Allstate - You're in good hands

12/08/2004 NORTHBROOK, Ill. -

The past year brought a surge of financial and emotional optimism to Baby Boomers contemplating retirement, according to the fourth annual Allstate "Retirement Reality Check" survey.

Baby Boomers, the generation shaped by post World War II optimism, are particularly hopeful about the emotional benefits of retirement. At the same time, the 2004 Allstate "Retirement Reality Check" survey did highlight some areas of discomfort for Boomers, particularly concerning health-care costs and the financial viability of government programs such as Medicare and Social Security.

The following chart details these findings:

However, the survey indicated that optimism is on the upswing, although short of the high levels of the 2001 survey, in which 63 percent of Boomers agreed, "the best years of my life will come after I retire." This year, 57 percent agreed with that statement, up from 55 percent in 2003.

And only 9 percent responded this year that they worry about being lonely or life passing them by after retirement, down from 14 percent a year ago.

The majority - 74 percent - said they are very or somewhat prepared for retirement in terms of savings and investments, little change from previous years (75 percent in 2003, 74 percent in 2002 and 78 percent in 2001).

The annual Allstate survey, which began in 2001, tracks attitudes toward and savings for retirement. In 2001and 2002, the survey measured Baby Boomers - people born between 1946 and 1964. This year and last, the survey was expanded to include Generation X, those born from 1965 to 1978. An additional generation was included in this year's survey, the Silent Generation, born before 1946.

What a Difference a Year Makes
Gen X respondents generally showed increasing optimism as well. For example, 43 percent of Boomers and 34 percent of Gen-Xers said they likely will have to postpone retirement because of the recent economic downturn. In 2003, more than half - 59 percent of Boomers and 56 percent of Gen-Xers - agreed with that statement.

At the same time, however, the anticipated retirement age of survey respondents has changed very little. The median age at which respondents said they expect to retire was 63, compared with 62.5 in 2003, age 64.6 in 2002 and age 63 in 2001.

Both generations said they expect to work for pay after retirement. This year, 76 percent of Boomers and 72 percent of Gen-Xers said that, compared with 61 percent of Boomers and 55 percent of Gen-Xers a year ago.

"However, our survey shows that people who expect to work after retirement plan to do so because they want to, not because they have to," said Casey Sylla, president, Allstate Financial.

Emotional Reasons for Wanting to Work
During all four years of the survey, respondents emphasized emotional benefits over financial ones as reasons to work after retirement. This year, emotional responses surged among respondents of both generations.

By far the top reason for working was to "stay mentally active," cited by more than 90 percent of both generations. A year ago, 59 percent of Boomers and 63 percent of Gen-Xers cited that reason.

"Social interaction" and the chance to "work on something I feel passionate about" were cited by more than 80 percent of both generations this year; both up significantly from year-ago levels.

However, financial issues grew in significance in this year's survey.

Financial Matters Magnified
Specifically, 41 percent of Boomers and 47 percent of Gen-Xers said they'll likely work after retirement because they'll need the health benefits; a year ago, 29 percent of both generations said that.

And 42 percent of Boomers and 44 percent of Gen-Xers said they'll work to make ends meet. In 2003, only 26 percent of Boomers and 23 percent of Gen-Xers said the same.

This year, 64 percent of Boomers surveyed said that rising health-care costs is a major concern about retirement, up from only 39 percent when the survey began in 2001. And 50 percent said they worry about getting sick, compared with 27 percent in 2001.

A significant number of both generations - 53 percent of Boomers and 44 percent of Gen-Xers - also said they have increased their retirement savings in recent years to catch up to where they believe they should be. Those figures are up slightly from last year.

"The significant gap between what people believe and how they are acting is troubling, because it suggests that too many Americans plan to retire and just hope for the best," Sylla said. "Hope is not a substitute for having a well thought-out plan for retirement and sticking to it."

Confidence in Government Savings Programs Wanes
One anomaly identified in the Allstate survey is mixed attitudes among Baby Boomers about Social Security.

Among Boomers, 38 percent said they plan to use Social Security for a large part of retirement income, up from 29 percent in 2003.

At the same time, 66 percent of Boomers admitted they do not believe the federal government will make the necessary changes in Social Security to ensure their retirement needs are met. Last year, 64 percent of Boomers said they lack confidence in Social Security.

And 60 percent of Boomers admitted that Social Security benefits being cut or eliminated is a major concern - up from only 25 percent in 2001.

Generation X respondents also are pessimistic about Social Security - 74 percent said they don't believe the federal government will make necessary changes - but they are slightly less likely to plan on relying on the program for retirement income.

Both generations expressed similar pessimism about the financial health of Medicare.

Allstate created the fourth annual Allstate "Retirement Reality Check" survey in conjunction with Mathew Greenwald & Associates. Using a random digit dialing methodology, Greenwald & Associates polled 1,604 people born between 1946 and 1978, with household incomes of $35,000 or more. Retirees were accepted with incomes of at least $20,000. The margin of error (at the 95 percent confidence level) for the total number of respondents in this study is ±2.5 percent, ±3.8 percent for information specific to Gen Xers, ±4.5 percent for Baby Boomers, and ±5.0 for Silent Generation.

The Allstate Corporation (NYSE: ALL) is the nation's largest publicly held personal lines insurer. Widely known through the "You're In Good Hands With Allstate^®" slogan, Allstate helps individuals in more than 16 million households protect what they have today and better prepare for tomorrow through more than 12,900 exclusive agencies and financial specialists in the U.S. and Canada. Customers can access Allstate products and services through Allstate agencies, or in select states at allstate.com and 1-800 Allstate^®. EncompassSM and Deerbrook^® Insurance brand property and casualty products are sold exclusively through independent agents. Allstate Financial Group provides life insurance, annuity, retirement, banking and investment products through distribution channels that include Allstate agencies, independent agencies, financial institutions and broker-dealers.

Download an Executive Summary PDF of the Allstate "Retirement Reality Check" survey.

FOR MORE INFORMATION:
Contact:Rebecca Hirsch, Media Relations, (847) 402-5600>