Older Workers Worried About Promised Medicare and Social Security Benefits, Watson Wyatt Survey Finds
Roughly six out of 10 (61 percent) older workers -- those 50 to 64 yearsold -- are not confident of receiving their promised Medicare benefits and 51percent are not confident of receiving promised Social Security benefits afterthey retire. The analysis is based on a 2007 Watson Wyatt survey of 5,000older employees.
Confidence in these government programs is partly associated with howsecure workers are in their own financial resources for retirement. Ninety-sixpercent of older workers who are confident of having adequate personalresources to live on comfortably five years into retirement are also somewhator very confident they will receive their Medicare and Social Security dues.However, among those who are worried their own resources will not besufficient, only 87 percent are confident of receiving their full Medicarebenefits, and 85 percent are confident of receiving their full Social Securitybenefits.
Confidence falls farther along the horizon: Of those who are confident ofhaving sufficient personal resources to last 20 years into retirement, 67percent and 66 percent are also confident of receiving their promised Medicareand Social Security benefits respectively. Of those who worry their retirementresources won't stretch that far, these numbers fall to 44 percent and 41percent respectively.
"People with less overall confidence in their retirement resources arelikely to worry more about Social Security and Medicare because they cannotrely on personal savings. And these fears may be further exacerbated by therecent turmoil in financial markets," said Alan Glickstein, a seniorretirement consultant at Watson Wyatt. "Yet, this anxiety is not based only oncurrent market pressures: With an aging U.S. population, both systems arestarting to pay out benefits to a rapidly growing older population while thepool of workers paying into each is growing much more slowly."
The Watson Wyatt analysis further showed that older workers' attitudestowards their promised Medicare and Social Security benefits differ by age,gender, education and income level:
-- Workers at the lower end of the age range are less confident abouttheir future benefits: Those 50-54 years old are much less confident ofreceiving their due than those aged 54-64, when it comes to both SocialSecurity and Medicare.
-- Women tend to be less confident than men about the government makinggood on its Medicare promises -- roughly 64 percent of responding women had noconfidence in the system compared with roughly 58 percent of men. The trendwas similar for Social Security.
-- Generally, workers with more education have more confidence in thesystem -- roughly 78 percent of respondents with less than a high schooleducation have little to no confidence in Medicare, compared with 64 percentof those with a college degree and 57 percent of those with a graduate degree.The trend was similar for Social Security.
-- The effect of income and marital status was mixed -- these factors seemto have less impact than age, gender and educational background on retireeconfidence.
"Retirement income has traditionally been likened to a three-legged stoolconsisting of government plans, employer plans and personal savings," saidMark Warshawsky, director of retirement research at Watson Wyatt. "With thefuture of Medicare and Social Security uncertain, it is critical for employersand their employees to adequately prepare for future retirement needs."For more information, read the September 2008 Insider article on OlderWorkers' Confidence in Social Security and Medicare:http://www.watsonwyatt.com/us/pubs/insider/showarticle.asp?ArticleID=19753
About Watson Wyatt
Watson Wyatt (NYSE, Nasdaq: WW) is the trusted business partner to theworld's leading organizations on people and financial issues. The firm'sglobal services include: managing the cost and effectiveness of employeebenefit programs; developing attraction, retention and reward strategies;advising pension plan sponsors and other institutions on optimal investmentstrategies; providing strategic and financial advice to insurance andfinancial services companies; and delivering related technology, outsourcingand data services. Watson Wyatt has 7,000 associates in 32 countries and islocated on the Web at http://www.watsonwyatt.com.Confidence in having enough resources to live comfortably 5 years into retirement More than 20 years into retirement Confident Not confident Confident Not confident Medicare SS Medicare SS Medicare SS Medicare SS Not at all/ Not too confident of receiving due benefit 4% 4% 13% 15% 33% 34% 56% 59% Somewhat/Very confident of receiving due benefit 96% 96% 87% 85% 67% 66% 44% 41%
SOURCE Watson Wyatt
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