Around The Globe, Baby Boomers’ Retirement Priorities Shift From Fun To Fundamentals

The concept of retirement as it is known in the developed world has traditionally inspired visions of days filled with leisure, travel, and the pursuit of hobbies and other family and personal interests. But for millions of Baby Boomers and older adults around the globe, the prospect of retirement is instead becoming a source of angst as people worry less about enjoying the good life and more about whether they will have the financial resources to meet even the basic necessities of life.

New global research from The Hartford Financial Services Group, Inc. (NYSE: HIG) shows the No. 1 financial concern for people age 45 and older is keeping up with daily expenses for food, shelter and other basic needs such as health care. Those concerns grew decidedly graver in the United States, the United Kingdom and Germany compared to last year, when the No. 1 concern was "enjoying my life.”

Nearly three in five people in the U.K. (59.3 percent), Germany (56.3 percent) and Spain (54.1 percent), and nearly one in two people in the U.S. (49.7 percent) say they are worried about getting by on a daily basis in retirement, according to The Hartford’s third-annual international retirement survey. Conducted this summer by independent research agency Opinauri, the survey polled 6,750 consumers in the U.S., U.K., Germany, Spain, Italy, Japan, South Korea, Taiwan and Australia.

"As millions of Baby Boomers around the world close in on retirement, they are realizing that they are financially unprepared to start this new chapter in their lives,” said Peter Smyth, executive vice president of The Hartford’s International Markets.

"Our research tells us that few people are planning for retirement, most lack confidence in their financial acumen, and many don’t know where to turn to for advice,” he said. "The volatility in the world’s equity markets this year seems to have reinforced the overall uncertainty about financial planning.”

The Hartford’s international retirement survey identified some wide-ranging concerns around the globe relating to quality of life in retirement:

• The ability to afford health care is an important financial concern in South Korea (23.1 percent), Italy (21.4 percent), Japan (19.4 percent), the U.S. (15.9 percent) and Germany (14 percent). Many people said they were concerned about declining health as they age, particularly in Spain (55.5 percent), Taiwan (33.6 percent), the U.K. (36.3 percent) and Italy (34.6 percent).
• Having enough money to enjoy life was cited as a key concern in the U.K. (46.5 percent) and the U.S. (43.2 percent).
• The potential to run out of money was listed as one of the least appealing aspects about retirement by respondents in South Korea (38.8 percent), Japan (34.5 percent), Australia (27.9 percent), Taiwan (27.3 percent) and the U.S. (27 percent).

The Global Crisis of Confidence

Increasingly, people in the developed world indicate they do not understand financial planning and do not know where to turn for help with financial matters. The longer-term trend since 2006 is that people say they do not know where to obtain advice about financial planning:

• In Japan, more than one in two (54.4 percent) people do not know where to go for financial advice compared to 43.6 percent in ‘07 and 37.8 percent in ‘06.
• The U.S. and U.K. saw a similar trend, with 27.4 percent in the U.S. saying they did not know where to turn for financial advice compared to 26.9 percent in ‘07 and 19 percent in ‘06. In the U.K., the lack of confidence grew to 18.1 percent in ‘08 from 15.9 percent in ‘07 and 12.8 percent in ‘06. One in four Germans (24.7 percent) said they didn’t know where to turn, up from 10.1 percent last year.
• Overwhelmingly, respondents had a low opinion about their level of financial planning knowledge. In Japan, 19 out of 20 people (96.4 percent) say they lack confidence in their financial planning knowledge, meaning they were only "somewhat,” "not too” or "not at all” confident. That compares to nine in 10 in South Korea (92.2 percent), Taiwan and Italy (85.8 percent), Australia (83.5 percent), the U.K. (81.9 percent), the U.S. (79.4 percent) and Germany (76.7 percent).

Aversion to Risk is Rising

People are increasingly describing themselves as being risk averse, saying they are willing to accept "somewhat” or "very small” financial gains in return for financial security.

• The most risk averse countries in the survey – meaning respondents described themselves as "fairly” or "completely” risk averse - were Germany (76.1 percent), Italy (67.4 percent), the U.K. (63.1 percent) and Spain (61.7 percent), Japan (57.9 percent), Korea (54.8 percent) and Australia (52.4 percent).
• The greatest risk in retirement was identified as the loss of buying power to inflation in Spain (51 percent), Italy (47 percent), Germany (34.6 percent) and the U.K. and Taiwan (27.5 percent). In Germany (29.5 percent), Japan (26.1 percent) and the U.S. (22 percent), the greatest risk was perceived as the financial impact of a significant health care event or problem.

Anxiety Is Up, Preparedness Is Down

"The overall level of financial preparedness globally remains low and is deteriorating,” Smyth reported. "More than half of respondents in several of the countries we surveyed indicated they had not improved their financial situation in the past 12 months.”

The Hartford’s research indicated that few people in any country have done any financial planning. In Japan, for instance, four out of five people (82.3 percent) said they did not have a financial plan for retirement and one in three (33.2 percent) said they saw no need for one. Similarly, many people in Germany (64.8 percent), Italy (63.7 percent), Spain (53.3 percent), Australia (51 percent), the U.K. (50.5 percent), the U.S. (45.4 percent), Taiwan (44 percent) and South Korea (21.9 percent) had not planned for retirement.

Anxiety over financial preparedness in retirement remains high, especially in Japan (88.8 percent in 2008), the U.S. (77 percent), Germany (72.8 percent) and the U.K. (68.6 percent) saying they have at least "some” concerns or in many cases were "very” or "extremely” concerned about having enough money. In Japan, more than half (56.9 percent) of survey respondents report being "extremely” or "very” concerned.

Few people are confident that all sources of income for retirement will be sufficient. Nine in 10 people in Japan (93.9 percent), four out of five in the U.K. (85.9 percent) and Germany (79.1 percent), and three out of four people in the U.S. (74.6 percent) said they were "not too” or "not at all” confident.

"As the world ages, more people are coming to the realization that they need to plan, save and invest for their own financial security in retirement,” Smyth said. "The Hartford and other financial services firms around the world have a huge opportunity to help people prepare to live a better life as they enter their sunset years. The vision of a comfortable retirement can be more than a dream. With proper planning, it can become a way of life.”

About The Hartford

The Hartford, a Fortune 100 company, is one of the nation's largest diversified financial services companies, with 2007 revenues of $25.9 billion. The Hartford is a leading provider of investment products, life insurance and group benefits; automobile and homeowners products; and business property and casualty insurance. International operations are located in Japan, the United Kingdom, Canada, Brazil and Ireland. The Hartford's Internet address is www.thehartford.com.

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Some of the statements in this release may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We caution investors that these forward-looking statements are not guarantees of future performance, and actual results may differ materially. Investors should consider the important risks and uncertainties that may cause actual results to differ. These important risks and uncertainties include those discussed in our Quarterly Reports on Form 10-Q, our 2007 Annual Report on Form 10-K and the other filings we make with the Securities and Exchange Commission. We assume no obligation to update this release, which speaks as of the date issued.