massmutual retirement savings risk study risk study report.pdf · background & methodology 1...

MassMutual Retirement Savings Risk Study

M A R C H 2 0 1 8

Background & Methodology

1

Background

To better understand the investment preferences and philosophies of those approaching retirement as well as

retirees, MassMutual commissioned a survey of pre-retirees within 15 years of retirement and of retirees no

more than 15 years into retirement.

Methodology

On behalf of MassMutual, Greenwald & Associates, an independent research firm, conducted an online

survey that included 804 pre-retirees and 801 retirees. Respondents were drawn from ResearchNow’s

online panel. To qualify for the survey, all respondents had to be at least 40 years old.

Pre-retirees were required to have a household income of at least $40,000, work full-time for a

private sector employer, and be participating in that employer’s DC retirement plan.

Retirees were required to have total investable assets of at least $100,000. They had to be retired

from a private sector employer and participating in that employer’s DC retirement plan at the time

of retirement.

The survey was fielded in January 2018.

Key Findings

2

Investing & Risk Tolerance

When it comes to investments, six in ten pre-retirees say their current investment mix is designed for growth, while half

of retirees say they are balancing between growth and preservation. Retirees generally indicate that their risk tolerance is moderate to more conservative and they seem confident that they are taking

the right amount of risk.

Pre-retirees are more likely to say they are comfortable taking greater investment risk and expect their investments to

outperform the market.

Most say they can remain focused on the long-term even if the market drops, but these pre-retirees and retirees do

express some concern about major downturns, especially right before retirement.

Retirement Glide Path & Advisor Influence

Both pre-retirees and retirees overwhelmingly agree that they want their investments to continue to grow after they

retire.

Interestingly, retirees are more likely than pre-retirees to say they are not substantially more conservative with their

investments after retirement (36% vs. 29%), while pre-retirees are more likely to say they will become substantially

more conservative when they retire (43% vs. 37% of retirees).

In fact, 43% of pre-retirees expect to be primarily focused on preservation at retirement, while only 23% of retirees

were focused on preservation at that time, suggesting pre-retirees are notably more conservative.

Those with a defined benefit plan or annuity are more likely to be growth-focused in the five years before retirement, at

retirement, and within the first ten years in retirement.

When pre-retirees and retirees discuss this with their advisors, advisors most often suggested they invest more

conservatively (88%). Given investors’ desire for continued growth, this suggests there may be a disconnect between

retirees’ risk tolerance and the advisor’s guidance.

Key Findings (cont.)

3

Plan Investment Options

When it comes to different types of investments, retirees are more likely to be familiar with actively managed

mutual funds (82% vs. 74%), passively managed mutual funds (75% vs. 69%) and customized investments

(67% vs. 59%), while pre-retirees are more likely to be aware of target date funds (TDFs) (59% vs. 52% of

retirees).

Pre-retirees are more likely to find TDFs appealing (70% vs. 47% of retirees), although small shares are

actually invested in a TDF (29% and 20% of retirees).

Many indicate an interest in a “set-it-and-forget-it” investment option, and TDFs are seen as easy to use and

helpful for those who may not have the discipline to adjust allocation on their own.

Few suggest that TDFs aren’t personalized enough or that they would rather manage their investments

on their own.

Retiree Lessons Learned

• More than half of retirees agree that they should have started saving for retirement earlier than

they did.

• Most say they would stick with the same investment approach, but about a third say they would

invest more aggressively if they had a do-over.

• Retirees offer advice to near-retirees: use a financial advisor, and more generally, know your risk

tolerance.

Investing & Risk Tolerance

When it comes to managing savings and investments, retirees consider

themselves more knowledgeable (90% vs. 85% of pre-retirees).

How knowledgeable would you say that you are when it comes to managing your savings and investments? (Pre-Retirees n=804; Retirees n=801) 5

21%

64%

15%

<.5%

31%

58%

9%

1%

Very knowledgeable

Somewhat knowledgeable

Not too knowledgeable

Not at all knowledgeable

Pre-Retirees Retirees

Knowledge of Managing Savings and Investments

• Those with higher assets are more likely to

consider themselves at least somewhat

knowledgeable (90% vs. 76% with

<$250,000 in assets).

• Respondents with high risk tolerance are

especially more likely than those with low risk

tolerance to say they are very knowledgeable

about managing savings and investments

(27% vs. 13%).

• Both retirees and pre-retirees who have a

defined benefit plan or an annuity are more

likely to call themselves knowledgeable

(89%), compared to 83% without these

products.

• Respondents who have taken money/loans

from their 401(k) or suspended contributions

are much more likely to say they are not

knowledgeable about this topic (23% vs.

10% who have not taken any of those

actions).

Additive Insights

Retirees are more likely than pre-retirees to say they can stay focused on

long-term goals when the market drops.

To what extent do you agree or disagree with each of the following statements? (Pre-Retirees n=804; Retirees n=801) 6

28%

42%

24%

35%

23%

35%

8%

8%

5%

10%

26%

38%

61%

51%

63%

58%

56%

49%

50%

48%

27%

36%

32%

22%

9%

12%

7%

18%

13%

40%

40%

43%

38%

27%

24%

1%

1%

1%

0%

3%

3%

2%

4%

25%

16%

15%

15%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Strongly agree Somewhat agree Somewhat disagree Strongly disagree

When saving for retirement you must invest

some money in equities (stocks/mutual funds)

to get a good return

I can stay focused on long-term goals even

when the market drops

People need to invest in the stock market to

accumulate enough money to retire

Most active investment managers do not

outperform the market, so it is better to invest

in indexes, such as the S&P 500

If the market dropped 20%, it would not bother

me

I check to see how my investments are

performing at least once a week

Agree/Disagree

• Respondents with assets between $250,000 and $999,999, those with high risk tolerance and those who feel they are very knowledgeable about

savings and investments are more likely to say they can stay focused when the market drops and believe that people need to invest in the stock market

in order to accumulate enough money to retire.

• Older pre-retirees five years away from retirement are more likely than pre-retirees and retirees overall to say they check their investment performance

at least once a week.

Yet, pre-retirees and retirees do express concern about market downturns,

especially in the years right before retirement.

How concerned are you about each of the following [IF PRE-RETIREE: in retirement]? (Pre-Retirees n=804; Retirees n=801)

*Asked of pre-retirees only 7

38%

32%

25%

23%

17%

20%

16%

16%

8%

43%

46%

51%

52%

47%

37%

31%

33%

24%

16%

19%

20%

21%

31%

36%

41%

43%

52%

3%

3%

4%

5%

5%

8%

12%

8%

16%

Pre-Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Very concerned Somewhat concerned Not too concerned Not at all concerned

Major losses in the value of your

investments right before you retire*

A major downturn in the stock market

Stock market volatility

Making a poor investment decision

that leads to significant loss

Taking too much investment risk

Level of Concern

Most pre-retirees currently have an investment mix designed for growth, while

half of retirees say they aim to balance growth and preservation.

How would you describe the investment mix you currently have? (Pre-Retirees n=804; Retirees n=801) 8

11%

48%

32%

5%

1%

2%

6%

26%

49%

13%

5%

1%

Aggressive growth

Moderate growth

Balance between growth and preserving your money

Preservation with some growth

Completely focused on preservation

Not sure


Current Investment Mix

• Respondents who claim they are very

knowledgeable about

savings/investments are more likely to

have an investment mix that aims for

aggressive growth (18%), compared

to 7% who feel less knowledgeable.

• Among those who say they need at

least 75% of their income replaced in

retirement to live comfortably, retirees

are more likely than pre-retirees to say

they have an investment mix designed

for preservation (21% vs. 5%).

Additive Insights

As expected, pre-retirees are more likely to be comfortable taking investment

risk.

Which statement comes closest to describing how comfortable you are when it comes to taking investment risk? (Pre-Retirees n=804; Retirees n=801) 9

9%

70%

19%

2%

4%

65%

27%

4%

I am comfortable taking a high level of investment risk, in orderto have the possibility of high investment returns

I am comfortable with some investment risk, in order to have thepossibility of above average investment returns

I am only comfortable with a little investment risk, even though Iknow I have to accept below average investment returns

I cannot accept any investment risk, and I am willing to acceptvery low investment returns


Investment Risk

• Respondents without an advisor are more likely to say they are comfortable with taking a high level of investment risk (11% vs. 6%), although those

with an advisor are more likely to be comfortable with taking some risk (72% vs. 62%).

• Those who say they are very knowledgeable about savings and investments are more likely than those who feel less knowledgeable to be comfortable

with taking high investment risks (16% vs. 5%).

Most feel they are taking the right level of risk with their current investments,

though a quarter of pre-retirees feel they’re too aggressive.

When it comes to your investments would you say that...? (Pre-Retirees n=804; Retirees n=801) 10

3%

22%

62%

11%

2%

1%

13%

75%

10%

2%

You are taking much more risk than you should

You are taking somewhat more risk than youshould

You are taking the right level of risk

You are taking somewhat less risk than youshould

You are taking much less risk than you should


Investment Risk Currently Being Taken

• Both retirees and pre-retirees with an

advisor, those with $250,000 to $999,999

in assets and respondents with high risk

tolerance are more likely than their

counterparts to feel they are currently

taking the right level of risk.

• Those who are invested in TDFs are

more likely than those who are not to feel

they are taking more risk than they

should be taking (29% vs. 21%).

Additive Insights

In keeping with their growth strategy, pre-retirees are more likely than retirees

to aim for their investments to outperform the market.

When it comes to your investments, do you aim for them to...?(Pre-Retirees n=804; Retirees n=801) 11

14%

53%

29%

3%

1%

9%

49%

37%

4%

0%

Significantly outperform the market

Slightly outperform the market

Match the market

Slightly underperform the market

Significantly underperform the market


Expected Investment Performance

• Both pre-retirees and retirees who have an advisor or high risk tolerance are more likely to expect their investments to outperform the market, while

those without an advisor or with low risk tolerance aim for their investments to match the market.

When it comes to selecting investments, pre-retirees and retirees alike

indicate that the most important thing is to match risk tolerance.

When you are selecting investments, how much consideration do you give to each of the following?(Pre-Retirees n=804; Retirees n=801) 12

48%

66%

49%

56%

50%

49%

40%

45%

32%

27%

42%

47%

32%

46%

44%

29%

41%

38%

40%

45%

49%

44%

53%

55%

41%

40%

46%

33%

6%

4%

7%

4%

8%

6%

9%

8%

12%

15%

13%

10%

14%

12%

3%

3%

8%

9%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

A great deal Some A little None

An investment that matches your

tolerance for risk

Diversification

Performance over 10 years

Your ability to make changes as you

see fit

Performance over the past year

Investment fees

Whether an advisor is actively

managing the investment

Consideration When Selecting Investments

• Respondents with assets above $250,000, those who have an advisor, defined benefit plan or annuity, respondents with high risk tolerance, show no

“bad behavior,” use TDFs or consider themselves very knowledgeable about savings/investments are all more likely than their counterparts to feel

diversification should be taken into a great deal of consideration.

Retirement Glide Path & Advisor Influence

Retirees are more likely than pre-retirees to strongly agree that they want their

investments to continue to grow after retirement.

To what extent do you agree or disagree with each of the following statements? (Pre-Retirees n=804; Retirees n=801) 14

56%

69%

40%

40%

9%

8%

41%

30%

54%

52%

48%

36%

4%

5%

7%

37%

42%

6%

14%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees


I want my investments to continue to grow

even after I retire

It is important to take steps to ensure you do

not suffer major stock market losses right

before you retire

As workers approach retirement, they should

significantly cut back how much they invest in

stocks and stock mutual funds

Agree/Disagree

• Both retirees and pre-retirees with low risk tolerance or those who use TDFs are more likely than their counterparts to feel it is important to take steps

to ensure you don’t suffer a major market loss right before retirement and that workers should significantly cut back how much they invest in stocks

and mutual funds as they approach retirement.

Retirees are more likely than pre-retirees to say they do NOT believe in

becoming substantially more conservative with investments in retirement.

Which of the following comes closest to how you approach retirement investing? (Pre-Retirees n=804; Retirees n=801) 15

16%

27% 28% 27%

2%

14%

23%

27% 27%

9%

Completely followTheory A

Follow in Theory A morethan Theory B

Follow in BothEqually

Follow Theory B morethan Theory A

Completely followTheory B


Preferred Approach to Retirement Investing

Theory A:

Become significantly more

conservative with their money

because they need to withdraw

income and may not be able to

replace assets when the market

drops

Theory B:

Do not be substantially more

conservative with their money

because they could live a long

time after retirement and need to

grow money

Net: Theory A

Pre-Retirees – 43%

Retirees – 37%

Net: Theory B


Retirees – 36%

• Those with low risk tolerance or feel less knowledgeable about savings/investments are more likely to believe in becoming significantly more

conservative as they approach retirement, while those with high risk tolerance or feel very knowledgeable are more likely to feel you should not

become substantially more conservative.

In retirement, at least 43% of pre-retirees expect to have investments primarily

focused on preservation, rising to nearly 50% once 15 years into retirement.

Thinking about the years before retirement, how have you or do you think you will invest when you are..? (Pre-Retirees n=804)

Now thinking about the years after retirement, how do you think you will invest when you are...? (Pre-Retirees n=804) 16

Pre-Retiree Investment Allocation

(Practice & Projection)

75%

64%

38%

17% 20%

15% 15% 16%

26%

40%

34% 33% 33%

28%

4% 6%

19%

43% 40%

45% 48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

15 years away 10 years away 5 years away At retirement 5 years into 10 years into 15 years into

Growth Balance Preservation

In contrast, about a quarter of retirees have or plan to have their investments

in retirement primarily focused on preservation.

Thinking about the years before retirement, how did you invest when you were]...? (Retirees n=801)

Now thinking about the years after retirement, how have you or will you invest when you are...? (Retirees n=801) 17

Retiree Asset Allocation

(Practice & Projection)

79% 80%

64%

32% 32%

23%

18%

12% 13%

25%

44% 43% 44%

39%

4% 4% 8%

23% 23%

28% 36%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

15 years away 10 years away 5 years away At retirement 5 years into 10 years into 15 years into

Growth Balance Preservation

The Influence of Guaranteed Income

18

78%

69%

48%

24% 27%

20% 18%

75%

66%

40%

17% 19% 13% 13%

15 years beforeretirement



At retirement 5 years intoretirement

10 years intoretirement

15 years intoretirement

With DB/Annuity Without

Percent Focused on Growth

• Perhaps it’s not surprising that those who report having either a defined benefit plan or an annuity are much more likely to say that they expect their

money to last as long as they live (74% vs. 53%), but respondents with these income-generating products are feeling better about retirement as well.

They are more likely to say that they are not worried about financing retirement (52% vs. 38%).

• However, there are some interesting similarities and differences in how they expect to invest in the years right before retirement and thereafter. While

those with guaranteed income report the same overall risk tolerance and current investment mix, they plan to be more growth-focused in retirement

than those who do not have these products.

• Pre-retirees and retirees with guaranteed income suggest that have or will employ the same investment strategy as those without when retirement is

15 years away and 10 years away, but at 5 years prior to retirement, they become more growth-focused than those without and remain that way until

15 years into retirement.

In this time period, those with guaranteed income are significantly

more likely than those without to be growth-focused.

Thinking about the years before retirement, how have you or do you think you will invest when you are..?

Now thinking about the years after retirement, how do you think you will invest when you are...?

While pre-retirees are less likely to be working with an advisor, 35% intend to

work with one in the future.

How many professional financial advisors do you currently work with that advise on investments? (Pre-Retirees n=804; Retirees n=801)

[IF NO ADVISOR] Do you plan to work with a professional financial advisor in the future? (Pre-Retirees n=300; Retirees n=196) 19

54%

6%

1%

39%

61%

11%

2%

26%

One

Two

More than two

None


Number of Advisors

Yes 35%

No 65%

Pre-Retirees

Plan to Work With Advisor in Future

Yes 16%

No 84%

Retirees

• Respondents who say they are very knowledgeable about savings/investments are more likely to have no advisor (42% vs. 33% who feel less

knowledgeable). Those with assets less than $250,000 are also more likely to have no advisor (40% vs. 32% with $250,000 to $999,999 in assets).

• Those with high risk tolerance are more likely than their counterparts to say they plan to work with an advisor in the future (35% vs. 19%).

Consultation with advisors seems to increase some as clients approach

retirement.

[IF HAS ADVISOR] As you approach/approached retirement, are you/did you consulting/consult with your advisor(s)? (Pre-Retirees n=504; Retirees n=605) 20

Frequency of Consulting Advisor while Approaching Retirement

5%

41%

50%

3%

1%

16%

42%

38%

3%

2%

Much more frequently

Somewhat more frequently

No more frequently

Somewhat less frequently

Much less frequently


Net: More Frequently


Retirees – 58%

Net: Less Frequently

Pre-Retirees – 4%

Retirees – 5%

• Respondents with $250,000 to $999,999 in assets, those with defined benefits plans/annuities, high risk tolerance or those who are invested in a TDF

are more likely to consult with their advisor more frequently when approaching retirement.

When advisors consult with clients approaching retirement, they most often

suggest investing somewhat more conservatively.

[IF HAS ADVISOR] Has/Did your advisor recommended/recommend changing/that you change your investment mix as you approach retirement? (Pre-Retirees

n=504; Retirees n=605)

[IF YES] What did your advisor recommend when it came to the mix of your investments? (Pre-Retirees n=250; Retirees n=366) 21

Advisor Recommended Changing Investment Mix

While Approaching Retirement

10%

63%

25%

2%

10%

78%

11%

2%

That you invest moreconservatively

That you invest somewhatmore conservatively

That you invest somewhatmore aggressively

That you invest moreaggressively


Yes 46% No

54%

Pre-Retirees

Yes 57%

No 43%

Retirees

Recommended Changes to

Investment Mix

• Pre-retirees that are 5 years out until retirement are more likely than pre-retirees in general to have been approached by their advisor about changing

their investment mix while approaching retirement (56% vs. 46%).

• Among all pre-retirees who were approached by their advisor, 27% say their advisor advised them to invest more aggressively, compared to 11% of

pre-retirees 5 years out from retirement.

Plan Investment Options

Both pre-retirees and retirees are satisfied with their plan’s investment choices

and the performance of the investments.

[IF PRE-RETIREE] How satisfied are you with the following aspects of your employer’s retirement plan? (Pre-Retirees n=804)

[IF RETIREE] At the time you retired, how satisfied were you with the following aspects of your employer’s retirement plan? (Retirees n=801) 23

39%

51%

39%

47%

34%

41%

29%

47%

27%

35%

53%

43%

54%

43%

58%

50%

57%

38%

53%

42%

93%

93%

92%

89%

92%

92%

86%

85%

80%

77%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Very satisfied Somewhat satisfied

The plan overall

The investment choices available to you

The performance of the investments in the

plan

The options available for what to do with

your savings at retirement

The education and advice available

through the plan

Satisfaction with Employer’s Retirement Plan

• With the exception of investment choices available, respondents with high risk tolerance are more likely than those with low risk tolerance to express

satisfaction with their employer’s retirement plan in all of the following aspects.

• Those with $250,000 to $999,999 in assets are more likely than those with lower assets to express satisfaction with the performance of the

investments (94% vs. 89%).

• Both retirees and pre-retirees who are currently invested in TDFs are satisfied with the education and advice available through their plan (85%,

compared to 76% who are not invested in TDFs).

Satisfied with their plans, pre-retirees appear more inclined to leave assets in

the plan upon retirement.

24

36% 36%

28%

41%

5%

54%

Leave/Left all your savings in the plan Leave/Left some of your savings in theplan

Withdraw/Withdrew all the money from theplan


Money in Employer’s Retirement Plan After Retirement

[IF PRE-RETIREE] When you retire, what do you plan to do with the money in your employer’s retirement plan? (Pre-Retirees n=424)

[IF RETIREE] When you retired, what did you do with the money in your employer’s retirement plan? (Retirees n=792)

Note: Re-based question without “Not sure” responses

• Respondents with an advisor are more likely than those without an advisor to withdraw all money from their plan (31% vs. 23%).

Pre-retirees are more familiar than retirees with target date funds (TDFs).

How familiar are you with each of the following investment types? (Pre-Retirees n=804; Retirees n=801) 25

25%

36%

22%

32%

22%

22%

15%

25%

49%

47%

47%

44%

37%

30%

44%

42%

20%

14%

23%

19%

27%

33%

31%

25%

6%

3%

8%

6%

14%

15%

10%

9%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Very familiar Somewhat familiar Not too familiar Not at all familiar

Actively managed mutual funds

Passively managed mutual funds

Target date funds (TDFs)

Customized investments where the money

manager automatically customizes the

allocation

Familiarity with Different Types of Investments

• Respondents with $250,000 to $999,999 in assets, those who have a defined benefit plan or annuity, have high risk tolerance or say they are very

knowledgeable about savings and investments are more likely to be familiar with all of the following types of investments.

Pre-retirees are much more likely than retirees to find customized investments

and TDFs appealing.

How appealing do you find each of the following investment types? (Pre-Retirees n=804; Retirees n=801) 26

25%

24%

21%

22%

18%

23%

19%

11%

56%

47%

57%

49%

56%

41%

52%

36%

80%

71%

79%

71%

73%

64%

70%

47%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Very appealing Somewhat appealing



Customized investments where the money

manager automatically customizes the

allocation


Appealing Types of Investments

• Those with assets lower than $250,000 are more likely to find target date funds appealing (71% vs. 62% with higher assets).

TDF usage is relatively low compared to other investment options, especially

among retirees.

27

47%

43%

29%

23%

49%

45%

20%

31%




Customized investments where the money managerautomatically customizes the allocation


Investments in Different

Funds

[IF PRE-RETIREE] Do you have any funds invested in any of the following?

[IF RETIREE] At the time that you retired, did you have funds invested in any of the following?

(Pre-Retirees n=804; Retirees n=801)

• Respondents with assets between

$250,000 and $999,999 and those

with high risk tolerance are more likely

than their counterparts to be invested

in Target Date Funds.

• Among those who say they need at

least 75% of their income replaced in

retirement to live comfortably, pre-

retirees are more likely than retirees to

use TDFs (31% vs. 17%).

Additive Insights

TDFs are seen as easy to use. However, few lament they aren’t personal or

say that they would rather manage their investments themselves.

[IF FAMILIAR WITH TDFs] To what extent do you agree or disagree with each of the following statements regarding Target Date Funds (TDFs)?

(Pre-Retirees n=699; Retirees n=679) 28

24%

16%

15%

7%

14%

9%

9%

16%

7%

3%

6%

4%

5%

3%

42%

37%

51%

37%

26%

24%

29%

29%

21%

11%

39%

31%

21%

12%

13%

14%

20%

35%

24%

17%

46%

37%

38%

38%

27%

17%

31%

28%

21%

33%

14%

21%

37%

49%

15%

17%

34%

48%

28%

48%

44%

57%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Strongly agree Somewhat agree Net: Disagree Not sure

TDFs are easy to use

TDFs are a good investment because I

might not have the discipline or time-adjust

my investments myself

TDFs are a “default option” if employees do

not pick our own investments

I don’t like TDFs because I would rather

manage the money myself

My employer encourages employees to

invest in TDFs

I wish TDFs were more personalized

Most of the people I know at work are in

TDFs

Target Date Funds (TDFs) – Agree/Disagree

• Respondents who do not have an advisor and those who consider themselves very knowledgeable about managing savings and investments are

more likely to say they would rather manage their money on their own.

• Those with high risk tolerance are more likely to see TDFs as easy to use (69% vs. 40% with low risk tolerance) or agree that TDFs are a good

investment because they might not have the discipline or time to adjust investments on their own (63% vs. 50%).

**Three in four pre-retirees wish they had started saving for retirement at a

younger age, compared to just 55% of retirees who say the same.

29

16%

11%

13%

15%

13%

27%

56%

48%

44%

44%

38%

30%

24%

33%

34%

30%

34%

25%

4%

8%

9%

11%

15%

19%

Pre-Retirees

Retirees

Pre-Retirees

Retirees

Pre-Retirees

Retirees


I would prefer an investment

option that lets me “set-it-and-

forget-it”

I enjoy figuring out how to best

invest my money

I prefer to delegate financial

decisions to a professional,

rather than do it myself

Agree/Disagree

To what extent do you agree or disagree with each of the following statements? (Pre-Retirees n=804; Retirees n=801)

Nearly three-quarters of pre-retirees and six in ten retirees suggest they would

prefer a “set-it-and-forget-it” investment option.

• Both retirees and pre-retirees who have an advisor, those with assets lower than $250,000, respondents who display “bad behaviors” and those who

consider themselves less knowledgeable about savings/investments all tend to prefer investment options that lets them “set -it-and-forget-it” more

often than their counterparts.

Pre-retirees are more likely to prefer an actively managed TDF, while

retirees prefer consistency.

30

52%

48%

42%

58%

The investment manager makes a number of changes inthe investments, seeking to get higher returns by reacting

quickly to changes in market conditions

The investment manager does not make many changes,seeking to be consistent and not over-responding to

changes in market conditions


Most Preferred Style of Target Date Fund

[IF FAMILIAR WITH TDFs] If you were considering investing in a target date fund (TDF), which style fund would you most prefer?

(Pre-Retirees n=699; Retirees n=679)

• Those who have an advisor are more likely to prefer an actively managed TDF (55% vs. 39% without an advisor), while those without an advisor

prefer consistency (61% vs. 45% with an advisor).

• Similarly, respondents with high risk tolerance prefer actively managed TDFs (51% vs. 42%), while those with low risk tolerance prefer consistency

(58% vs. 49% with high risk tolerance).

Retiree Lessons Learned

More than half of retirees wish they had started saving earlier, though even

more pre-retirees feel this way.

To what extent do you agree or disagree with each of the following statements? (Pre-Retirees n=804; Retirees n=801)

**Asked of retirees only 32

38%

21%

8%

36%

34%

31%

18%

28%

43%

8%

17%

18%

Pre-Retirees

Retirees

Retirees


I wish I had started saving for retirement

at a younger age

Agree/Disagree

I should have invested differently in the

years leading up to retirement**

• Those with assets lower than $250,000, respondents who display “bad behaviors” and those who consider themselves less knowledgeable about

savings/investments are more likely than their counterparts to wish they had started saving for retirement at a younger age.

• Retirees with lower assets or bad investment behaviors are also more likely to feel they should have invested differently leading up to their retirement.

Most retirees wouldn’t change how they invested just before retirement; those

that would tend to feel they should’ve been more aggressive.

[IF RETIREE] Thinking back to how your retirement savings was invested in the years just before you retired, would you make any changes? (Retirees n=801) 33

58%

10%

25%

6%

1%

No, I would employ the same investment strategy

Yes, I would have invested much more aggressively

Yes, I would have invested somewhat more aggressively

Yes, I would have invested somewhat more conservatively

Yes, I would have invested much more conservatively

Retirees

Change Investment Risk if Could Go Back

Net: More

Aggressively

35%

Net: More

Conservatively

8%

• Retirees with high risk tolerance are more likely to say they wouldn’t change how they invested (61% vs. 51% with low tolerance). Retirees who did

not take money/loan from their 401(k) or suspend contributions are more likely than those who did display these “bad behaviors” to say they still would

employ the same investment strategy they did before retirement (60% vs. 46%).

• Retirees with assets of $250,000 or more are more likely to say they would have invested somewhat more conservatively (9% vs. 3% of those with

less assets).

Looking back, retirees most often advise today’s near-retirees to use a

financial advisor.

[IF RETIREE] What advice would you give people approaching retirement about how to invest their money just before and just after retirement? (Retirees n=801) 34

Top Mentions Retirees

Use a financial advisor 17%

Keep saving/Save as much as possible 9%

Be conservative/Reduce risk 7%

Diversify 6%

Know your own comfort level 6%

Invest as early as you can 5%

Balance between growth and income 5%

Advice About How to Invest Money Right Before or After Retirement

Demographics of Respondents

36

Pre-Retirees

(n=804)

Retirees

(n=801)

Age

40-54 69% 7%

55-64 29 40

65-74 2 40

75+ * 12

Gender

Male 48% 50%

Female 52 50

Employment Status

Employed full-time 100% --

Employed part-time -- 5%

Not employed -- 95

Education

Some high school or less -- *

High school graduate 9% 10%

Some college/trade or technical school 29 29

College graduate (4-year degree) 41 38

Graduate or professional degree 21 23


*=<0.5%

37

Pre-Retirees

(n=804)

Retirees

(n=801)

Retired

Yes -- 100%

No 100% --

[IF PRE-RETIREE] Within how many years do you expect to retire?

5 years or less 20% --

6 to 10 years 31 --

11 to 15 years 49 --

[IF RETIREE] For how many years have you been retired?

5 years or less -- 55%

6 to 10 years -- 25

11 to 15 years -- 20


*=<0.5%

38

Pre-Retirees

(n=804)

Retirees

(n=801)

2017 Household Income

Less than $30,000 -- *

$30,000 to $39,999 -- 2%

$40,000 to $49,999 2% 2

$50,000 to $74,999 22 31

$75,000 to $99,999 20 18

$100,000 to $124,999 17 19

$125,000 to $149,999 11 14

$150,000 or more 26 14

Savings and Investments

Less than $50,000 12% --

$50,000 to $99,999 8 --

$100,000 to $149,999 7 5%

$150,000 to $199,999 7 4

$200,000 to $249,999 9 6

$250,000 to $499,999 18 21

$500,000 to $999,999 19 26

$1 million or more 17 37

Prefer not to say 3 --


*=<0.5%

39

Pre-Retirees

(n=804)

Retirees

(n=801)

Hispanic, Spanish, or Latino Descent

Yes 5% 3%

No 95 97

Racial/Ethnic Background

White/Caucasian 88% 93%

African-American/Black 6 3

Asian/Indian/Pacific Islander 6 3

Other 1 1

[If Asian] (n=37) (n=18)

Chinese 35% 78%

Indian 25 6

Japanese 16 16

Vietnamese 4 --

Korean -- --

Other 21 --


*=<0.5%

40

Pre-Retirees

(n=804)

Retirees

(n=801)

Sexual Orientation

Heterosexual or straight 92% 95%

Gay 3 2

Lesbian 2 1

Bisexual 1 1

Prefer not to say 2 2

Transgender or Transsexual

Yes * *

No 99% 99%


Marital Status

Married 73% 80%

Divorced or separated 11 7

Single, never married 11 4

Not married, but living with a partner 4 3

Widowed 1 6


*=<0.5%

41

Pre-Retirees

(n=804)

Retirees

(n=801)

[IF MARRIED OR PARTNER] Household Decision-Making on Financial Matters (n=625) (n=663)

You make most of the decisions with little or no input from

another household member

36% 31%

You take the lead and discuss decisions with another

household member

36 34

Decisions are made in total partnership 28 36

[IF MARRIED OR PARTNER] Spouse’s/Partner’s Employment Status

Employed full-time 77% 19%

Employed part-time 8 6

Not employed 15 75

[IF MARRIED OR PARTNER] Spouse/Partner Retired

Yes 20% 77%

No 80 23


*=<0.5%

42

Pre-Retirees

(n=804)

Retirees

(n=801)

Money Currently Saved in Retirement Plan (or Saved at the time of Retirement)

Less than $25,000 8% 2%

$25,000 to $49,999 10 4

$50,000 to $99,999 13 7

$100,000 to $149,999 12 7

$150,000 to $199,999 8 8

$200,000 to $249,999 7 10

$250,000 to $499,999 20 25

$500,000 to $999,999 13 18

$1 million or more 5 13



*=<0.5%

43

Pre-Retirees

(n=804)

Retirees

(n=801)

Nature of Occupation

Professional or technical 27% 32%

Mid-level or lower level Manager 24 17

Senior Manager 14 12

Administrative 12 12

Other white collar 8 7

Blue collar 8 6

Executive 4 9

Service worker 3 2

Sales or retail * *

Medical or nurse * *

Customer service * --

Business owner -- *

Teacher -- *

Clerical -- *

Something else 1 *


*=<0.5%

44

Pre-Retirees

(n=804)

Retirees

(n=801)

Industry

Manufacturing/Production 18% 18%

Business and financial 14 18

Health care 11 10

Computer technology 7 9

Services industry 7 8

Engineering 5 4

Technology (other than computer) 5 3

Construction and maintenance 4 2

Legal 2 3

Agriculture 1 1

Arts and entertainment 1 1

Education 1 1

Life sciences 1 *

Physical sciences * 1

Social services * *

Architecture * *

Mathematical or statistical * *

Other 24 20


*=<0.5%

massmutual retirement savings risk study risk study report.pdf · background & methodology 1...

Documents