T. Rowe Price Group, Inc. · NASDAQ:TROW
T. Rowe Price — Investor Presentation (2014)
45 slides from T. Rowe Price's investor presentation, 2014
Slide 1: First Look: Assessing the New Retiree Experience
First Look: Assessing the New Retiree Experience SURVEY HIGHLIGHTS
Slide 2: Table of Contents
Table of Contents Demographic and Financial Profiles 3 Expected and Actual Sources of Retirement Income 12 Managing Spending 19 Satisfaction and Financial Well-Being 27 Workers’ Savings and Expectations 30 Who isn’t Doing as Well? 38 Methodology 43 2
Slide 3: Demographic and Financial Profiles
DEMOGRAPHIC AND FINANCIAL PROFILES
Slide 4: Age
Age How old are you? Workers Retirees Average age 57 65 Median age 56 66 Workers Retirees Under 50 0% 4% 50–54 35% 3% 55–59 35% 8% 60–64 18% 23% 65–69 9% 40% 70–74 2% 14% 75+ 1% 8% Q. 2 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. Conducted for T. Rowe Price by Brightw
Slide 5: How Long Ago Retired
How Long Ago Retired About how long ago did you retire: Base: Retirees TITLE Average 2.8 years 1 year Median 3.0 years 18% 24% 2 years 3 years 4 years 16% 5 years 22% 20% Q. 8 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. 5
Slide 6: Years Expect Income to Support Retirement
Years Expect Income to Support Retirement About how many more years do you expect your income sources in retirement will have to support you or a surviving spouse? Base: Retirees Average 21 years Average age of retirees 65 30% 26% 25% 20% 17% 17% 15% 13% 10% 10% 9% 5% 5% 3% 0% Under 10 years 10–14 y
Slide 7: Work Status
Work Status BASE: RETIREES Bearing in mind that some people retire and then go back to work, which one of the following phrases best describes your work situation? 5% Retired and not working 2% or looking for work 11% Retired but now looking Retired but now working (21%)… for work Full-time as an 3%
Slide 8: Household Income Including Social Security
Household Income Including Social Security Including Social Security (if any) but not counting any income earned by other adults in your household, what was your personal income from all sources before taxes in 2013? Including Social Security (if any) what was the income earned by other adults in yo
Slide 9: Household Investable Assets Plus Home Equity Less Debt
Household Investable Assets Plus Home Equity Less Debt Workers % Retirees % None or negative amount 8 4 Any to under $50,000 9 10 $50,000 to <$100,000 6 5 $100,000 to < $250,000 14 15 $250,000 to < $500,000 15 18 $500,000 to < $750,000 12 9 $750,000 to < $1.0M 8 7 $1.0M to < $1.5M 11 12 $1.5M to < $
Slide 10: Market Value and Asset Allocation
Market Value and Asset Allocation MEAN VALUES UNLESS OTHERWISE INDICATED Please indicate the current market value of these assets held by you or by other members of your household. Of this total, please indicate the percentage held in… Allocation% Workers % Retirees % Workers Retirees Self $545 $602
Slide 11: Own Real Estate
Own Real Estate Apart from real estate you may own through a business, do you own your own home, a second home or any other real estate? Workers 81% Retirees 82% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q. 65 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. 11
Slide 12: Expected and Actual Sources of Retirement Income
EXPECTED AND ACTUAL SOURCES OF RETIREMENT INCOME
Slide 13: Sources of Retirement Income (Mean%)
Sources of Retirement Income (Mean%) Approximately what percentage of your household income do you expect this source to provide in retirement? Approximately what percentage of your household income does this provide? Workers Retirees Social Security 33% 43% 401(k), Roth 401(k), 403(b), 457, profit
Slide 14: On Track to Meet Financial Goals
On Track to Meet Financial Goals All things considered, how comfortable are you that you are on track to meet your financial goals? Not comfortable at all Not very comfortable Somewhat comfortable Very comfortable Retirees 6% 16% 51% 27% Workers 12% 24% 50% 14% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Slide 15: Withdrawal Plan
Withdrawal Plan BASE: RETIREES Thinking about your investable assets—that’s your stocks, stock mutual funds, bonds, bond mutual funds, asset allocation funds including target date funds, money market mutual funds and other cash equivalents whether held in a 401(k), an Individual Retirement Account o
Slide 16: Percentage of Investable Assets Withdrawn
Percentage of Investable Assets Withdrawn About what percentage of your investable assets did you withdraw in the past 12 months? Base: Retirees who have a withdrawal plan (48%) Average 4.9% Median 4.0% 35% 30% 29% 25% 20% 19% 17% 15% 10% 8% 8% 7% 6% 6% 5% 0% 1% 2% 3% 4% 5% 6%–7% 8%–10% 11%–16% Q. 5
Slide 17: Retirees' Proportion of Annual Income Replaced
Retirees’ Proportion of Annual Income Replaced About what proportion of the annual income this household had before you retired does this household have today? Base: Retirees Average 66% 30% 27% 25% 25% 20% 17% 15% 14% 11% 10% 5% 5% 2% 0% None (0%) 1–20% 21–40% 41–60% 61–80% 81–99% 100% Q. 48 Retire
Slide 18: Asset Allocation in Retirement
Asset Allocation in Retirement When it comes to asset allocation in retirement, with which statement do you agree more: With many years to live in retirement, keeping upside market potential is essential to make sure I don't run out of money Minimizing risk and producing income is more important tha
Slide 19: Managing Spending
MANAGING SPENDING
Slide 20: Retirement Spending Strategies
Retirement Spending Strategies In retirement, which would you rather do? Maintain the same level of spending year after year in retirement, even if such spending diminishes the value of your portfolio Adjust your spending up and down depending on the market to maintain the value of your portfolio Wo
Slide 21: Managing Spending
Managing Spending When it comes to managing spending, which of the following statements are true for you? True: Workers Retirees 74% You track expenses carefully 80% 61% You stick to a spending budget 63% You have a written spending budget which does not use 24% spreadsheets or applications such as
Slide 22: Which Statements Describes You
Which Statements Describes You BASE: RETIREES Please indicate the extent to which each of the statements below describes you. Not at all Not very much Some but Not very much A Great Deal I've discovered that I can adjust my lifestyle according to my 2%9% 49% 40% income I don't need to spend as much,
Slide 23: True of My Retirement
True of My Retirement Given the retirement savings you have in place right now and the rate at which you are adding to those savings, which of the statements below do you expect will be true for you in retirement? Given your savings, income and expenditures, which of the following statements are tru
Slide 24: Expect to Spend Assets or Leave to Heirs
Expect to Spend Assets or Leave to Heirs BASE: RETIREES Do you expect to spend down all or most of your assets to live on in retirement, or do you expect to leave a significant sum to your heirs? Expect to leave a significant sum 42% Expect to spend assets 59% Q. 56 Retiree Spending Study © 2014 Bri
Slide 25: Sources of Funds for Emergency
Sources of Funds for Emergency If you suddenly faced an emergency that required more cash than you had on hand, to which of the following sources of funds would you turn? Workers Retirees 40% Credit cards 36% 36% Your after-tax personal savings and investments 42% A special emergency fund account yo
Slide 26: Special Emergency Fund Account
Special Emergency Fund Account BASE: HAVE AN EMERGENCY FUND About how long do you think you could meet your routine household expenses from this special emergency fund account? Workers % Retirees % 1–3 months 18 11 4–6 months 32 28 7–9 months 7 3 10–12 months 16 28 13–24 months 15 15 25–36 months 4
Slide 27: Satisfaction and Financial Well-Being
SATISFACTION AND FINANCIAL WELL-BEING
Slide 28: Satisfaction in Retirement
Satisfaction in Retirement BASE: RETIREES All things considered, how satisfied would you say you are with your retirement so far: 3% Very satisfied 9% Somewhat satisfied Not very 44% satisfied Not satisfied at all 44% Q.44 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. C
Slide 29: Financial Well Being Compared to Parents
Financial Well Being Compared to Parents BASE: RETIREES Compared to how your parents lived when they were the age you are now, would you say you are: 5% Much better off financially Somewhat 20% 31% better off financially Somewhat worse off financially Much worse off financially 44% Q.45 Retiree Spen
Slide 30: Workers' Savings and Expectations
WORKERS’ SAVINGS AND EXPECTATIONS
Slide 31: Workers' Perceived Job Security
Workers’ Perceived Job Security BASE: WORKERS How concerned are you that you may lose your job in the next 12 months? 6% Very concerned Somewhat concerned 34% 23% Not very concerned Not concerned at all 37% Q.31 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. Conducted fo
Slide 32: Workers' Personal Deferral Rate
Workers’ Personal Deferral Rate Not counting any contributions your employer may make to your retirement account over the next 12 months, how much money, if any, do you expect to put into this account? Base: Workers Median 10% Average (ex outliers): 11% 30% 25% 24% 20% 15% 14% 12% 11% 10% 10% 7% 6%
Slide 33: Workers Considering Delaying Retirement
Workers Considering Delaying Retirement BASE: WORKERS In the past 12 months have you considered delaying your retirement beyond your original target age, or haven’t you? Have considered delaying retirement 43% Have not considered delaying retirement 57% Q.32 Retiree Spending Study © 2014 Brightwork
Slide 34: Workers' Expected Retirement Age
Workers’ Expected Retirement Age At what age do you expect to retire? Base: Workers Median 67 years old Average 68 years old 50% 45% 43% 40% 35% 30% 25% 23% 20% 16% 15% 10% 7% 6% 5% 5% 0% 50–59 60–64 65–69 70–74 75–79 80 + Q. 33 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reser
Slide 35: Workers' Minimum Retirement Nest Egg
Workers’ Minimum Retirement Nest Egg In today’s dollars, what’s the bare minimum dollar figure you’d like to have saved before you retire? Median $693 Thousand Average $1.3 Million 30% 27% 25% 20% 16% 15% 15% 12% 10% 10% 10% 7% 5% 3% 0% Up to $100,000 $100,000 to $250,000 to $500,000 to $750,000 to
Slide 36: Confidence They Will Hit that Number
Confidence They Will Hit that Number BASE: WORKERS How confident are you that you will hit that number? Very Confident 18% 18% Somewhat Confident No very Confident Not Confident at all 22% 42% Q.37 Retiree Spending Study © 2014 Brightwork Partners LLC. All rights reserved. 36
Slide 37: Social Security Choices
Social Security Choices BASE: WORKERS If you had to say right now, which one of the following choices would you make about Social Security when you retire: Begin taking Social Security as soon as 20% I become eligible (currently age 62), even if my monthly benefit payments 34% are lower as a result
Slide 38: Who Isn't Doing as Well?
WHO ISN’T DOING AS WELL?
Slide 39: Total Retirees: Marital Status
Total Retirees: Marital Status BASE: RETIREES What is your marital status? Widowed Never married Divorced/ Separated Married/Living with partner Total Retirees 10% 10% 18% 63% Male 6% 9% 12% 74% Female 14% 11% 24% 52% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q. 73 Retiree Spending Study © 2014 Br
Slide 40: Retirees By Marital Status
Retirees By Marital Status BASE: RETIREES Investable Assets Plus Home Equity Less Debt Not Married or Total Retirees % Married or Partnered % Partnered % Negative amount 3 3 3 None 1 0 2 Any to under $5,000 2 2 3 $5,000 to <$50,000 8 6 11 $50,000 to <$500,000 38 30 52 $500,000 to <$2.5M 38 47 24 $2.
Slide 41: Gauging Retired Singles' Satisfaction
Gauging Retired Singles’ Satisfaction All things considered, how satisfied would you say you are with your retirement so far: Married Live in Total Retirees % Yes No Total Actual 1507 1016 491 Net: Satisfied 88% 90% 85% Very satisfied (4x) 44% 48% 37% Somewhat satisfied (3x) 45% 43% 48% Not very sat
Slide 42: Gauging Retired Singles' Financial Well-Being
Gauging Retired Singles’ Financial Well-Being Married Single Looking for work 11% 19% Are surprised how hard it is to live without a pre-retirement paycheck* 27% 36% Agree with the statement "I will run out of money" 11% 19% *Indicated this describes them “A Great Deal” or “Some but Not Very Much” Q
Slide 43: Methodology
METHODOLOGY
Slide 44: T. Rowe Price Retirement Spending Study—Methodology
T. Rowe Price Retirement Spending Study—Methodology § Representative national survey of: – 1,030 working adults 50+ years old currently contributing to a 401(k) plan or eligible to contribute and have balance of $1,000+. – 1,507 adults retired in the last 1 to 5 years and deriving income from a roll
Slide 45: Thank You
THANK YOU CCON0047407 202004-1150110 9/17