the ing educators economic index: lessons learned about educators ing studies the retirement and...

The ING Educator’s Economic Index:

Lessons Learned About Educators

ING studies the retirement and financial mind-set, opinions, confidence and habits of today’s Kindergarten through Grade 12 (K-12) Educators… who are so integral to the growth of our next generations… what do they think about the world around them, their financial situations, and how do they make decisions? And how can we help them prepare for their own futures just as they help prepare our children prepare for theirs?

For distributor and employer distribution only.Not for distribution to the general public.(c) 2010, ING North America Insurance Corporation.C10-0910-008

Retirement - Insurance - Investments 2

Behavioral Finance and retirement research traditionally focuses on large private sector employers, and their 401(k) plans.

Educational Services Industry is the second largest industry in the economy (Bureau of Labor Statistics, 2008); with teachers accounting for 6.3 million workers… and with respect to Behavioral Finance, there is a lack of research understanding the motivations, opinions, personalities, attitudes of these teachers

How do they interact with financial products, resources and situations

Where do they focus their attention, what do they think is important

How confident are they about their own situations Potential impact on retirement saving and situations

New Landmark Study from ING Focuses specifically on K-12 Educators

K-12 Educators

“Understanding how people think and feel, about

themselves, their situations, about

money and finances, is key to

helping encourage,

facilitate and enable productive

retirement savings

behavior.”Lessons Learned About

Educators Report,© 2010 ING North America

Insurance Corporation. Available at

ingretirementresearch.com


1,016 K-12 responded to the survey.

• K-12 Educators work in a teacher/instructor capacity in grades Kindergarten through 12 th grade, at either a public

or private school.

• Educators included in this study are employed full-time and between the ages of 20 and 70.

Quotas were set. Invitations were sent to a representative sample of full-time employees age 20-70. All responders to the survey invitation, regardless of their study qualification status, were weighted to be representative of full-time employees age 20-70. This resulted in a representative sample of those who actually qualified for the study and completed the interview. K-12 Educator oversample interviews were also weighted on Marital Status and Age.

The study was conducted 5/27/10 – 6/1/10. Results are reported at +/-3% at the 95% confidence level.

Survey conducted for the ING Institute for Retirement Research through Synnovate

© ING North America Insurance Corporation

Survey Methodology


K-12 Educators

Who are these educators? What is their personality? What do they think about America’s issues?

Who do they trust?What do they buy and how

do they make purchase decisions?

How do their financial habits compare to other habits?

What does their retirement picture look like?

What are their financial confidence and experience

levels?

What do they want from their employers for financial

education? How do they want to receive it?


K-12 Educators

Who are these educators?


What is their personality? What do they think about America’s issues?

Who do they trust?What do they buy and how

do they make purchase decisions?

How do their financial habits compare to other habits?

What does their retirement picture look like?

What are their financial confidence and experience

levels?

What do they want from their employers for financial

education? How do they want to receive it?


ETHNICITY n=1,016

% White/Caucasian 89%

GENDER

Female 73%

Male 27%

MARITAL STATUS

Married/Domestic Partner 65%

Widowed/Divorced/Separated 17

Never Married 18

HOUSEHOLD SIZE

Mean 2.7

PRESENCE OF CHILDREN IN HOUSEHOLD

% Have Children <18 in HH 37%

Demographic Profile (cont’d)

Q.48/Sample data. Which of the following best describes your current marital status? [Select one]Q.45. Which best describes your race / ethnic origin? [Select one]Q.49/Sample data . What is your current household size? [Select one]Q.50/Sample data. Do you have children in your household? [Select all that apply]

On average, K-12 Educators live in 2+ person households, with approximately one-third having children under 18 in their household.


TYPE OF ORGANIZATION n=1,016

EDUCATIONAL INSTITUTION 100%

Elementary Educational Institution 53

Secondary Educational Institution 47

ROLE IN EDUCATION (Base = Work in Elementary or Secondary Education)

n=1,016

Teacher/instructor 100%

ROLE IN EDUCATION (Base = Work in Elementary or Secondary or Higher Education)

n=1,016

Public School System - Elementary or Secondary 88%

Private School System - Elementary or Secondary 12

Employment Profile

Q.SA4. Which of the following best describes the type of organization you work for? [Select one]Q.SA5 Which of the following best describes your role in education? [Select one]Q.SA6. Which best describes your employer? [Select one]

Slightly more work in Elementary education than in Secondary. The Study focused solely on Educators. Most work for Public school systems.


SUJBECTS TAUGHT (Base = K-12 Educators) n=1,016

English / Literature / Writing 40%

Math 37

Science 30

Social Sciences 26

Remedial / Special Education 22

History 19

Physical Education 8

English as a second language 7

Honors / College-Level 2

Other 27

GRADES TAUGHT (Base = K-12 Educators) n=1,016

Kindergarten 16%

Grades 1-5 43

Grades 6-8 31

Grades 9-12 35

Employment Profile (cont’d)

Q.34a. What subject matter(s) do you teach? [Select all that apply]Q.SA51. What grade(s) do you teach? [Select all that apply]

English, Math, and Science are the subjects surveyed K-12 Educators most commonly teach.


UNION MEMBER n=1,016

% Yes 61%

PENSION ELIGIBLE n=1,016

% Yes 72%

Employment Profile (cont’d)

Q.SA8. Do you belong to a union? [Select one]

Union membership is high among K-12 Educators.


HAVE EMPLOYER-SPONSORED RETIREMENT PLAN n=1,016

% Yes 65%

CURRENTLY INVESTING IN ESRP (Base = Own ESRP) n=664

Yes 68%

No 23

Not Sure 9

ESRP BALANCE (Base = Investing in ESRP) n=456

<$50k 50%

$50k - < $100k 15

$100k+ 13

Not sure 22

Mean (000’s) $66.8

2009 ESRP CONTRIBUTION (Base = Investing in ESRP) n=456

Mean (000’s) $4.7

Financial Profile – Employer Related

Q.35. Will you be eligible for pension retirement income from your employer ? [Select one]Q.SA9. Which of the following financial products do you currently own? [Select one]Q.40. Are you currently investing in your employer’s defined contribution retirement plan? [Select one]Q.41. What is the approximate balance within your employer’s defined contribution retirement plan [Select one]Q.42.Approximately how much did you contribute to your employer’s defined contribution retirement plan in 2009? [Select one]

Most K-12 Educators state that they are pension-eligible. The majority also have an employer-sponsored retirement plan.


FINANCAL PRODUCT OWNERSHIP n=1,016

Own retail or ESRP investments 87%

Own employer-sponsored retirement plan 65

Own retail investments 63

Own checking/savings account 91

HAVE FORMAL, WRITTEN FINANCIAL PLAN

Yes 15%

No – but plan to create one 56

No – and I do not plan to create one 29

TOTAL HOUSEHOLD INVESTABLE ASSETS

<$10k 26%

$10k - < $50k 24

$50k - < $100k 17

$100k - <$250k 18

$250k+ 15

Mean (000’s) $151.6

Financial Profile – General

Q.SA9. Which of the following financial products do you currently own? [Select one]Q.13. Do you currently have a formal, written financial plan for managing your income and expenses during retirement? [Select one]Q.46. What would you estimate to be the total amount of your household’s investable assets? Please include money in checking, savings, employer sponsored retirement plans (such as 401(k), 403(b), 457) and investments (such as mutual funds, individual stocks and bonds, annuities, CDs, IRAs, etc.). [Select one]

K-12 Educators are more likely to own retail investments than are Government Employees (non-K-12 Educators). Few in both sectors currently have a formal, written financial plan.


TOTAL HOUSEHOLD RETIREMENT SAVINGS (Base = Own ESRP)

n=664

Nothing 4%

<$10k 28

$10k - < $50k 30

$50k - < $100k 13

$100k - < $250k 14

$250k+ 11

Mean (000’s) $102.7

PROPORTION OF HOUSEHOLD RETIREMENT SAVINGS IN ESRP (Base = Currently investing in ESRP)

n=456

Proportion in ESRP 64%

Financial Profile – General (cont’d)

Q.47. What would you estimate to be the total amount that your household has saved for retirement? Please include retirement savings including employer retirement savings plans (401(k), 403(b), 457), IRAs, annuities, and any other investments that you intend to use for retirement. [Select one]

Educators who are currently investing in their employer-sponsored retirement plan report that their ESRP makes up two-thirds of their households’ retirement savings.


K-12 Educators


What is their personality?What is their personality?

What do they think about America’s issues?

Who do they trust?What do they buy and

how do they make purchase decisions?

How do their financial habits compare to other

habits?

What does their retirement picture look

like?

What are their financial confidence and

experience levels?

Where do the look for financial education?


Risk Taker Personality

Most educators would not classify themselves as risk takers in their personal lives. Correspondingly, when asked to self-select a personality type, more chose “Relater” and fewest chose “Director”.

Q.31. Would you say you are a risk taker in your personal life? [Select one]

Relater: Good team player, prefer stability to risk, cares greatly about the feelings and needs of others, likeable, not a risk-takerThinker: Self-controlled and considerate, prefers analysis to emotionSocializer: Outgoing, optimistic, enthusiastic, like to be in the center of things, loves to talkDirector: Firm, forceful, confident, competitive, decisive, determined, risk-taker

Q.32. Which personality type would you say best describes you? [Select one]

Risk Taker?

Risk Personality

It follows that very few consider themselves “aggressive” investors; more than half consider themselves “conservative”.

Aggressive – Willing to accept a high level of risk to possibly achieve high asset growthModerate – Willing to accept a moderate level of risk to possibly have moderate investment growthConservative – Want to protect savings and avoid any possible losses

(“Aggressive,” “Moderate,” and “Conservative” are based on standard investor definitions.)

Q.12. Which of the following best describes your retirement investment philosophy?

15Retirement - Insurance - Investments


K-12 Educators


What is their personality?






habits?


like?


experience levels?

What do they want from their employers for

financial education? How do they want to receive

it?


Top 5 Issues Facing America Today- K-12 Educators

Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]

% Think is an issue

100% 100% 100% 99% 99% 99% 98% 98% 87% 99% 98% 95% 98% 95%

Educators feel that employment and healthcare costs are the top issues facing America today, but (not surprisingly, given their occupation) also rank education budgets as a top issue. Retirement “security” is one of the next most important issues.

Total #1 or #2


America’s Ability to Address Issues Effectively in Next 3 – 5 Years*

% Ranking issue #1

Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]Q.2 How optimistic or pessimistic are you that America will be able to address these issues effectively within the next 3 to 5 years? [Select one]

31% 7% 1% 5% 16% 3% 2% 14% 6% 6% 1% 1% 5% 1%

A non-optimistic pattern is evident for K-12 educators. They are the most pessimistic about America being able to effectively address education budgets. They are highly pessimistic about retirement “security”.

*Base: Respondents who consider it an issue

Total optimistic


Financial Literacy as Part of School System

Although very few educators rank financial literacy in the top two issues facing America today, virtually all believe that financial literacy should be a part of education in the school system. Half feel that it should be an important part.

Q.1 In your opinion, what are the top five issues that America is facing today? [Rank top 5]Q.3 Please read the following statements and select the one that best describes your feelings. [Select one]

3% rank financial literacy in the top 2 issues facing

America today

95%


K-12 Educators

Who are these employees?



Who do they trust?Who do they trust?What do they buy and



habits?


like?


experience levels?

Where do the look for financial education?


Trust of Others - K-12 Educators

K-12 Educators tend to be more trusting of interpersonal relationships than organizational relationships… with the notable exception of car sales people!

Q.4 In matters that are relevant to your relationship, how much do you trust…?[Select one]Q.5 In general, how much do you trust… ?[Select one] *Base: Have a Relationship


K-12 Educators






What do they buy and how do they make

purchase decisions?


habits?


like?


experience levels?



it?

Retirement - Insurance - Investments

Single Biggest Purchase in Past 12 Months

Q.24. What was your biggest single purchase in the past 12 months? [Open End]

<$250“Books”“Artwork”“Dvd player”

$250 - $499“Computer”“Dishwasher”“Snow blower”

$500 - $999“Car repair- an alternator”“Emergency vet bill”“Mattress”

$1,000 - $4,999“Television, washer”“Fencing around house”

$5,000 - $9,999“Graduate courses”“A vacation to Disney”

$10,000 - $24,999“Graduate school for daughter”“Used car”

$25,000 or more“Trip to Africa”“House”

Some of the larger single past-year purchases for educators include the exotic – trip to Africa – and higher education. Most have spent more than $1,000 on a single purchase in the past year

$1,000+ (net): 53%


Resources Used to Make Appliance/Vehicle Purchase Decision

Educators depend more on their friends/family/colleagues and spouses/partners than on other resources when making appliance/vehicle purchase decisions. Sales professionals – and educational materials (including web sites) -- fall into the second tier of resources.

Q.26. Which, if any, of the following resources have you used when making a purchase decision on the following areas? – Appliances or Vehicles [Select one]

84% use at least one of these

resources

Tier 1

Tier 2


Resources Used to Make Financial Product Purchase Decision

When making financial product purchase decisions, in addition to utilizing friends/family/colleagues or their spouse/partner, financial advisors are also top resources. Employers also become more influential.

Q.26. Which, if any, of the following resources have you used when making a purchase decision on the following areas? – Financial Products [Select one]

75% use at least one of these

resources

Tier 1

Tier 2

Rises to top

Up from 6%

Low influencers

Importance of Resources Used to Make Appliance/Vehicle Purchase Decision*

Spouses/partners are considered to be a very important resource by most for appliance/vehicle purchase decisions. Sales professionals are important for many of these, but not to the extent of several other resources.

*Base: Use resource for financial product decision


Importance of Resources Used to Make Financial Product Purchase Decision*

Q.28. How important are each of the following resources when purchasing financial products? [Select one] *Base: Use resource for financial product decision

Spouses/partners are considered to be a very important resource by most for financial product purchase decisions, followed by financial advisors. Employers are important for many, but not to the extent of several other resources.


Financial product owners in these sectors state that fees/costs, company reputation, and performance are the strongest contributors to their financial purchase decisions.

Q.22. When choosing a financial or investment product, to what extent do each of the following contribute to your consideration of purchasing the product? [Select one]

*Base: Own retail investments, ESRP, and/or checking/savings account

What they Consider when Purchasing Financial Products*


Attention Paid When Deciding to Purchase Financial Product* - K-12 Educators

Q.23. When you’re deciding to purchase a financial product, what level of attention do you pay to the following documents or information from the offering company, if they are available to you? [Select one]

They pay most attention to the documents that give general descriptions of the product and its benefits – and least attention to prospectuses, legal documents and marketing materials.


K-12 Educators







habits?


habits?


like?


experience levels?



it?


How Often Conduct Activities

Mean times per year (including ‘Never – 0’)

% Do Activity

Q.30. How often do you… ? [Select one] *Base: Have checking/savings account**Base: Have ESRP, annuities, and/or IRA

100% 98% 73% 93% 98% 95% 94% 98% 97% 94%

98% 90% 91% 73% 77% 73%

% Do Activity

A similar pattern holds for K-12 Educators. However, K-12 Educators conduct financial habits at a lower frequency than Government Employees (non-K-12 Educators).

FIN

AN

CIA

L H

AB

ITS

OT

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IFE

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K-12 Educators







habits?


like?


experience levels?


experience levels?



it?


Comfort Level in Financial Ability Today

Q.14. How comfortable are you in your financial ability today to…? [Select one]

Most educators feel comfortable that they can cover day-to-day basic expenses, but that confidence decreases as potential expenses get larger – or longer-term.


Financial Confidence Change Compared to Before Market Decline

Q.14. How comfortable are you in your financial ability today to…? [Select one]Q.15. Compared to before the financial market decline that began in 2008, has your confidence level changed in your financial ability to…? [Select one]

41% 45% 59% 56% 53% 58% 58% 73% 70% 84% 89%

Comfortable in Financial Ability Today (Top 2 Box)

Many educators have had their confidence shaken in their ability to cover many aspects of savings and expenses – especially their ability to adequately save for retirement and deal with the unexpected.


K-12 Educators







habits?


like?


like?


experience levels?



it?


Thinking vs. Planning

Most educators say they have given at least some thought to how they will get income during retirement; two-fifths say they have thought about it a lot. They do not give as much consideration to how much they might need when they retire.

Q.6. How much thought have you given to how you will actually get income during retirement? [Select one]

78%

They think about retirement

But 70% haven’t thought about how much income they might need retire in more than a year… 29%

have never thought about it

Q.7. When was the last time you and/or your spouse/life partner calculated how much you will need to retire? [Select one]


Retirement Age and Social Security Expectations

Of those educators who have thought about when, most commonly expect to retire in their 60’s. One-quarter, however, do not know when they will retire. And 5% don’t plan to retire at all. 60% expect to receive Social Security income.

Q.8. At what age do you expect to retire? [Select one]

Mean = 62.6 years

Expect Social Security?

Planned Retirement Age


Changes as a Result of Financial Market Decline

Many have increased their expected retirement age as a result of the decline, and conversely (perhaps compensating) few have increased their retirement savings. Cost of living increases are the biggest driver of an older expected retirement age.

Q.9. Has your expected retirement age changed compared to before the financial market decline that began in September of 2008? [Select one]Q.10. Which of the following, if any, contributed to the change in your planned retirement age? [Select one]Q.11. Have you changed the amount you invest for retirement as a result of the financial market decline that began in 2008? [Select one]

*Base: Expected Retirement Age Increased

Retirement Age Changed

Retirement Investment Amount Changed

Why?*


Comfort with Current Financial Ability – Retirement Related Savings

One-third are uncomfortable with their current financial ability to save enough for retirement; far fewer are comfortable with their ability to save enough for retirement. The financial market decline has caused roughly four-in-ten to be more uncomfortable with their ability to save for retirement.

Q.14. How comfortable are you in your financial ability today to…? [Select one]Q.15. Compared to before the financial market decline that began in 2008, has your confidence level changed in your financial ability to… [Select one]

Ability to save for retirement Confidence in ability to save for retirement since decline


Income from Pension

On average, the pension-eligible expect that just over half of their household’s retirement income will come from their pension plan. However, over half do not have confidence that this income will remain the same throughout retirement… and nearly half don’t understand the calculation.

Q.35. Will you be eligible for pension retirement income from your employer? [Select one]Q.36. How confident are you that your pension plan and your income from it will remain unchanged throughout retirement? [Select one]Q.37. Do you know how your pension plan benefit will be calculated? [Select one]Q.38. What percentage of your household’s retirement income do you expect to come from your pension plan? [Select one]

72% say they are eligible for pension Retirement Income

Confidence that Pension Plan Income Will Remain Unchanged Throughout Retirement*

*Base: Eligible for Pension Retirement Income

Know Pension Benefit Calculation*

Percent of Household Retirement Income Expected from Pension*

46%

54%


Investing in Employer-Sponsored Retirement Plan

The majority of employer-sponsored retirement plan owners are currently investing in their plans, but over half of investors would like to be contributing more than they are presently.

Q.40. Are you currently investing in your employer’s defined contribution retirement plan? [Select one]Q.43. Please read the following statements and select the one that best describes your feelings about the amount you currently contribute to your defined contribution retirement plan. [Select one]

Feeling About Current ESRP Contribution Level**

*Base: Own ESRP**Base: Currently investing in ESRP

Currently Investing in ESRP*


Educators not Investing in Employer-Sponsored Retirement Plan*

Some are not participating in an employer-sponsored retirement plan for technical reasons, such as employer not offering it or ineligibility. Others offer an assortment of reasons for why they are not participating – including lack of knowledge about the plan/investments, preference for other types of investments, and lack of money.

Q.44. You indicated that you are not currently participating in your employer’s defined contribution retirement plan. Why not? [OPEN END]

“I have no idea how it works.”“No extra cash.”

“Do not trust investing”“My wife is a teacher and she is contributing to hers, do not make enough

money to contribute to both.”“I've never heard of it and I don't even know if it is something that my

employer offers.”“I need to have more information regarding to it.”

“Couldn't afford it any more”“Not as good as my other investments”

“Using outside investments”“Haven't pursued the necessary paperwork to begin contributing again”

”Job loss in family, concern about finances, never got around to it”“I prefer to fund a Roth account as well as my other incomes”

“They did not offer it until this year and I am ready to retire next year.”

*Base: Do not own ESRP or own but are not currently investingComments have not been coded to quantify, but rough estimates are that one-third of those who own an ESRP but are not currently investing say it is because they prefer to invest elsewhere or already have other investments; roughly 20% say they cannot afford to contribute; 10% say they are not sure what the plan is or what it entails.


K-12 Educators







habits?


like?


experience levels?



it?



it?


Employer Involvement in Financial Education – K-12 Educators

Q.18. Please read the following statements and select the one that best describes your feelings. [Select one]Q.19. What type of additional financial education would you like to be receiving through your employer? [Select one]Q.20. How would you like to receive additional financial education? [Select one]

Employer Role in Providing Financial Education

Additional Financial Education Wanted Through Employer*

*Base: Want employer to make more financial education available

Educators to not expect their employers to play provide more financial education… but of those who do want more, most want retirement and investing ideas.

Method Wanted for Receiving Additional Financial Education Through Employer*


Preferred Method of Receiving Investment Information*

Less than half of educators who own retail and/or employer-sponsored retirement plans prefer to receive investment information in the mail. Very few would like it to come via phone. On-line methods are slightly preferred.

Q.21. What is your most preferred method of receiving information about your investments? [Select one]

*Base: Own retail investments and/or ESRP

50% prefer an electronic

method


Questions / Comments

Visit

Ingretirementresearch.comfor the Study Report, other articles and research updates, and special reports and tools for your

employees

Visit

Ingretirementresearch.comfor the Study Report, other articles and research updates, and special reports and tools for your

employees


Important Information

This presentation has been prepared by the ING Institute for Retirement Research for informational purposes. Nothing contained herein should be construed as (i) an offer to sell or solicitation of an offer to buy any security or (ii) a recommendation as to the advisability of investing in, purchasing or selling any security. Any opinions expressed herein reflect our judgment and are subject to change. The opinions, views and information expressed in this commentary are subject to change without notice based on market conditions and other factors.

This information provided for your information only by the ING family of companies.

C10-0910-008 (9/10)

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