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A | Insights on Generational Retirement Planning

Aging and Retirement: A Generational Perspective.Building a plan for life, health and retirement

B | Insights on Generational Retirement Planning

There’s no question that planning for retirement and long term care are two of the biggest issues Americans are facing today. The majority do not have the traditional pensions afforded to previous generations and have saved far too little in their 401(k) plans or other products. Additionally, there is an emerging “Sandwich Generation” – people who are planning for their own financial futures while being tasked with providing financial support to their adult children and parents. The evolving family dynamic, coupled

with a changing economic and social landscape, has made planning for retirement and long term care more important than ever.

Over the past 40 years, Genworth has worked to educate families on the need to plan for the significant financial risk that a long term care event could impose on them. The number of Americans over the age of 65 is projected to nearly double over the next 40 years, according to the U.S. Census Bureau. With the ever-increasing cost of care and limited public financing options available, long term care has quickly become a larger social issue that requires our immediate attention. Whether we want to acknowledge it or not, many of us will need to deal with a long term care event either for ourselves or for a loved one, and having the necessary information to make informed decisions is critical.

As an established leader in long term care insurance, Genworth is uniquely positioned to provide insights into how the population at large should be thinking about this issue and the societal impacts of not planning. We’re pleased to present the results of our generational planning study, “Aging and Retirement: A Generational Perspective,” developed to support the myriad of organizations that focus on aging and retirement issues. The study seeks to better understand public sentiment on planning for retirement and long term care with the goal of encouraging families to start talking and planning for future care needs.

Retirement and long term care planning is about more than just cost and often requires difficult family decisions and sacrifices. Having the right talk, the right way, at the right time, can ease many of the pressures associated with planning for future needs. We encourage you to take action and begin the process today to prevent you and your family from facing a crisis tomorrow.

Tom J. McInerneyPresident and CEO, Genworth Financial, Inc.

1 | Insights on Generational Retirement Planning

Top Findings Helping Americans Live, Age and Retire Better

Every generation can learn from the ones that came before and the ones that follow. In that spirit, we launched the generational planning study to help share wisdom across the generations. One of the most compelling findings came from a question we asked people 40 and older: What financial advice would you give to younger generations? Overwhelmingly, they advised younger people to save early and save often. That advice is the crux of the study’s findings. Americans understand what we must do to secure a comfortable life and retirement. The challenge comes in turning understanding into action. The survey’s findings provide a snapshot of how we’re doing and what we can do better. The key takeaway for our families and ourselves is that it’s always the right time to build a plan for life, health and retirement.

Making the grade: Nearly half of Americans give themselves failing grades for retirement contributions.

Women at risk: Just 38% have started preparing for retirement.

Avoiding regrets: Four out of five have an avoidable financial regret.

Family matters: Less than one-third expect to rely on themselves or their spouse for their care as they age.

Catalyst for action: 23% started planning to avoid becoming a burden; 22% said early action can lead to a secure retirement.

Talk it out: Four out of five report “The Talk” inspired action and positive feelings.

Retirement savings gap: Average retirement contribution is just $7K annually but people anticipate needing a $1.7 million nest egg.

Healthy aging: 60% give themselves favorable health grades.


Plan at Every Age for Every Stage

It can be hard to focus on the future when daily life is so busy. But at any stage of life, it’s important to be sure you’re on track for a comfortable retirement. While Americans are well aware of the need to plan, they admit they don’t always follow through. More than half – 53% – have not started making arrangements for retirement and 37% say their biggest financial regret is not saving enough for retirement. Not surprisingly, nearly a quarter of people (23%) said the catalyst for planning was a desire to not become a burden on family, followed closely, at 22%, by those who say early action can lead to a secure retirement. While getting older often compels people to focus on the future, good planning starts early, ideally with a first job.

Action Steps

Be Aware and Prepare

Starting Out:If you have a 401(k) at work, max out your contributions and take advantage of any employer match.

Earning Years:Set a retirement savings goal and research how much you need to save at every age to meet it. Then make a savings plan and stick to it.

Retirement:Review regularly any investments, life insurance and long-term care insurance to be sure they align with your needs, particularly if you’ve had any major life changes.

How would you grade yourself on the following?Excellent Good Fair Poor/Failing

As you think about aging, which are major concerns for you?

Health

71%

Finances

63%

MentalLimitations

46%

Lack ofMobility

46%

Caregiving

35%

Amount Contributing to Retirement

46%

26%

20%

8%

Managing Current Finances

38%

36%

14%

12%

Current Health

8%

32%

47%

13%

Financial Fitness at Every Age

Who Has Begun Planning for Retirement by Age?

Retirement Preparation 18 to 34 Years

35 to 55 Years

55+ Years

Contribute to IRA 16% 22% 31%

Contribute to 401(k) 25% 34% 35%

Set Aside Monthly Amount 27% 33% 44%

Met With Financial Professional

12% 15% 25%

Talk With Family About Help Needed

13% 21% 27%

Set Up Future Living Situation 14% 20% 29%


Women: The At-Risk Gender

Proactive Planning for Women and Families

One of the best gifts a person can give their loved ones is to prepare for the future. Many people, however, are vastly underprepared despite their life experiences. One of five Americans (18%) report that they or a loved one had recently experienced a long-term care need, and statistics show that most people will require some type of care as they age. The big question is where they’ll get that care. While 31% say they’ll rely on themselves or their spouse, 22% will look to the government and 18% say they don’t know where they’ll access care.

When it comes to virtually every metric for preparation, women are particularly vulnerable. Just 38% of women, compared with 57% of men, have begun to prepare for retirement. Men also report being more self-reliant when it comes to care, with just 12% planning to rely on their children, compared with 23% of women.

Action Steps

Show The Love: Protect Your Family

Starting Out:Involve yourself in long-term planning for parents and grandparents. They are likely to appreciate your concern and perspective.

Earning Years:Women need to pay special attention to challenges arising from needing care or being a caregiver. Explore options for long-term care before you or a loved one needs help. Consider long-term care insurance as an option.

Retirement:Take control of the future by having key documents in place. Write a will, designate a person to act as power of attorney, review beneficiaries for financial products such as life insurance, and develop a medical directive.

Women vs. Men – Who’s Begun Preparing a Retirement Plan

38% Women

57% Men

Women vs. Men – Who’s Making Retirement Contributions

Make Monthly Contributions

17% 30%

28% 37%

People Have Not Made Adequate Family Protection Preparations

47% Have not designated a guardian for children

49% Have not designated beneficiaries for financial products

50% Have no life insurance

64% Do not have an advanced medical directive

Contribute to a 401(k)

Contribute to an IRA

28% 42%

vs.


“The Talk” – A Reality Check and a Way Forward

Nearly half (47%) of Americans say they want to be a key decision maker in the care of their parents and loved ones. They may be reluctant, however, to talk about aging, money, health and end-of-life issues. But having “The Talk” can be a positive experience and an important catalyst for planning. More than a third of parents say they appreciated having the topic raised and 22% began to plan as a result.

Having an open conversation also provides an invaluable opportunity to discuss expectations and consider how they align with likely scenarios. For example, many people anticipate spending less in retirement but research shows that the majority of adults spend more.* They may also be starting from a less-than-ideal place. On average, Americans report saving $7,360 annually and think they will need a $1.7 million retirement nest egg. Given the reality of today’s retirement savings, frank communication is essential.

The Reality of Retirement

What changes are you willing to make or have made to ensure you live comfortably in retirement?

Cut Living Expenses

54%

Work Part-Time

During Retirement

33%

Work Longer at Current

Job

27%

Sell Personal Belongings/

Property

19%

Ask Family for Help

9%

Action Steps

Earning Years:Initiate a conversation with family members about future needs and planning. Look for tips on how to approach the discussion with compassion and sensitivity.

Retirement:Prepare for the possibility of spending many years in retirement by adjusting spending and considering part-time work.

Relevant Organizations

Other

Don’t Know

As you age and need care, who do you expect will provide this care for you?

My Children

Other Family

Myself/Spouse Through Savings & Investments

The Government

Have you talked to your parents about their plan for future care and wishes for retirement?

52% No 56% Have children

48% Yes 67% Have children

Those who have children are more likely to talk to their parents.

Starting Out:Chances are, your care will be in your hands as you age. The earlier you can begin to save, the better. Interest compounded over time can make your nest egg grow exponentially.

22%

31%

18%

18%

6%

3%

1%

* Retirement Income Planning Study, 2012 Genworth


A Decade-by-Decade Guide to Preparing for Aging and Retirement

1. If your workplace offers a tax-advantaged retirement plan, be sure to enroll. If possible, contribute enough to qualify for any employer match.

2. Pay down any high-interest debt, particularly credit card debt. You will you save money on interest and be in a better position to plan.

3. Collect your credit reports and scores from the major credit-reporting agencies. Correct any errors and explore how to boost your scores.

1. Consider the pros and cons to buying vs. renting. If you choose to be a homeowner, start or continue saving for a down payment.

2. If you are a parent or planning to become one, consider the financial ramifications, from day care to college, and how you would pay for these expenses.

3. Prepare for the unexpected. Buy life and disability insurance, establish guardianship arrangements for children and designate beneficiaries for financial products.

1. Have a frank conversation with your parents about their plans for retirement and provisions they’ve made to help them adjust as they age. Don’t wait for a crisis.

2. Make or update your will. Don’t let disagreements undermine the family unity you’ve spent so many years building.

3. Purchase long-term care insurance and make sure your life insurance is still adequate.

1. Reevaluate your savings and retirement goals and make any changes to get you back on track. This might mean increasing contributions to retirement plans or IRAs.

2. Track what you spend today and how much you’ll need in retirement. Research shows people plan to spend less in retirement but often spend more.

3. Find or continue working with a trusted financial advisor who also understands the intricacies of Social Security.

1. Determine the optimum withdrawal rate, taking into account such factors as how long you might live, inflation, market conditions and future health, care and housing needs.

2. Develop a realistic long-term-care plan even if you are healthy. If you need care, who will provide it and how will it be paid for?

3. Think about the right time to retire and how you might use your experience and skills to segue into part-time or consulting work.

1. Stay as active and healthy as possible. Aging is inevitable but you can do a lot to keep your body and mind fit and resilient.

2. Be sure all important papers are in order – will, medical directives, power of attorney, beneficiary designations, etc. – and that a loved one knows where they are kept.

3. Explore housing options that will meet your needs as you age. Evaluate what it would take to stay in your own home if that’s what you choose.

20s

30s

40s

50s

60s

70+


MethodologyGenworth’s generational planning study was conducted in collaboration with J&K Solutions, LLC and The Olinger Group. The data from this study was collected from an online survey over the course of 10 days in February 2015. A demographically representative sample of 1,000 adults ages 18 and older across the United States were surveyed providing a highly stable and reliable data source. The sample follows the framework of the 2010 U.S. Census data for age, ethnicity, gender, region and income. This allows for estimates of the stated population within +/- 3% with95% confidence.

Age

1,000

18 to 24 Years

25 to 34 Years

35 to 44 Years

45 to 54 Years

55 to 64 Years

65+ Years

11%

18%

19%

19%

16%

17%

Income< 25k 25k - 50k50k - 75k75k - 100k100k +

34%

35%

16%

7%

8%

53% 47%

Genworth Financial, Inc. (NYSE: GNW) is a leading Fortune 500 insurance holding company committed to helping families become more financially secure, self-reliant and prepared for the future. Genworth has leadership positions in long term care insurance and mortgage insurance and competitive offerings in life insurance and fixed annuities that assist consumers in solving their insurance, retirement and home ownership needs.

Genworth operates through three divisions: U.S. Life Insurance, which includes long term care insurance, life insurance and fixed

About Genworth Financialannuities; Global Mortgage Insurance, containing U.S. Mortgage Insurance and International Mortgage Insurance segments; and the Corporate and Other Division, which includes the International Protection and Runoff segments. Products and services are offered through financial intermediaries, advisors, independent distributors and sales specialists. Genworth, headquartered in Richmond, Virginia, traces its roots back to 1871 and became a public company in 2004. For more information, visit genworth.com.

For more information visit:genworth.com

©2015 Genworth Financial, Inc. All rights reserved.

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