n=2238)**

  Used an on-line form or   25%          43%         32%          17%
  calculator                                                      

  Estimated or guessed      20           15          18           23

  Used a self-created       17           9           11           23
  worksheet                                                       

  Calculated by a financial 15           12          16           15
  advisor                                                         

  Used a paper worksheet    9            7           9            9
  obtained from a financial                                       
  services company,                                               
  financial educational                                           
  publication or other                                            
  source                                                          

  Used a computer program   8            9           8            8

  Read or heard that is how 3            2           3            2
  much is needed                                                  

  Don't know/don't remember 4            2           4            4
  ------------------------- ------------ ----------- ------------ ------------

The amount Federal workers think they need to accumulate for retirement
in addition to employer pensions and Social Security benefits varies
widely. Among those who calculated their retirement savings needs, about
one in four state they need to accumulate less than \$500,000 by the
time they retire. Late career workers tend to think they will need less
than early career workers. This may occur because late career workers
are more likely to be covered by the Civil Service Retirement System,
which provides a larger defined benefit. Most early career workers are
covered by the Federal Employees Retirement System and therefore have
more personal responsibility for their retirement income. Goals tend to
increase with household income.

**Retirement Savings Goal by Household Income**

What is the total lump sum dollar amount that you think you will need to
accumulate by the time you retire to maintain your desired lifestyle?
(Among those doing a retirement calculation)

  --------------------- ------------ --------------- -------------- ---------- --------------- -------------- ---------- --------------- --------------
                                     **Early                        **Mid                                     **Late                     
                                     Career**                       Career**                                  Career**                   

                        **Total\     **\<\$75,000\   **\$75,000+\              **\<\$75,000\   **\$75,000+\              **\<\$75,000\   **\$75,000+\
                        (n=3511)**   (n=108)**       (n=88)**                  (n=338)**       (n=714)**                 (n=587)**       (n=1596)**

  Less than \$100,000   9%           7%              0%                        7%              1%                        25%             10%

  \$100,000-\$249,999   15           8               5                         16              5                         27              19

  \$250,000-\$499,999   15           8               2                         20              10                        13              21

  \$500,000-\$749,999   13           12              10                        16              14                        6               14

  \$750,000-\$999,999   11           16              10                        14              17                        3               9

  \$1-\$2 million       17           26              32                        15              28                        4               12

  \$2 million or more   10           16              37                        3               17                        1               5

  Don't know/Don't      11           6               4                         9               7                         20              10
  remember                                                                                                                               
  --------------------- ------------ --------------- -------------- ---------- --------------- -------------- ---------- --------------- --------------

Discussions about retirement goals and the financing required to support
them is a critical part of planning for married workers. However, only a
third of married Federal workers appear to be discussing these issues to
any substantial degree with their spouse. As with other types of
planning, workers appear to become more likely to conduct these
discussions as they near retirement, particularly among the more
affluent.

**Discussion with Spouse Regarding Retirement Goals and Financing by
Household Wealth**

To what degree have you and your spouse discussed your goals for
retirement and the financing required to achieve them? (Among married
workers)

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=4767)**   (n=221)**       (n=95)**       (n=723)**       (n=789)**      (n=762)**       (n=1383)**

  A great deal      13%          7%              8%             8%              11%            15%             21%

  A lot             20           9               13             14              20             25              29

  Some              37           35              46             37              40             35              35

  Only a little     20           29              22             23              23             19              12

  Not at all        9            18              11             17              6              6               2
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

**[INVESTMENT STRATEGIES]{.underline}**

Making investment decisions appropriate for long-term retirement savings
can be difficult, but this is a critical step in successful retirement
planning. Most Federal workers try to make these investment decisions
essentially on their own, without the aid of a primary professional
financial advisor. Just two in ten say they have a primary advisor who
helps them with their retirement planning and/or investment decisions.
Workers with household wealth of \$50,000 or more are more likely to use
a professional advisor, with one-third of affluent, late career
employees stating they use this type of service.

**Professional Financial Advisor by Household Wealth**

Do you have a professional advisor you consider to be your primary
financial advisor for retirement planning and/or investment decisions?

  ---------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                          **Early                        **Mid Career**                 **Late Career** 
                          Career**                                                                      

             **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
             (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Yes        21%          9%              22%            14%             26%            14%             33%

  No         77           90              78             84              73             85              66
  ---------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Yet when asked about their most trusted sources for information about
retirement planning, half identify financial professionals, far less
than the number reporting they make use of them in a regular capacity.
Written material received at work is cited by many as a trusted source
of information (38%). Nearly three in ten indicate friends and coworkers
or family members are among their most trusted sources of information on
retirement planning.

**Most Trusted Sources of Retirement Planning Information**

What would you say are your most trusted sources of information about
retirement planning? (Check all that apply.)

  ---------------------------- ------------ ----------- ------------ ------------
                               **Total\     **Early     **Mid        **Late
                               (n=7294)**   Career\     Career\      Career\
                                            (n=658)**   (n=2737)**   (n=3869)**

  Financial professionals      50%          51%         50%          50%

  Written material received at 38%          36%         36%          41%
  work                                                               

  Friends or co-workers        28%          38%         28%          26%

  Family                       27%          48%         29%          19%

  Newspapers/magazines         25%          24%         25%          26%

  Seminars                     25%          15%         21%          32%

  Internet                     23%          29%         24%          20%

  Spouse                       23%          18%         21%          25%

  Written materials from       21%          21%         22%          21%
  financial companies                                                

  TV/radio                     10%          9%          10%          10%

  Computer software            6%           5%          6%           6%

  Other                        8%           8%          7%           9%

  Don't know                   7%           6%          8%           7%
  ---------------------------- ------------ ----------- ------------ ------------

Almost eight in ten workers would be very or extremely interested in
receiving more help from their Federal employer in preparing financially
for their retirement future. Only one in twenty employees state they
would not be interested in expanding the information they receive from
their employer.

When it comes to monitoring their investments, Federal workers appear to
be doing a great job as eight in ten workers review their investments
annually or more often.

Owning a home can also be a retirement investment strategy for some
workers. Although few expect to use home equity for retirement purposes,
more than four in ten have given a great deal or a lot of thought to how
this fits into their total investment plans. For late career employees,
the percentage including this in their investment plans increases to
more than half.

**Home as an Investment**

How much thought have you given to how the value of your home fits in as
a part of your investment plans? (Among homeowners)

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=6149)**   Career\     Career\      Career\
                                        (n=415)**   (n=2289)**   (n=3445)**

  A great deal of thought  18%          10%         15%          24%

  A lot of thought         26           24          23           29

  Some thought             34           41          37           30

  Only a little thought    12           13          15           9

  No thought               9            12          10           7
  ------------------------ ------------ ----------- ------------ ------------

The effect debt has on retirement savings is also an important
consideration in retirement planning. Overall, federal workers appear to
have a good understanding of this, as almost seven in ten workers (68%)
have given their debt management a great deal or a lot of thought in
regard to saving for retirement. Less than one in ten admit to giving
this little or no thought.

**Effect of Debt on Ability To Save for Retirement**

How much thought have you given to how any debt you may currently have,
including bank loans, home equity loans, car loans/leases, student
loans, and credit cards, could affect your ability to save for
retirement?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  A great deal of thought  32%          27%         30%          37%

  A lot of thought         36           35          36           37

  Some thought             21           23          24           17

  Only a little thought    5            8           6            4

  No thought               4            7           4            4
  ------------------------ ------------ ----------- ------------ ------------

There are many aspects of retirement planning that can go awry because
of situations beyond the employee's control. Thinking about how these
unforeseen circumstances can affect their retirement plans, however,
does not appear to be on the minds of Federal workers. Less than three
in ten have given much consideration to contingency planning for
retirement. While awareness of the need to plan for these situations
goes up as employees near retirement, four in ten late career workers
say they have devoted only some thought to these issues, and nearly a
quarter have given it little or no thought.

**Thought Given to Retirement Contingency Planning**

How much thought have you given to how you will be able to maintain
yourself if your retirement does not go as planned, such as if a family
emergency occurs, an expected inheritance does not come through, you do
not find work in retirement, or you must retire earlier than expected
due to ill health?

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=7294)**   Career\     Career\      Career\
                                        (n=688)**   (n=2737)**   (n=3869)**

  A great deal of thought  11%          6%          8%           15%

  A lot of thought         17           7           14           22

  Some thought             38           32          40           39

  Only a little thought    22           31          24           17

  No thought               11           20          13           6
  ------------------------ ------------ ----------- ------------ ------------

Contingency planning includes recognizing that the death of a spouse
will likely have a financial impact on the surviving partner's
retirement future. Almost half of Federal workers identify they have
given this serious thought. There is little variance to this proportion
by pay or household wealth of the worker, but almost six in ten late
career employees state they have given this a great deal or a lot of
thought.

**Thought Given to Financial Consequences of Death on Surviving Spouse**

How much thought have you given to the financial impact on your spouse
in retirement if you should die first, and the financial impact on you
if your spouse should die first? (Among married workers)

  ------------------------ ------------ ----------- ------------ ------------
                           **Total\     **Early     **Mid        **Late
                           (n=4767)**   Career\     Career\      Career\
                                        (n=380)**   (n=1809)**   (n=2578)**

  A great deal of thought  21%          15%         17%          25%

  A lot of thought         28           21          25           33

  Some thought             34           30          37           32

  Only a little thought    11           18          13           7

  No thought               6            14          7            3
  ------------------------ ------------ ----------- ------------ ------------

Financing long-term care for illnesses in retirement (either for the
retiree or spouse) can have a devastating impact on retirement income
resources. While many Federal workers have not yet acquired long-term
care insurance, more than one in four have purchased it for themselves
and/or their spouse. Three in ten late career employees have this
coverage for themselves and/or their spouse.

**Have Long-Term Care Insurance**

Do you (and/or your spouse) have long-term care insurance, either
through the program provided to Federal employees or some other
long-term care insurance?

+------------------------+----------+----------+----------+----------+
|                        | **Total\ | **Early  | **Mid    | **Late   |
|                        | (n       | Career\  | Career\  | Career\  |
|                        | =7294)** | (        | (n       | (n       |
|                        |          | n=688)** | =2737)** | =3869)** |
+------------------------+----------+----------+----------+----------+
| Yes (net)              | 26%      | 23%      | 25%      | 31%      |
+------------------------+----------+----------+----------+----------+
| > Yes, unmarried       | 8        | 9        | 6        | 9        |
+------------------------+----------+----------+----------+----------+
| > Yes, married and     | 3        | 2        | 3        | 4        |
| > self only            |          |          |          |          |
+------------------------+----------+----------+----------+----------+
| > Yes, married and     | 2        | 1        | 1        | 2        |
| > spouse only          |          |          |          |          |
+------------------------+----------+----------+----------+----------+
| > Yes, married and     | 14       | 10       | 13       | 17       |
| > both                 |          |          |          |          |
+------------------------+----------+----------+----------+----------+
| No                     | 65       | 59       | 67       | 65       |
+------------------------+----------+----------+----------+----------+
| Don't know             | 8        | 18       | 9        | 4        |
+------------------------+----------+----------+----------+----------+

Estate planning and executing a will is another important part of
retirement planning. Four in ten Federal workers reported having a will,
with a greater percentage of wealthier, late career workers saying that
they have taken this step.

**Have Will by Household Wealth**

Do you have a will?

  ------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                             **Early                        **Mid Career**                 **Late Career** 
                             Career**                                                                      

                **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Yes           40%          14%             25%            28%             44%            41%             62%

  No            59           85              75             71              56             59              38
  ------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

Although most workers state they have reviewed their designated
beneficiaries for financial purposes, almost four in ten state this
action was taken more than two years ago. There are no significant
differences between career points, including late career employees who
are getting closer to retirement.

**Last Review of Beneficiaries**

When did you last review, and update if necessary, the beneficiaries on
such things as your will, retirement plans, life insurance, bank
accounts, and other investments?

  ---------------------- ------------ ------------ ------------ ------------
                         **Total\     **Early      **Mid        **Late
                         (n=7294)**   Career\      Career\      Career\
                                      (n=688)**    (n=2737)**   (n=3869)**

  Within the past 6      11%          10%          10%          13%
  months                                                        

  6-12 months ago        14           16           15           13

  13-24 months ago       14           14           14           14

  More than 2 years ago  37           26           38           40

  At last life event     7            11           7            6
  change                                                        

  Don't know/don't       16           24           16           14
  remember                                                      
  ---------------------- ------------ ------------ ------------ ------------

#### INVESTMENT KNOWLEDGE

Understanding your own level of financial knowledge and what is
important when making investment decisions can be critical in securing
sufficient assets to support a desired retirement lifestyle. The
majority of workers say they take the lead (54%) or they and their
spouse share (39%) in making financial decisions for their household.

However, most consider themselves neither knowledgeable nor confident
about these decisions. Even the more affluent workers are likely to
report they have a less-than-desirable level of competence. Between
seven and eight in ten federal workers describe themselves as having
some or only a little knowledge of investments and feeling somewhat or
not too confident about their knowledge or ability to make investment
decisions for retirement.

**Personal Assessment of Investment Knowledge by Household Wealth**

Overall, how would you describe your personal knowledge of investing?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  A great deal of   4%           3%              3%             2%              6%             1%              6%
  knowledge                                                                                                    

  A lot of          14           10              24             9               18             10              22
  knowledge                                                                                                    

  Some knowledge    45           40              50             39              56             38              52

  Only a little     28           35              21             35              18             36              18
  knowledge                                                                                                    

  No knowledge      9            12              3              14              2              14              2
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

**Personal Assessment of Planning Financially for Retirement by
Household Wealth**

How confident do you feel about your knowledge of planning financially
for retirement, including how much money you will need to put aside for
retirement?

  ---------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                **Early                        **Mid Career**                 **Late Career** 
                                Career**                                                                      

                   **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                   (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Extremely        4%           2%              8%             3%              4%             2%              8%
  confident                                                                                                   

  Very confident   16           12              16             9               23             13              25

  Somewhat         44           37              46             39              48             44              51
  confident                                                                                                   

  Not too          27           38              28             35              22             31              14
  confident                                                                                                   

  Not at all       8            10              2              13              3              9               2
  confident                                                                                                   
  ---------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

**Personal Assessment of Ability To Make Investment Decisions by
Household Wealth**

How confident do you feel about your ability to make decisions regarding
where to invest your retirement savings and how to allocate your
retirement dollars across different types of investments?

  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------
                                 **Early                        **Mid Career**                 **Late Career** 
                                 Career**                                                                      

                    **Total\     **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                    (n=7294)**   (n=451)**       (n=132)**      (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  Extremely         4%           3%              7%             2%              5%             2%              6%
  confident                                                                                                    

  Very confident    15           12              16             9               21             12              22

  Somewhat          41           37              47             38              47             37              47
  confident                                                                                                    

  Not too confident 29           34              23             34              24             34              21

  Not at all        10           13              6              16              4              14              5
  confident                                                                                                    
  ----------------- ------------ --------------- -------------- --------------- -------------- --------------- --------------

About three-fourths of workers describe themselves as moderate to
conservative investors with only 7% stating they are willing to take
substantial risks for more potential financial gain. Late career
employees are more conservative than workers further from retirement,
with more than one-third (35%) stating they are willing to take only a
small amount of risk and 14% saying they try to take the least amount of
risk possible to preserve their investment dollars.

**Investment Risk Tolerance by Household Wealth**

Which one of the following four statements describes your attitude
toward investment risks?

  ----------------------- ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------
                                       **Early                                   **Mid                                     **Late Career** 
                                       Career**                                  Career**                                                  

                          **Total\                **\<\$50,000\   **\$50,000+\              **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                          (n=7294)**              (n=451)**       (n=132)**                 (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  You prefer to take      7%                      12%             16%                       7%              11%            4%              4%
  substantial risks                                                                                                                        
  hoping to get a                                                                                                                          
  substantial financial                                                                                                                    
  gain on your                                                                                                                             
  investments                                                                                                                              

  You are willing to take 47                      51              57                        47              62             31              51
  a moderate risk hoping                                                                                                                   
  to get an above average                                                                                                                  
  financial gain from                                                                                                                      
  your investments                                                                                                                         

  You are willing to take 30                      24              27                        31              22             38              34
  a small amount of risk                                                                                                                   
  hoping to get a fair                                                                                                                     
  return on your                                                                                                                           
  investments                                                                                                                              

  You try to reduce the   11                      9               \<0.5                     11              4              20              10
  risk you take with your                                                                                                                  
  money to the barest                                                                                                                      
  minimum, even if it                                                                                                                      
  reduces the money you                                                                                                                    
  make on your                                                                                                                             
  investments                                                                                                                              

  Don't know              5                       4               0                         4               1              8               1
  ----------------------- ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------

Most workers appear to have some recognition of the level of risk
associated with different types of investments. However, while workers
tend to identify stock funds as the most risky of the investments
identified in the survey, they do not assign significantly different
levels of risk to international than to domestic investments, on
average. In addition, as a group they tend to rank balanced and money
market funds in the same risk category.

**Average Reported Level of Risk Associated With Investments by
Household Wealth**

Thinking about the different types of investments available on the
market and the different amounts of investment risk associated with
each, how much risk do you think is associated with each of the
following types of investments? (Score range: 5 = great deal of risk to
1 = no risk)

  ------------------ ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------
                                  **Early                                   **Mid                                     **Late Career** 
                                  Career**                                  Career**                                                  

                     **Total\                **\<\$50,000\   **\$50,000+\              **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                     (n=7294)**              (n=451)**       (n=132)**                 (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  International      4.2                     4.2             4.3                       4.2             4.3            4.1             4.2
  stock funds                                                                                                                         

  Domestic stock     4.1                     4.2             4.1                       4.2             4.1            4.0             4.0
  funds                                                                                                                               

  Money market funds 2.7                     3.1             2.5                       3.0             2.5            3.0             2.4

  Balanced funds     2.7                     2.6             2.8                       2.7             2.7            2.7             2.8

  Bond funds         2.2                     1.9             2.0                       2.1             2.3            2.2             2.4

  Guaranteed         1.9                     1.8             1.6                       1.9             1.7            2.0             1.9
  accounts or stable                                                                                                                  
  value funds                                                                                                                         
  ------------------ ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------

More than half of Federal workers correctly identify that a balanced
mutual fund is a mix of stocks, bonds, and money market securities.
However, almost one-third of the employees acknowledge that they don't
know.

**Description of a Balanced Mutual Fund by Household Wealth**

As far as you know, which of the following describes how a "balanced"
mutual fund is invested (e.g., what types of investments are included in
the fund's portfolio)?

  ------------------ ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------
                                  **Early                                   **Mid                                     **Late Career** 
                                  Career**                                  Career**                                                  

                     **Total\                **\<\$50,000\   **\$50,000+\              **\<\$50,000\   **\$50,000+\   **\<\$50,000\   **\$50,000+\
                     (n=7294)**              (n=451)**       (n=132)**                 (n=1240)**      (n=1073)**     (n=1337)**      (n=1888)**

  A mix of stocks,   56%                     56%             65%                       47%             69%            47%             66%
  bonds, and money                                                                                                                    
  market securities                                                                                                                   

  A mix of large and 11                      12              19                        8               14             9               13
  small                                                                                                                               
  capitalization                                                                                                                      
  stocks                                                                                                                              

  A mix of foreign   2                       2               \<0.5                     3               2              2               3
  and U.S.                                                                                                                            
  securities                                                                                                                          

  Don't know         31                      31              16                        42              16             42              18
  ------------------ ------------ ---------- --------------- -------------- ---------- --------------- -------------- --------------- --------------

**[Health Savings Accounts]{.underline}**

The survey included a few questions regarding employees' use of health
savings accounts (HSA). An HSA is a tax-sheltered trust account that
combined with a High Deductible Health Plan (HDHP) provides insurance
coverage and a tax-advantaged way to help save for future medical
expenses.

Overall, three in ten are positive about these medical accounts, and
another one in ten are very positive. Four in ten are neutral and less
than one in ten (8%) feel negative or very negative about these.

If health savings accounts were available, one-quarter say they were
extremely or very likely to put money into the account, while one in
three stated they were not too or not at all likely to participate in
this program. About one-third indicated they would be somewhat likely to
participate.

When asked if they think it will help them save money for health
expenses in retirement, the responses are somewhat equal between
extremely or very likely (25%) and not too or not at all likely (27%). A
higher percentage (35%) believes it is somewhat likely to help them with
medical expenses for retirement.

# 

**[NEXT STEPS]{.underline}**

The results from this survey will be instrumental in helping to develop
a retirement readiness profile index. The concept of retirement
readiness is a central component of the Retirement Financial Literacy
and Education Strategy that OPM submitted to Congress last fall. The OPM
retirement financial education strategy is based on a model of financial
education that brings together information and training on the Federal
benefits programs with a broader holistic approach about what
information employees need to know in order to set and achieve their
retirement goals. This strategy broadens the focus of pre-retirement
education to bring together the basic information about the benefits
provided by the Government, as an employer, and the broader financial
education needs of employees. The strategy is based on a model that
incorporates the broad range of information employees need to be aware
of and understand, in order to make informed retirement planning
decisions. The three key dimensions of retirement readiness are:

-   **Networking & Engagement:** *addressing the life fulfilling aspects
    of this life stage, including personal and interpersonal aspects of
    aging and retirement.*

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-   **Overall Health:** *understanding the aging process and how best to
    approach healthcare such as preventative and disease treatment.*

-   **Wealth:** *preparing financially and being aware of geographical
    affects on a retiree's cost of living (where someone intends to live
    in retirement; how home value may or may not be used as financial
    support).*

The results from this survey will be instrumental in helping to develop
a retirement readiness profile index. Agencies can use the retirement
readiness profile in two ways. They can use it as a tool to identify the
general status of retirement readiness of their employees and then plan
specific programs to address issues identified. The retirement readiness
profile can also be used by individual employees to create their own
profiles. They can then take steps to strengthen the weaknesses
identified in their individual profile. In addition OPM will use the
index to periodically assess the government-wide level of employee
retirement readiness.

[^1]: Source: Employee Benefit Research Institute and Mathew Greenwald &
    Associates, Inc., 2005 Retirement Confidence Survey

[^2]: Based on UP94 Life Tables projected to 2005.

[^3]: Employee Benefit Research Institute and Mathew Greenwald &
    Associates, Inc., 2005 Retirement Confidence Survey

[^4]: Employee Benefit Research Institute and Mathew Greenwald &
    Associates, Inc., 2005 Retirement Confidence Survey

[^5]: Employee Benefit Research Institute and Mathew Greenwald &
    Associates, Inc., 2005 Retirement Confidence Survey