Schwab Study Finds Four Generations of American Adults Fundamentally Rethinking Planning for and Living in Retirement

Landmark Study by Charles Schwab and Age Wave Reveals that All Generations Are Asking for Help to Help Themselves Achieve Financial Self-Reliance As Hopes, Fears, Expectations Regarding Work and Relationships Among the Generations Change

SAN FRANCISCO–(BUSINESS WIRE)–Americans across generations are developing new and different ideas about how they expect to approach retirement. In a landmark study of four generations released today by Charles Schwab & Co., Inc., survey participants across the board see that the responsibility for a secure financial future is rapidly shifting to them.

“We undertook this study to better understand the way people from four adult generations think about retirement,” said Charles Schwab, founder, chairman and CEO, the Charles Schwab Corporation. “We surveyed nearly 4,000 people across the generations and got some fascinating insights that show people are rethinking the old model of retirement. We discovered, for example, that on average people believe ‘old age’ doesn’t begin until 75 or older. With the average retirement age now in the early 60’s, Americans are reasonably planning for upwards of 30 years in this stage of life. Most people are beginning to think of this as whole new third act.”

The Schwab study describes this thinking in detail:

• A Distress Call from Retirement Limbo: Respondents are thinking about their retirement futures and say they will need to have saved at least $500,000 to live comfortably in retirement – which is twice the median net worth of today’s Boomer pre-retirees.¹ Additionally, only a quarter of Americans say they clearly understand Social Security and how it works. Just 11 percent of Americans say they understand Medicare very clearly.
• A Coming Era of Financial Self-Reliance: Looking forward, survey participants identify a need for self-reliance in retirement. Younger generations, especially, see larger parts of their retirement funds coming from personal savings and investments. Generation Y (ages 21 to 31) expects 61 percent of its retirement funding to come from personal savings and investments versus 32 percent from the oldest generation (ages 63 to 83).
• Low Grades for Likely Resources: Survey participants say they have not gotten the support they need to prepare for retirement, so 78 percent have acquired financial management skills on their own. They give other resources low grades as trustworthy sources for information: family, friends and employers all got “Cs.” Professional financial advisors scored slightly higher with a “C+.”
• A Request for Better and More Financial Education from Schools and Employers: Just 3% of all generations strongly agree that Americans are currently a financially responsible population. But, survey participants say they want help to help themselves overcome this challenge: 95 percent say basic financial management should be a standard part of our high school curriculum; and seven in 10 would like professional saving and investing advice from their employer.
• Looking Forward to a New Exciting Chapter Based on Reinvention and New Ways of Working: Staying mentally active – not the paycheck – is the No. 1 reason people want to work in retirement, and 60 percent say they would like to enter a different line of work. People are asking for a new model for work life in their later years: 40 percent said they would like to cycle between periods of work and leisure during their retirement years.
• The “Sandwich” Effect Becoming Even More Complex: Respondents are anticipating even more generational interdependence and support in their later years. While four in 10 anticipate they will need to financially support their parents, one in four worry that they will have to financially support their siblings. Among younger respondents, these concerns are the strongest.

The Schwab and Age Wave study, “Rethinking Retirement: Four American Generations Share Their Views on Life’s Third Act,” examines attitudes and opinions of 3,866 respondents across four generations: Silent Generation (ages 63 to 83), Boomers (ages 44 to 62), Generation X (ages 32 to 43), and Generation Y (ages 21 to 31). Harris Interactive® conducted all surveys and analysis.

How We View Retirement – “Me” Versus “We”

The new thinking about retirement also shows that nearly half (45 percent) of survey participants see retirement as a time to give back to their family and community. This dynamic may be due in part to seeing a gap of potentially productive years between retirement age, which they define as 63, and “old age,” which they say does not start until around 75. People who view retirement as a time to give back are more likely to believe they will stay youthful longer and that success is about having loving family and friends.

“Many Americans have been thinking about the social and economic shifts that will be caused by the coming wave of retirees. Now, we have a cross-generational study that shows us the radically different ways future generations expect to live in and approach retirement,” said Ken Dychtwald, Ph.D., president and CEO, Age Wave. “Our current retirement systems and networks aren’t set up to meet their expectations as they alternate between periods of work and leisure, and they may find themselves at the center of a complex set of relationships where they care for parents as well as siblings. We will see profound changes in ways we’ve never imagined. Luckily, there is optimism across generations. And in true American spirit, people are asking for help to help themselves with this new retirement dynamic.”

Dr. Dychtwald, recognized as a leading gerontologist, psychologist who comments frequently on the topic of the future of retirement, He is author of fifteen books including Age Wave, Workforce Crisis and The Power Years: A User’s Guide to the Rest of Your Life. He and his company Age Wave have served as an advisor to businesses and social service organizations worldwide.

About the Study

“Rethinking Retirement” was initiated by Schwab in collaboration with Age Wave. All data collection and analysis was conducted online within the United States by Harris Interactive. A total of 3,866 interviews were conducted between March 28 and April 22, 2008. The sample is representative by age, gender, race, income, investable assets, education and region for each of the four generations studied. An oversample was conducted by generation among the major non-White ethnic groups (Hispanics, African Americans and Asians) to ensure adequate representation by ethnicity across all generations. No estimates of theoretical sampling error can be calculated: a full methodology is available.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.2 million client brokerage accounts, 1.3 million corporate retirement plan participants, 332,000 banking accounts, and $1.4 trillion in client assets as of April 30, 2008. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Schwab Institutional division. Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com.

About Age Wave

Age Wave is the world’s leader in market analysis and innovative insights concerning the boomer and mature adult sectors. Drawing on thirty+ years experience, Age Wave has developed a unique understanding of the population’s expectations, attitudes, hopes and fears regarding retirement and maturity-related lifestyle and workstyle issues. Under the leadership of Dr. Ken Dychtwald, Ph.D., Age Wave has overseen hundreds of cutting-edge research, training, and consulting assignments worldwide across a variety of industry sectors including financial services, healthcare, food and beverage, retail, travel, media, communications real estate and technology. agewave.com.

About Harris Interactive®

Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research, powered by science and technology, Harris assists clients in achieving business results. Harris Interactive serves clients globally through their North American, European and Asian offices and a network of independent market research firms.

© 2008 Charles Schwab & Co., Inc. All rights reserved. Member SIPC (0708-9323)

¹ According to the Federal Reserve 2004 Survey of Consumer Finances

Contacts

Charles Schwab
Matt Hurwitz, 415-297-4199 (Mobile)
Matt.hurwitz@schwab.com
or
Edelman
Jennifer McClellan, 917-573-0989 (Mobile)
Jennifer.mcclellan@edelman.com