AXA Scope www.retirement-scope.axa.com 2006

Retirement: Dawn of a New Age As a leader in Financial Protection bridging the successive phases of people’s lives, we are committed to share whatever insights we may gain into ways of achieving sustained life satisfaction and fulfillment. This document is designed to do just that: to help people better understand retirement issues and challenges, to enable them to learn from real-life experiences around the world so they can live better lives.

A unique research project now in its second year, the AXA Retirement Scope survey highlights the benefits of living the retirement years as a rich, active period and suggests ways to attain those benefits. The results show how people who are prepared, not only financially but also psychologically, approach and experience retirement as an exciting, satisfying and fulfilling life phase. The research underlines the advantages of taking an active, dynamic approach to life, during the working years and beyond.

At AXA, our goal is to establish a warm, ongoing relationship with our customers in order to offer them the highest quality of advice along with products and solutions adapted to their particular needs. The AXA Retirement Scope project fits neatly into this perspective. Designed to help us deepen understanding of retirement and health-related attitudes and behavior among both working people and retirees worldwide, it enables us to continue to create global products better adapted to peoples’ needs.

As part of our desire to better serve our customers, our aim is for the AXA Retirement Scope survey to provide insight to people everywhere into how to be confident about retirement.

Henri de Castries, Chairman of the Management Board Contents

P. 4 P.19 Aging populations: Critical retirement issues Opportunities & Challenges P.20 - Retirement intentions and reality P.20 - Don’t Worry, Be Happy The Crunch P.21 - Upbeat retirees P.21 - Evolving attitudes P.6 - Later retirement P.22 - Individual responsibility P.6 - Reduced generosity P.22 - Retirement ants & grasshoppers P.23 - Critical issues for retirement Health, Wealth and Happiness and health P.8 - Increasing health care cost P.23 - Age as a state of mind P.8 - Private insurance vs. out-of-pocket P.9 - encourages retirement P.24 Cultural P.10 & Regional Variations Goals & Methods P.25 - Cheerful Anglo-Saxons P.25 - Dissatisfied Europeans P.26 - Asian gloom P.11 - Independent professional research P.11 - Transnational results & profiles P.28 P.12 National Attitudes Active and Passive Profiles & Behavior

Actives Profiles P.38 P.13 - The Openhearted Hyperactive Conclusion P.14 - The Hedonist Happy People P.15 - The Family-centered Are Active People P.15 - The Workaholic P.16 - The Health Obsessed

Passive Profiles P.17 - The Idle P.17 - The Apathetic P.18 - The Deprived

AXA Retirement Scope / February 2006 3 Aging populations: Opportunities & Challenges

Financing and health care has not always been a thorny issue. When Bismarck introduced the world’s first state-financed pension for people 65 and over in 1889 for example, the measure had no serious impact on state finances. That’s because the average life expectancy at the time was only 49.

Pensions and other spending linked to retirement have grown in both relative and absolute terms since their modest 19th century inauguration. In contrast to the brief period after work in the past, retirement now constitutes one of the major phases in contemporary life. Today’s retiree community represents an increasingly dynamic and influential social and economic force; its members have the opportunity to enjoy decades of active, fulfilling lives.

Public and private issues tied to ageing, retirement and health care rank among the most hotly debated contemporary topics. As some social and economic experts focus on ways to satisfy the growing needs of the increasingly active population aged 60 and over, others stress that ageing populations are putting more and more strain on public spending.

4 AXA Retirement Scope / February 2006 The Pension Crunch

The combination of lower birth rates and longer life expectancies means that older people will continue to constitute an increasingly large proportion of the population. As a consequence, younger, working people are threatened by a potentially mushrooming tax burden as they finance the pensions that enable their elders to live. In the UK for example, only one in five people were retired in 1950, compared to nearly one-third today.

Old-age dependency ratios generation has been promised much more than can be delivered without dramatically damaging the prospects of future generations,” writes International Herald Tribune columnist Philip Bowring.

Not everyone shares this alarmist view, but it is clear that population age curves are changing quickly. Japan offers the most striking example. Over the next ten years, the number of Japanese aged 60 or older should increase by about 7.25 million, while those between the ages of 15 and 29 will decrease by about 3.81 million. This means that one of every three Japanese will be over 60 by 2015.

The OECD predicts that in European countries, if Fewer current trends continue,

2000 2025 2050 there will be one person workers in retirement for every one Ratio of the population aged 65 and over to the population aged 20-64. person in Source: OECD and UN. to cover by 2050. This would put huge tax pressure on Some observers go so far as to predict “intergenerational costs working people and war.” “Four issues are coming together to create a seriously inhibit economic "perfect storm": birth rates below replacement level, growth, as enormous resources would be funneled longer life spans, holes in private pension funds and to maintaining the elderly rather than financing massive government fiscal deficits. The aging investments for the future.

AXA Retirement Scope / February 2006 5 In contrast to the labor force growth that has US, where retirement contributed to economic growth in the OECD Changing age is now 65.5, it will countries over the past 50 years, labor force become 67 for people contraction is projected for the decades ahead. born after 1960. A Only in the U.S. is the labor force expected to laws similar rise to 67 from continue to expand: 65 is under consideration in Germany. In Italy, the will rise from 57 to 60 for women, Labour force growth and to 65 for men, in 2008.

Greater employment of people aged 50-to-64 offers another way to better balance working and inactive people by taking advantage of the huge pool of potential earners. In fact, in the OECD countries, more than 4 out of 10 people aged 50-to-64 are unemployed or inactive. Especially in Europe, many have taken advantage of early retirement programs to definitively leave the work force. Now, such programs have largely disappeared. As Bruno Tobback, Belgian Minister for Pensions, explains: “early retirement was seen as a way to ‘make room for younger workers’. However, the reverse has occurred, since rates of young workers remain particularly high in countries where early retirement has been widely used.” 2000 2025 2050 Changes in government policies in Europe have Source: OECD. reversed the trend toward constantly lower labor market exit ages. But while employment rates for older workers in the European Union have risen Later retirement from 38% in 1990 to 42% in 2004, they remain low compared to the rates in Japan (63%) or the US Mindful of the dangerous consequences of shrinking (60%), notes the International Labor Organization labor forces combined with increasingly larger (ILO). proportions of retirees, governments are starting to act. In many countries, minimum ages for retirement are rising, workers are being encouraged to remain in the labor force longer, pension financing methods are being revised, legislation and workplace Reduced regulations are being reformed. generosity In the UK for example, the recently introduced Turner plan for pension system reform would gradually Extending working lives can help alleviate the increase the minimum age for benefits from 65 cur- crunch, but cannot redress the growing imbalance rently to 67 and, in 2050, to 69 years of age. In the between workers and retirees nor the potential crisis

6 AXA Retirement Scope / February 2006 in public pension funding. It appears increasingly clear that, for many public pension schemes, Health, Wealth mandatory contributions are bound to increase while benefits are destined to decline. and Happiness

Various private and semi-private pension plans are expected to make up the difference, especially in Europe, where public systems account for such Health issues are central to an understanding of a large relative proportion of current pension the social and economic implications of aging and programs. “Pension reforms all across Europe have retirement. Research shows that the two are a common theme: they reduce the generosity of clearly interrelated. But while health has an effect the pay-as-you-go (PAYG) public pension pillar on people’s attitudes and behaviors toward threatened by population aging, and they attempt retirement, it is only one of several variables that to build up new pre-funded pillars that rely on affect the way people live the phase of their lives private saving through occupational and individual after work. pension plans,” concludes Germany’s Mannheim Research Institute for the Economics of Ageing. People today are healthier and longer-lived. The The results of the AXA Retirement Scope survey average 65-year old man in the OECD countries show that working people see the handwriting on can expect to live to age 81. A woman can expect the wall. Majorities of working people in 9 of the 11 to live beyond age 84. It’s not simply due to the fact countries surveyed expect their national pension that health care has improved. In fact, according to systems to be overhauled in the years ahead. With the OECD, socio-economic and lifestyle play a larger few exceptions, most workers and retirees foresee role than the provision of health care itself. a combination of reduced benefits and extended working years to qualify. A large body of The research supports the conviction that rich are healthiness depends on the way people live. SHARE, the landmark healthier Survey of Health, Ageing and Retirement in Europe, shows a strong correlation between healthiness and socio-economic status among people aged 50 and over. “Individuals with a low are 70% more likely to be physically inactive, and 50% more likely to be obese than individuals with a higher education.” The report goes on to show how levels of smoking, drinking and obesity are all directly linked to economic and lifestyle factors across Europe.

“Wealthier people may be able to afford more health care and thus remain healthy longer, once

AXA Retirement Scope / February 2006 7 older,” suggests SHARE. Because health care does In the U.K. and Spain, in contrast, spending on health make a demonstrable difference, the SHARE report care amounts to only 7.7% of GDP. suggests that more emphasis be placed on preventive health care initiatives. The idea is to Regardless of the proportion of national wealth improve public health generally by funneling a dedicated to health care, spending has increased greater proportion of health care spending to in every country over the past decade. This preventive health programs that would be available constantly increasingly cost has a constantly to all income groups. increasing impact on both government and individual pocketbooks. Studies of the OECD countries show a similar relation between higher income and higher life A combination of public expectancy, but the relationship is not linear. Life and private money expectancies in Japan and Spain, for example, are Footing funds the increasing higher than would be predicted by per capita cost of health. The income, while life expectancies are shorter than the bill public sector accounts would be expected in the U.S. for the greatest share in most countries, with the notable exception of the Total spending on health care does not track with U.S. But even there, the public portion amounts to national healthiness either, using life expectancy 6.6% of GDP, which is about average for developed as the criterion. Spending on health care is countries. As a result of government policy changes relatively low in such countries as Italy, Spain and aimed at controlling skyrocketing health care costs Japan for example, but average life expectancies in many countries, the relative share paid for by the are above average. The opposite is true in such private sector has increased slightly over the past countries as Germany and the Netherlands, where 10-to-15 years. life expectancies are below average yet health care expenditures are relatively high. Private insurance vs. Increasing out-of-pocket

health care costs Private health care spending is generally split between private and out-of- One element in common among all of the developed pocket spending by consumers. Private insurance countries is that spending on health care has is the main source of financing health care increased substantially over recent decades. On for certain population groups in Germany and average, OECD countries devoted 8.8% of GDP to the Netherlands, for example, and accounts for health spending in 2003, compared to 7.1% in nearly 37% of health care spending in the U.S.. 1990 and slightly more than 5% in 1970. The figures In countries with universal public systems, private vary enormously from one country to another. insurance provides only supplementary financing, Spending is highest in the U.S., 15% of GDP, accounting for as little as 5% of national spending followed by Switzerland and Germany, which devote on health care. 11.5% and 11.1% of GDP to health, respectively.

8 AXA Retirement Scope / February 2006 Direct out-of-pocket consumer spending on health “stressful working conditions also contribute care by consumers likewise varies a great deal to poor health and to the development of chronic from to country to country. In France and Germany, illness, i.e. to conditions that in turn influence early out-of-pocket spending accounts for only 10% of retirement,” the report concludes. the total. Spanish, Australian and Italian consumers spend more than twice that proportion – 24%, 21% Research shows that income levels, educational and 21% respectively. Regardless of the relative levels and healthiness are all critical to the way amount, consumers just about everywhere spend people aged 50 and over rate their quality of life. more today than in the past, especially for drugs. According to SHARE, “quality of life is clearly The OECD reports that in real terms, per capita related to indicators of health: better health goes spending on drugs has risen by more than a third along with better quality of life in all European since 1997, totalling more than USD 450 billion. countries under study”.

Evolving health and retirement perspectives create opportunities and challenges for Stress encourages government, employers and individuals. As we shall see from the results of the AXA retirement Retirement Scope survey, a handful of critical factors can make spell the difference between Health and work decisions interact: poor health is enjoying and enduring the retirement years: one of the reasons people decide to leave the work force, either through retirement or disability - the will and capability to pursue an active programs. As the SHARE report underlines, lifestyle, working conditions have both a direct and indirect - access to sufficient financial resources effect. “This is not only the case for with high during retirement, ergonomic exposures and high physical work load. - financial planning to ensure necessary Rather, stressful working conditions, e.g. in terms retirement income, of high work pressure, monotonous jobs, - balanced, reasonable efforts to maintain poor incentives and elevated instability a healthy lifestyle, influence employees‘ decision to depart from jobs - psychological preparation for retirement. as early as they can,” notes SHARE. Furthermore,

AXA Retirement Scope / February 2006 9 Research overview

Goals and Methods

The issues tied to retirement, pensions, health and aging are numerous, complex and often intertwined. The AXA Retirement Scope research program is designed to survey, understand and gain perspective on the attitudes of both working people and retirees concerning these issues on an international scale. Building on these perspectives, AXA aims to create global products better adapted to people’s needs.

In creating the program, AXA established three key objectives:

- To examine and understand a wide range of behaviors and attitudes in the general public toward retirement, health and related issues

- To juxtapose opinions about retirement and health against reality by comparing and contrasting the views of working people with those of retirees

- To provide an international vision by consolidating results across national borders

10 AXA Retirement Scope / February 2006 Independent, professional research

The research was designed and conducted worldwide by the Custom Research division of GfK, one of the world’s five leading market research organizations, which also tabulated and Transnational validated the results. In each geography, field work was carried out by one of each country’s leading results & profiles market research organizations.

A total of 6 915 people were questioned, via AXA Retirement Scope research results telephone, in 11 countries. In ten of them, the sample were first tabulated for each of the 11 consisted of 300 working people and 300 retirees, countries involved. The 11 national reports representative of the national population. In the as well as the international overview are U.S., to account for the larger overall population, available on-line to everyone at : the sample was enlarged to a total of 848, divided http://www.retirement-scope.axa.com between working people and retirees. The 20-minute telephone questionnaires were conducted between July and September 2005.

AXA Retirement Scope / February 2006 11 Results Active and Passive Profiles

Some people just cannot wait to retire. Others rue the day. The AXA Retirement Scope survey is designed to provide a roadmap of the multitude of attitudes towards retirement. But the survey also aims to develop understanding into the reasoning and sentiments that underpin various opinions. To achieve this, survey results are analyzed and correlated across multiple criteria. The goal is to determine which attitudes and conditions play a decisive role in conditioning overall opinions. Does it depend on income, for example? How important are family concerns? Do working people hold views strikingly different from those of retirees?

Cross-analysis of the survey results show that seven key variables tend to determine people’s overall attitudes and behaviors:

- Perceptions of how the quality of life will evolve after retirement - The emotion-laden images that people associate with retirement - The activities that people engage in or expect to engage in - The feeling of being happy - Describing oneself as healthy and the steps people take to stay healthy - Perceptions of the quality of work among people 65 and older - Planned or actual remuneration for work during retirement

12 AXA Retirement Scope / February 2006 Once identified as determinant factors, all of these toward life during the elder years. The nature and variables were compiled across the entire sample amount of activity makes a difference in determining of people surveyed, regardless of other factors, such various profiles of course, but simply projecting as age, sex or country. The results revealed that or engaging in activity is the most important people everywhere in the 11 countries surveyed single ingredient. People with an active image of tend to fall into two classes: those who hold active, retirement tend to be more satisfied with life in positive attitudes towards retirement and those general and more positive toward the later years who hold passive, negative views. Attitudes towards than those with a passive view. health are also critical in determining overall opinions about retirement for some subgroups. Those who hold an active, positive view of retirement represent slightly more than half (52%) Within the two basic classes of attitudes, the cal- of the people surveyed for the AXA Retirement culation of survey results according to the Scope study. identified determinant factors yields eight distinct categories. These eight ‘profiles’ represent families People with an active, positive outlook fall into of attitudes and beliefs that cut across traditional five profiles. socio-economic categories such as age and sex as well as geographical and cultural distinctions The Openhearted Active Profiles Hyperactive

More than any other factor, the level of activity If there’s something to celebrate, or a family occasion, that people project or actually maintain during theatre outing, problem in the neighborhood or retirement determines their overall attitude some other event where you could use some support

Optimism

Family Openhearted Centered Hyperactive 9% 5%

Hedonist Dynamic 52% 16% Inactive Retirement Workaholic Health 17% Obsessed 5% Active Retirement Apathetic Idle 12% 25%

Passive 48% Deprived 11%

Pessimism

AXA Retirement Scope / February 2006 13 or participation, find an Openhearted Hyperactive balanced life without stress, a sharp contrast with person. These people, who constitute five percent a mere 2% overall average. What is more, their of the total survey sample, tend to get involved in a efforts appear to pay off: nearly 40% say they are myriad of activities – from volunteer groups, clubs in very good health, compared to less than 30% for and family life to cultural activities, sports, gardening the entire sample. and travel. Retired or still working, the Openhearted Hyperactive tend to organize their lives around People who fit the Openhearted Hyperactive profile others, with particularly active social lives and a are nearly evenly split between retirees (53%) and strong sense of community. Most are aged 50 or people who are still working (47%). They can be found older and two-thirds are women. everywhere, but the greatest concentrations are in Canada, Australia and the U.S., where they account The Openhearted Hyperactive regularly participate for 7-to-8% percent of the total. Openhearted in an average of about four different activities, Hyperactives are relatively rare in Japan, Hong nearly twice the average for the survey sample. Kong and Spain, where they count for only 3%, 2% Busy as bees, they are also happy as larks. More and 1% respectively of people surveyed. than four out of ten (42%) describe themselves as ‘very happy’, compared to a survey average of 28%. Only a handful (2%) say they are ‘unhappy’, versus 11% across the entire population questioned. The Hedonist Though their schedules are full, Openhearted You can recognize Hedonists by the smiles on their Carefree Hyperactive people still faces. The most joyous profile within the entire AXA generally find time to Retirement Scope population, nearly half (47%) and busy take good care of describe themselves as ‘very happy’. Overall, they themselves. Roughly account for 16% of the total survey sample. The as bees three-quarters engage Hedonists consist mostly of retirees (72%), evenly in some kind of sport balanced between men and women. In contrast or physical activity and try to eat healthy foods. to the social and community focus among the More than one-quarter (26%) says they live a Openhearted Hyperactives, Hedonists tend to focus more on enjoying their own lives, even if they do engage in clubs and volunteer work more than average and spend more time with friends.

The Hedonists are among the oldest group in the survey, with half of the members aged 65 and over and few members younger than 55. The heaviest concentrations are found in the British Commonwealth. In the UK, they account for more than one-third (36%) of people surveyed, followed by Australia (28%) and Canada (22%). Hedonists are rare in Asia, where they count for only 4% of those surveyed, and in the Mediterranean countries, which count only about 7%.

14 AXA Retirement Scope / February 2006 For the Hedonist, having a good time during retirement means engaging in a rich and varied range of and family activities. They are serious culture buffs, engaging in cultural activities about three times as much as the international average. They also travel at about twice the average. What is more, about half engage in hobbies, twice the overall sample average and more than one third devote time to sports.

Happy Hedonists can afford to enjoy themselves. In fact, 21% of the retired Hedonists say their are generally upbeat regarding both the quantitative standard of living actually improved once they and qualitative aspects of retirement. More than stopped working and 16% of Hedonists who are two-thirds (68%) say their standard of living will be still working likewise expect a higher standard of or already is stable or higher during retirement than living upon retirement. Furthermore, 70% of retired during their working lives. As far as the quality of Hedonists say they enjoy a satisfactory income. their lives is concerned, 85% predict or experience quality of life during retirement equivalent to or bet- With an average age of 60, Hedonists describe ter than during their working years. themselves as healthy. Nearly 40% describe themselves as ‘very healthy’ and only 11% (about half Evenly balanced between women and men, the the overall average) say they are in ‘poor health’. Family-centered group consists of slightly more working people (56%) than retirees. The best hunting ground for Family-centered people is France, where they account for about one-fourth of the total sample. Above-average concentrations are The Family-centered also located in Germany and Australia, where they account for about 12% of the samples. No group attaches more positive images to Surprisingly, despite the fact that relatively large the idea of retirement than those who fit the proportions of retirees live with their children in Family-centered profile. As their name suggests, Asia, members of the Family-centered profile are they find fulfillment by devoting themselves to their extremely rare in Hong Kong and Japan, where families. For 42% of them – six times the average they make up only 2% and 1% of the respective for the entire survey sample – retirement means sample populations. spending time with the family. At more than twice the overall average, 28% of Family-centered people expect to or already do devote themselves to caring for their children, grandchildren and other family members. The Workaholic

More optimistic All work and no play make Jack a dull boy, Upbeat on and happier than according to an old saying. All work and a little average, Family- healthy activity make the Workaholic quite a satisfied retirement centered people person, according to the AXA Retirement Scope

AXA Retirement Scope / February 2006 15 survey results. Consisting largely (74%) of working (56%) than retirees (44%), their personal habits and people, the Workaholics place a high priority on activities reflect what can be best described as an their work. The vast majority (85%) of Workaholics obsession with health. To stay in good shape, 89% who are still working expect to continue working say they do not consume , compared to after retirement. Even for those who are nominally only 6% for the entire sample. Likewise, 86% do retired, more than half (53%) continues to engage not smoke, versus only 7% for the entire survey. in some kind of paid work. That’s five times the Nearly three-quarters (70%) say they eat only healthy average for the total. It’s worth noting however that foods and 13%, twice the overall average, go to some of the working retirees are motivated by bed early to stay in good shape. necessity rather than the bliss they may achieve through their jobs. There is no doubt that healthy habits and lifestyles help contribute to good health. But the formula does Dedicated as they are not seem to work very efficiently for the members Workers to their work, working of this peculiar profile. Only one-third say they are Workaholics naturally in very good health, hardly overwhelming compared who tend to engage in to 29% for the overall survey sample. At the other fewer outside activities extreme, 13% of the Health obsessed describe than other members of themselves as being in poor health, somewhat better work out active profiles. Nearly than the average 19% overall. three-quarters (72%) do find time for sports and phy- sical activity though, which is 11 points more than Of all five profiles that make up the class of people the average for the entire survey sample. It should with active, positive attitudes towards retirement, come as no surprise that a much higher-than-ave- the Health obsessed are the least positive and the rage percentage (15%) also believe that work helps least optimistic. Only about one-quarter (24%) keep people healthy. describe themselves as 'very happy’, four points less than the overall survey average. People who fit More than 60% of retired Workaholics report that the Health obsessed profile are found in relatively their income is satisfactory, but only half of those high concentrations in Spain (10%), the U.K. and still working believe they will enjoy a satisfactory Germany (8%); they are very rare in Hong Kong income after they retire. Workaholics are relatively (1%) and Japan (2%). rare in Germany and France, where they account for only about 10% of survey participants. In contrast, they make up more than one quarter of the participants in Canada and the U.S. and 20% of Australians and Japanese surveyed.

The Health obsessed

The members of this small group, accounting for only five percent of the total survey sample, devote considerable time and attention to health matters. Composed of somewhat more working people

16 AXA Retirement Scope / February 2006 Passive Profiles

People with passive attitudes towards retirement tend to hold negative opinions about the elder years. Members of the three profiles within this class prepare for retirement much less than those in the active, positive class. Perhaps as a result, they enjoy or expect to enjoy lower standards of living and quality of life during retirement than people who fall into the five active, positive profiles. a higher-than-average proportion (79%) of the Idle As might be expected, they include a significant say they engage in sports or physical activities proportion of people with health problems, who to stay in shape. However, only 17% describe tend to be more pessimistic than those who are themselves as ‘very healthy’, 12 points lower than in good health. the survey average.

The Idle can be found Lots of just about everywhere, The Idle but go to Asia to find the highest concentrations. In The members of this profile account for one-quarter lethargic Hong Kong, they account of the total survey sample – the largest single group. for an astonishing 55% The Idle have an ambiguous attitude toward Asians of those surveyed. In retirement. While nearly half (49%) attach positive Japan, they account for associations to the period after work, nearly one-third 35%. Italy and Spain also count concentrations (30%) also cites negative associations. They are approaching one-third of the total population. The among the most discontent people within the survey, countries with lower-than-average percentages of with a mere 11% describing themselves as ‘very the idle include the U.K., Australia, France and the happy.’ Composed mostly of women (54%), the U.S., where they make up only about 15% of those profile includes an unusually high percentage surveyed. (22%) of housewives.

Evenly balanced between working people and retirees, the Idle engage or expect to engage in few activities during retirement. Neither working nor The Apathetic retired members of the Idle expect to be or are involved in such things as hobbies, gardening, or These are the couch potatoes of the world. For social or cultural activities. about one-quarter, four times the overall average, their vision of retirement is to sit around and do For those who are still working, only 17% expect nothing. Evenly split between working people and to engage in some kind of professional activity retirees, the Apathetic engage in or expect to upon retirement, about half the proportion for the engage in fewer activities than average. Only small overall survey sample. Among retirees, a mere 6% percentages have hobbies or get involved in sports, maintain some kind of professional activity. Oddly, gardening, cultural activities, travel or anything else.

AXA Retirement Scope / February 2006 17 Overall, the members of the Apathetic are in Members of the group, which consists largely of somewhat poorer than average health, with five retirees (68%), cite mostly negative images when percent fewer members describing themselves in asked to describe retirement, from loneliness and either ‘very good’ (24%) or ‘relatively good’ (76%) boredom to poverty and physical decline. More health as compared to the entire survey population. than twice the survey average (17%) says retirement The difference may stem from their passive attitude. means ‘doing nothing’. Indeed, they engage or plan More than two-thirds (69%) say they do or will do to get involved in few activities. Not surprisingly, the nothing in particular to stay healthy, versus an working people and retirees who make up the overall average of only 10% survey-wide. Deprived do not generally prepare for retirement; only 41% report some preparation, compared to The Apathetic encounter or expect to encounter about 70% for people in the five active profiles. some financial difficulties during retirement. Only 43% of the retired idle say they enjoy sufficient Health problems seem to contribute to their overall retirement income, compared to 55% of retirees gloominess. While only one-fifth of the people overall. Likewise, only 41% of the working members surveyed for the AXA Retirement Scope survey say of this profile expect their retirement income to be they are in poor health, three quarters of the sufficient. This may explain why more than a third Deprived describe their health as either mediocre (35%) expect to continue working after retirement. or poor.

You might hypothesize that climate encourages Financial worries people to just sit around in the sun, as the highest make things even proportions of the Apathetic can be found in the Dire worse. Nearly three- Mediterranean countries; they make up 26% of those quarters of the surveyed in Italy and 20% in Spain. But unusually financial Deprived, including high numbers are also found in Japan and Belgium, working people and where they account for about 20% of the sample. prospects retirees, expect to The Apathetic are in relatively low proportions, in or do encounter contrast, in Australia, Canada, the U.K. and the financial problems during retirement. Among U.S., where they account for only 5-to-7% of the working Deprived, nearly 80% expect their standard population. of living to decline upon retirement, twice the average for the entire survey sample. Likewise, 69% of retirees reports lower living standards.

Women account for 59% of the Deprived, including The Deprived a relatively high proportion of housewives. Japan and Spain are home to the largest relative numbers Think of everything that can go wrong during of this unhappy lot, where they account for 15% of retirement. You’ll find a complete catalogue among those surveyed. Slightly higher than average the people whose views place them in the Deprived percentages can also be found in France, Germany category: financial difficulties, poor health, inactivity and Italy, where 12% of the survey participants and an overall glum view of life. Burdened with a fall into the Deprived profile. They are most rare litany of expected or real woes, it’s not surprising in Australia, Canada and the U.K., where the that more than half (52%) of the Deprived describe Deprived account for only 7-to-8 percent of people themselves as unhappy. surveyed.

18 AXA Retirement Scope / February 2006 Critical retirement issues

“The best things in life are free,” according to the lyrics of an old pop tune. The AXA Retirement Scope survey does not take issue with that wisdom, but the results do suggest that, for a happy retirement, sufficient financial resources are important too. The survey shows a direct correlation between material well-being – in terms of both retirement income and standard of living – and a happy retirement. Some 70% of retirees who describe themselves as ‘very happy’ say they benefit from sufficient income. Likewise, two-thirds of retirees who describe themselves as ‘unhappy’ say their retirement income is insufficient. As Woody Allen has been quoted as saying, “Money is better than poverty, if only for financial reasons.”

Stable or higher standard of living Stable or improved quality of life Retirement income entirely sufficient Very happy

AXA Retirement Scope / Febuary 2006 19 A satisfying retirement does not depend on material expect to engage in either one, more than twice wealth for its own sake. Rather, those who enjoy that proportion of retirees actually do engage in retirement use their financial resources to support gardening and do-it-yourself projects. the activities they are interested in. When resources are lacking, activities seem to be necessarily Vacationing with children is another area where reduced. In every country surveyed, among both intentions and reality diverge. Four out of retirees and working people, the results show a ten working people expect to vacation with their direct correlation between the level of activity and children after retirement. But among retirees both happiness and quality of life. who took part in the 11-country survey, only about half that proportion (22%) said they actually do vacation with their children. A word of caution is necessary however. Whether the activity is travel, gardening or vacationing, it is important to Retirement intentions note that the behavior of tomorrow’s retirees may not match current retiree habits; working people and reality may indeed follow through on their intentions.

The results show remarkable Great divergences between the Don’t Worry, activities people expectations expect to under- Be Happy take upon retire- ment and the things that retirees actually do. Travel While television news may be filled with doom and provides the most striking example: about half of gloom, the AXA Retirement Scope survey shows the working people surveyed said they intended to that, among both working people and retirees, travel, but only 20% of retirees actually do so. The people are mostly content. Throughout the opposite holds true for gardening and do-it-your- 11 countries surveyed, 90% of working people self activities: while only 10% of working people describe themselves as ‘happy’ or ‘very happy’.

20 AXA Retirement Scope / February 2006 At 88%, the average remains overwhelmingly positive for retirees as well, albeit slightly lower. Even in Spain and Hong Kong, places with the lowest relative proportions of satisfied retirees, at least 80% say they are either ‘happy’ or ‘very happy’.

This generally Positive optimistic out- look applies to the way people associations see retirement as well. Among working people worldwide, about three-quarters attach positive associations to retirement. Retirees, with views presumably based on their actual experience rather than their expectations, are slightly less enthusiastic. Nevertheless, more than 60% conjure up positive associations when they are asked about retirement.

The survey results show that this same generally positive approach applies to the quality of life during retirement. Roughly three-quarters of both working people and retirees agrees that the quality of life during retirement improves or stays the same as during the working years. Evolving attitudes

The fact that 75% of the retirees questioned describe their quality of life as at least equivalent to the quality of life before retirement does not mean Upbeat retirees that, all else remaining constant, 75% of tomorrow’s retirees will be equally satisfied. Comparisons There is less consensus among working people between the attitudes of working people and and retirees when it comes to retirement income retirees must be cast in a dual perspective; not and standard of living. Retirees are more positive. only are the retired older and more advanced For example, 53% of retirees say they benefit in their life cycles, but the expectations and from a ‘completely sufficient’ or ‘sufficient’ income, socio-economic context of today’s working but only 48% of working people say they expect population are substantially different from those to benefit from sufficient or completely sufficient of past generations. Changes in women’s status income during retirement. Likewise, 63% of retirees and role in many societies, for example, translate into say their retirement standard of living is at least higher expectations among successive generations equal to their pre-retirement living standard. But of women. Rising education levels likewise raise only 59% of working people expect to maintain expectations. Higher standards of living mean at least an equivalent standard of living after that what had been a satisfying retirement in the retirement. past may be viewed as insufficient in the future.

AXA Retirement Scope / February 2006 21 years younger than the average for the retiree Individual population. Today, nearly 60% of working people responsibility are preparing for retirement. The experience of current retirees shows that Survey results show financial preparedness is a critical success factor. Taking a significant evolution The number of ways in which people prepared in attitudes of different for retirement tracks closely with self-described generations towards who happiness. ‘Very happy’ retirees prepared in more charge should bear the responsibility than four ways on average; ‘unhappy’ ones took an for financing pensions. Working people attach more average of fewer than three preparatory measures. responsibility to the individual (70%) compared to retirees (66%). Asked if they would prefer to assume full responsibility for financing their pensions, an astonishing 51% of working people responded positively, ten points more than retirees. Critical Issues for

The changing attitudes may well stem from retirement and expectations over the evolution of public pension policies and benefits. Nearly two-thirds of working health people expect to see pension reform in the years ahead, with overwhelming majorities predicting Working or retired, happy people generally feel reduced public pension benefits (73%) and extended healthy. The survey results show that active, contribution periods (78%). dynamic people, both working and retirees, tend to adopt a healthy lifestyle, by taking such steps as not smoking, avoiding stress or engaging in physical exercise. People in the five active, dynamic profiles take more such steps to stay Retirement ants healthy than people in the three passive profiles.

& grasshoppers However, the survey results show no clear correlation between the things people do for health reasons As Aesop described in his tale of the ant and the and perceived healthiness. If health measures did grasshopper 2,500 years ago, people always have make a difference, people in the Health obsessed been wrestling with the challenge of “preparing profile would be healthier than others, since they today for the wants of tomorrow.” In contrast take an average 3.7 health measures, about twice to their grasshopper elders, today’s working the average for the other profiles. But it turns out population is increasingly focusing on ant-like that the Health obsessed describe themselves as preparations for retirement and starting to prepare slightly less healthy than, for example, the at a younger age. Working people across the 11 Workaholics or Hedonists, both of whom do less to surveyed countries prepare with an average of four stay healthy. financial measures, versus three measures among retirees. Furthermore, working people begin As might be expected, more working people (88%) preparing retirement at age 39 on average – seven describe themselves as ‘healthy’ or ‘very healthy’

22 AXA Retirement Scope / February 2006 than retirees (75%). Healthiness also tracks with a With old age generally positive attitude towards retirement. Both working seen to begin in the 70s, it people and retirees who describe themselves as Ideals seems natural that more ‘very healthy’ tend to attach more positive attitudes than 80% of both working to retirement than those who are not in very good and and retired people world- health. wide say that people 65 and over make good workers. In every country surveyed, majorities of both dreams Retirees say the legal working people and retirees are ‘satisfied’ or ‘very retirement age could be set satisfied’ with the quality of their national health at 64 years old on a worldwide average. But that care systems. On a worldwide average, retirees, does not mean they think people should work who presumably use more medical services than beyond 65. In fact, retirees place the ideal working people, are somewhat more satisfied retirement age at 60, while working people (77%) than people still in the workforce (75%). say that, ideally, people should retire at 56. Most working people seem to recognize that retirement at such an early age is a pipe dream though; they say they will retire, on average, at age 62. It appears that many retirees would have preferred Age as a to work a bit longer: on average, retirees left the workforce at age 59, a year earlier than the age state of mind they set as ideal for retirement.

Old age is mostly a state of mind, according to a On the whole, a relatively small proportion of popular adage. But that state of mind seems to be today’s retirees (12%) continues to work after a moving target – the older people grow, the further retirement, except in Japan. But working people they distance themselves from old age. Asked to have quite a different attitude, with about half define old age, working people in the 11 countries saying that they expect to hold some kind of a job surveyed put the onset at 71. When the same after they retire. It remains unclear to what extent question was put to retirees, they responded, on retirees need to work out of necessity versus the average, that old age begins at 75. desire to keep occupied.

AXA Retirement Scope / February 2006 23 Cultural and Regional Variations

No one holds a monopoly on happy . Satisfied people living or anticipating active, fulfilling retirement lives can be found in all 11 countries. But an examination of survey results reveals unequal concentrations of positive attitudes and dynamic lifestyles in different geographic and cultural environments.

24 AXA Retirement Scope / February 2006 Anglo-Saxon retirees used four different investment Cheerful vehicles to ensure their retirement income. Working people likewise invest in an average of four ways Anglo-Saxons for retirement.

The impressive results from a handful of Anglo- The combination of preparedness for retirement Saxon countries, especially the ‘younger’ ones such with the resulting financial comfort enables Anglo- as Australia, Canada and the U.S., are undeniable. Saxons to anticipate and enjoy active, dynamic Nearly half (46%) of retirees in Australia, Canada retirement lives. Nearly three-quarters (70%) of and the U.S. describe themselves as ‘very happy’. Anglo-Saxon working people and retirees fit into The same description is chosen by 38% of retirees the five active, dynamic retirement profiles defined in the U.K. An overwhelming majority (83%) of retirees as part of the AXA Retirement Scope survey. in the four Anglo-Saxon countries report that their quality of life remained constant or improved during retirement.

Financial comfort helps Dissatisfied explain why Anglo-Saxon Money retirees are so cheerful. Europeans Two-thirds report ‘sufficient’ does or ‘completely sufficient’ In contrast to the ambient satisfaction in the Anglo- retirement income. Half say Saxon world, retirees in the five continental matter their standard of living European countries participating in the survey remained constant during seem considerably less satisfied with their lives. retirement and one-quarter say their living standard Only about one of five retirees in Belgium, France, improved. But there is also some apprehension Germany, Italy and Spain describe themselves as among Anglo-Saxon working people: nearly four in ‘very happy’. The difference is striking for the two ten (37%) expect their standard of living to decline Mediterranean countries, Spain and Italy, where once they retire. fewer than 15% of retirees say they are ‘very happy’. While three-quarters of European retirees say that Not only are Anglo-Saxons more comfortable than the quality of their lives remained the same or others, they also see themselves as healthier. More improved after retirement, that’s ten points lower than 80% of retirees in the four countries describe than the average in the four Anglo-Saxon countries themselves as either ‘rather healthy’ or ‘very healthy’. sampled. That’s five points more than the worldwide average. Fewer working Benefiting from less generous state-run pension people in the five schemes, Anglo-Saxons attach more importance Continental European coun- to personal responsibility for retirement financing tries likewise des- than people elsewhere. An overwhelming majority cribe themselves (85%) of both working people and retirees believe clouds as ‘very happy’ they are individually responsible for their retirement. (23%), compared The result is that they must prepare for retirement to the Anglo-Saxon working population (36%). More both psychologically and financially. On average, personal reserve among Europeans might be part

AXA Retirement Scope / February 2006 25 of the reason, but it is worth noting that the gap between European retirees and working people Asian gloom (13%) is greater than the same gap in the Anglo- Saxon countries (10%). Conclusions regarding Asian attitudes cannot be drawn on the basis of only two Asian locations. Insufficient financial resources seem partly to However, survey results do suggest that attitudes blame. More than 40% of continental European among both working people and retirees in Japan retirees report that their standard of living declined and Hong Kong are tinged with pessimism. Only after they retired. A lack of planning appears to 38% of retirees in the two places report that they be at least partially responsible. Both retirees and benefit from ‘sufficient’ or ‘completely sufficient’ working people in the continental European financial resources, while only one-fourth of working countries invest in an average of only three retirement people expect the same. Nearly half (47%) of retirees investment vehicles, compared to four measures in say their standard of living declined after retirement, the Anglo-Saxon countries. while more than half of working people (56%) expect their living standard to decline when they The relative lack of planning tracks with the view stop working. Large majorities of working people that individuals hold less personal responsibility for and retirees in the two locations fit into the three financing retirement. Only about half (53%) of AXA Retirement Scope passive profiles, including working people and retirees in the five continental 75% of people in Hong Kong and 71% of Japanese. European countries say the individual should be responsible for retirement, compared to 85% of Anglo-Saxons.

Europeans also see themselves as less healthy than Anglo-Saxons. While 74% of retirees in the five continental European countries say they are either ‘rather healthy’ or ‘very healthy’, the proportion is seven points below the Anglo-Saxon average.

With fewer financial resources than their Euro- Anglo-Saxon counter- parts and somewhat passives poorer perceived health, continental Europeans anticipate and enjoy less active retirement lives. Fewer than half (47%) of the working people and retirees in the five European countries fit into one of the five AXA Retirement Scope active, dynamic profiles.

26 AXA Retirement Scope / February 2006

National Attitudes & Behavior

No country has a monopoly on any particular set of retirement attitudes or behaviors. But an analysis of each country’s results in comparison to survey-wide figures reveals striking differences. In some, for example, planning for retirement carries significant weight. Elsewhere, people may tend to be more passive. The following section underlines the unique features of each country. It also shows where people who fit into each profile are most likely to be found.

28 AXA Retirement Scope / February 2006 Analysis of groups by country

Openhearted Health Family Hedonist Workaholic Idle Apathetic Deprived Hyperactive Obsessed Centered

% of total sample 5% 16% 5% 9% 17% 25% 12% 11%

Total population = 6,915 n=319 n=1091 n=394 n=619 n=1163 n=1700 n=895 n=734

AUSTRALIA 8% 28% 6% 11% 20% 14% 5% 8%

CANADA 8% 22% 3% 8% 27% 19% 7% 7%

UNITED STATES 7% 18% 5% 10% 26% 16% 7% 9%

UNITED KINGDOM 3% 36% 8% 9% 15% 14% 7% 8%

GERMANY 4% 20% 8% 12% 9% 27% 8% 12%

BELGIUM 6% 15% 7% 10% 15% 19% 20% 9%

FRANCE 6% 12% 6% 26% 10% 15% 13% 12%

SPAIN 1% 8% 10% 5% 11% 30% 20% 15%

ITALY 3% 6% 6% 3% 14% 31% 26% 12%

HONG KONG 2% 4% 1% 2% 14% 55% 9% 11%

JAPAN 3% 4% 2% 1% 20% 35% 21% 15%

Above average Below average

AXA Retirement Scope / February 2006 29 others. Like working people in Hong Kong and the Australia U.S., 20% of Australians are willing to accept some The Good Life risk when they invest for retirement. Perhaps because their retirees have such a good

40 time, Australians are the most reticent about increasing the minimum legal retirement age. While both working people and retirees worldwide say 30 the minimum age could be raised to about 63, Australians put the limit six years younger. 20

10

0 Canada Quality time

40 According to Australians, retirement is a time to keep busy and enjoy yourself. While active vs. 30 passive profiles split about 50/50 for all eleven countries surveyed, only about one-quarter of Australians fall into passive profiles – the lowest 20 proportion worldwide. Nearly 30% of Aussies fit into the Hedonist profile, nearly twice the worldwide 10 survey average. Likewise, an unusually high percentage is categorized as Openhearted 0 Hyperactives.

How do Australian retirees keep active? Many engage in hobbies (44%) and gardening (32%). You’ll find unusually high proportions of them Among both working people and retirees, participating in sports (27%), hiking (22%) and Canadians attach few negative associations with doing volunteer work (23%). Only 5% of Australian retirement. Rather, Canadian survey results show retirees report that they do nothing – the lowest the world’s highest proportion of retirees (89%) proportion anywhere. reporting a quality of life during retirement higher than or equal to the quality of their working lives. Along with their counterparts in Hong Kong, Australian working people and retirees rank individual Although they retire relatively young, and for responsibility highest worldwide when it comes three-fourths before the legal retirement age, to pension responsibility. People everywhere tend Canadian working people believe a person to favor risk-free retirement products, but should be considered old only after the age of 75. Australians are somewhat less risk-averse than That’s five years older than the worldwide average.

30 AXA Retirement Scope / February 2006 The idea that people remain younger longer may help explain why both working and retired United States Canadians believe the legal retirement age can be raised to 67 – 3 years later than the survey average. Contagious joy

Active and apparently imbued with a strong 40 , Canadians show up in unusually high proportions in most of the active profiles. More than one-fourth fall into the Workaholic category, 30 10 points above the worldwide average. In contrast, only about one-third of Canadians show up in one 20 of the three passive profiles. 10 Canadians and their U.S. neighbors are similar in many ways. For example, the proportion of retirees 0 in both countries who report sufficient or completely sufficient retirement income (70%) is the highest worldwide - nearly 20 points above average. Likewise, for the total population of retirees and working people in Canada and in the U.S., about 44% of people describe themselves as ‘healthy’, Go to the U.S. to find ‘very happy’ retirees: they the highest proportion worldwide and 15 points account for almost half of the retirees questioned – above the survey average nearly twice the survey average. The presence of so many joyful retirees seems to rub off on the working population. Working Americans attach fewer negative associations to retirement than people anywhere else.

Working people and retirees in the U.S. see retirement as an active period in life, which requires planning and preparation. Only Germans prepare for retirement as much (about 83%) as Americans.

Only one-third of Americans fall into passive profiles, compared to about half worldwide. Among numerous planned or actual retirement activities, the survey results show that Americans are more than twice as interested in cultural activities as either working people or retirees anywhere else. Americans seem to have the necessary financial resources as well. Like their Canadian neighbors, 70% of American retirees report sufficient or completely sufficient retirement income, the highest proportion worldwide. Furthermore, more than 60% of working people in

AXA Retirement Scope / February 2006 31 both countries expect to benefit from sufficient or Overall, German attitudes and behaviors track with completely sufficient retirement income. the overall survey breakdown of profiles – with the notable exception of the Workaholics. Fewer Although health care issues have been making than 10% of Germans fall into the Workaholic headlines for years, Americans seem to be relatively profile, compared to an average 17% survey-wide. satisfied with the existing state of affairs. Roughly For German working people and retirees, work does 40% of working and retired Americans say they are not seem to constitute the essence of existence. ‘very satisfied’ with their health care system, in contrast to a survey-wide average of only 23%. German working people express unusually low esteem for the working potential of their elder compatriots. Only two-thirds of working Germans say people 65 and over are capable of high quality work, compared to an average 80% worldwide. Germany The combination of a relatively weak propensity toward work in general and the relatively low Planning opinion of the quality of older workers may help explain why large majorities of both working comes first people and retirees disapprove of postponing retirement or increasing the minimum retirement age. 40

Germans and Americans are the world’s most 30 rigorous retirement planners. In both countries, some 83% of working people prepare for retirement, 20 compared to an average 59% survey-wide. Germans also start planning early, at 30 years old on 10 average, compared to 39 worldwide. The planning seems to work: Germany is the only country surveyed 0 where a large proportion of people (44%) said they knew their retirement income.

32 AXA Retirement Scope / February 2006 working. The experience of current retirees seems United Kingdom to bear out the validity of the preparation. Nearly 40% of British retirees report that they are ‘very Fun and roses happy’, 10 points above the survey-wide average.

40

30 France

20 Family treasure

10 40

0 30

20

10

Nobody sees retirement as more fun than the 0 British. More than one-third (36%) of British working people and retirees questioned can be characterized as Hedonists, compared to fewer than half that proportion (16%) worldwide. In contrast, Britons are under-represented in the As the world’s most visited country, France passive survey profiles. might be a good place for Hedonist retirees to enjoy themselves. But the French do not seem The British idea of an enjoyable retirement involves to view retirement as a time to have fun; only 12% participating in numerous activities, including travel fall into the Hedonist profile, compared to 16% and hobbies as well as cultural and athletic survey-wide. In contrast, the French see retirement endeavors. British working people and retirees are as a time to devote time and attention to family. the world’s most enthusiastic gardeners and Indeed, 26% of French working people and retirees do-it-yourselfers, engaging in these activities fit into the Family-oriented profile, about three twice as much as people elsewhere. Nearly times the worldwide average. two-thirds of British retirees go on vacation, the highest proportion worldwide and substantially The unusually deep attachment to family shows higher than the survey-wide average of 44%. up in French retirement intentions as well. Majorities of both working people and retirees say they intend With the lowest age at which people start planning to save their money during retirement, in order for retirement (28 years old), a huge majority to pass it on to their heirs. More than 70% of of working people in the UK expect their quality of French retirees are preparing to pass their savings life to improve or remain the same once they stop on, compared to an average 13% survey-wide.

AXA Retirement Scope / February 2006 33 French retirees are not likely to increase their savings much however; the French produce the world’s lowest proportions of retirees who hold a job (4%) and of working people who intend to hold a job after retirement (31%). The French are relatively under-represented in the Workaholic profile as well.

An unwillingness to dilute savings may help explain the huge gap between retirement travel intentions and behavior. Two-thirds of French working people say they intend to travel upon retirement – the highest proportion anywhere. But once they do stop working, only about 11% of retirees actually do travel – about half the worldwide average for retirees. illusions about a golden future. More than 80% say they expect their retirement income to be lower than their last . But this hard-boiled Belgian realism does not translate into gloom for the future. More than two-thirds of working Belgians think Belgium their standard of living will remain the same or increase after retirement. Indeed, Belgium has the Down-to-earth highest proportion of standard-of-living optimists optimism in all eleven countries surveyed. Among Europeans, Belgian working people and retirees are likewise the most optimistic about the 40 quality of life during retirement. Among retirees, 82% say their quality of life has either remained 30 constant or improved. For the eleven AXA Retirement Scope countries, only Canadian 20 retirees report higher quality of life results. Working people in Belgium are only slightly less optimistic 10 than their retired compatriots, with 79% expecting their standard of living to stay the same or improve 0 upon retirement.

Finally, when compared to their counterparts elsewhere in Europe, the Belgians are remarkably happy. In fact, 33% of both working people and retirees say they are ‘very happy.’ That’s seven When they look ahead toward their retirement points above the average for all 11 countries years, working people in Belgium seem to have surveyed, and 10-to-20 points above the results both feet firmly planted on the ground, with no from France, Germany, Italy and Spain.

34 AXA Retirement Scope / February 2006 Only 28% of Italian working people and retirees say Italy the individual should bear responsibility for retire- ment, the lowest proportion worldwide and only a La dolce vita? fraction of the survey average of 68%. That proba- bly explains why working people plan relatively lit- tle for retirement. More planning might prove useful

40 though, since only 40% of Italy’s retirees report sufficient or completely sufficient retirement income. 30

20 Spain 10 Sitting 0 and waiting

40 Italian working people do not plan much for retirement and, as a result, their lives seem to turn sour once 30 they leave the work force. Italy is one of three countries surveyed where substantially more working 20 people report being ‘very happy’ than retirees.

The opposite is generally true in the other eight 10 countries surveyed.

0 Retirement gloom even appears to affect people’s health. Italy has the highest proportion of working people worldwide who say they feel healthy: 49%. But when the same question is put to Italian retirees, only 18% say they feel healthy – six points below the worldwide average. With the survey’s highest proportion of retirees Italians are over-represented, proportionately, in who report that they ‘do nothing’ (21%), it is not the survey’s passive profiles, where they account surprising that Spaniards can be found in relatively for nearly 70% of all Italians surveyed, compared to high proportions in the passive AXA Retirement about half survey-wide. With large numbers reporting Scope profiles. Indeed, 65% of Spanish working mediocre health and few activities, it is not surprising people and retirees fall into one of the three to find that Italian retirees are the world’s least passive categories. Spain is one of only three frequent travelers; only 7% travel. Italian retirees countries surveyed where the proportion of people and working people also count among the world’s describing themselves as ‘very happy’ was higher least sports-minded. among working people than among retirees.

AXA Retirement Scope / February 2006 35 The only active category including a relatively large proportion of Spaniards is the Health-obsessed, Japan accounting for 10% of Spanish working people and retirees who participated in the survey - twice Retirement the survey-wide average. Spaniards do seem to be allergic in somewhat poorer health. Asked whether they feel healthy, 25% of working and retired Spaniards 40 responded affirmatively, versus 29% worldwide.

30 The world’s least informed about their future retirement income, Spanish working people are among those who prepare least for retirement. 20 Fewer than 40% make plans for retirement, compared to about 60% survey-wide. Nevertheless, they 10 remain optimistic: 40% of working Spaniards expect their retirement income to be equal to or 0 more than their last salary. That’s nearly double the worldwide average.

In general, Japanese participants seem unenthusiastic about the whole idea of retirement. Working people and retirees in Japan tend to fall into passive profiles defined as part of the AXA Retirement Scope study. Indeed, less than one-third fit the characteristics of the active profiles, with the largest proportion (20%) in the Workaholics group.

The deep Japanese work ethic might explain why so few retirees leave work voluntarily (16%) or retire before the legal retirement age (20%). The average retirement age according to working people elsewhere is 56, compared to 62 years old in Japan. Likewise, Japanese retirees place the ideal retirement age at 64, versus an average 59 in the other 10 countries surveyed. It is not surprising to learn that a large proportion (about 43%) of both working and retired Japanese attach negative associations to retirement.

Some 40% of Japanese retirees continue to work for pay, in contrast to a mere 12% survey-wide, while more than two-thirds of Japanese working people intend to continue to work beyond retirement, the highest proportion worldwide.

36 AXA Retirement Scope / February 2006 Only a tiny fraction (4%) of working people Hong Kong is the only location surveyed where in Japan expects to benefit from sufficient or a majority of retirees reported that their standard completely sufficient retirement income. Japan is of living declined upon retirement. Apparently the only country surveyed where a majority of anticipating the decline, two-thirds of working working people think their quality of life will decline people in Hong Kong expect to hold some kind of when they retire. a job after retirement. Seemingly cognizant of the difficulties encountered by today’s retirees, three- quarters of working people surveyed in Hong Kong said they would prefer to assume full responsibility Hong Kong for their pension benefits. Hong Kong is unique in other ways too. Perhaps Evolving views because pensions tend to be insufficient, there is a nearly unanimous belief among both retirees and working people that children should provide financial help for their retired parents.

As might be expected, an unusually high proportion of people in Hong Kong (75%) fall into passive 40 profiles, with more than half of those surveyed fitting into the Idle category. Only 10% of retirees 30 describe themselves as ‘very happy’, the lowest proportion in the entire survey.

20

10

0

AXA Retirement Scope survey results show that relatively few people in Hong Kong see retirement as the ‘golden years’, but that attitudes are changing. As an example of evolving views, fewer than one-third of Hong Kong retirees attach positive associations to retirement, but a much higher share of working people (52%) see retirement in a positive way. Likewise, Hong Kong is one of only three places where substantially more actives report being ‘very happy’ than retirees.

AXA Retirement Scope / February 2006 37 Conclusion

Happy People Are Active People

Two basic profiles emerge from the results of the AXA Retirement Scope survey. The first is the image of a dynamic, contemporary elder population, made up of energetic people who take advantage of their senior years to live vigorous, fulfilling lives. The second paints a somewhat gloomier image of a passive, sedentary population struggling to make ends meet and benefiting less from the retirement years.

There is no simple recipe to follow for a happy retirement. As the results of the AXA Retirement Scope survey show, different people have different retirement plans and aspirations. No single approach could suit everyone. But an examination of the results shows that people everywhere can greatly enhance their chances for a satisfying retirement by following a few basic guidelines.

Happiness tracks with level of activity

Avg. no.of activities (current or planned) % ‘very happy’

38 AXA Retirement Scope / February 2006 average of more than four initiatives to prepare for The Five Critical retirement. In contrast, retirees who describe them- selves as ‘unhappy’ took fewer than two steps. Retirement As minimum retirement ages rise and benefits from mandatory programs are reduced, financial Success Factors preparation will grow even more important in the future. Furthermore, with rising living standards, the expectations of today’s working people are Active Lifestyle likely to be higher than past generations.

The most critical factor, beyond basic life necessities, is the will and capability to pursue an active lifestyle during retirement. The strongest, clearest survey Health result is the direct correlation between the level of activity on the one hand, and the level of satisfaction The AXA Retirement Scope survey shows a link with life during retirement on the other. The nature between health and a happy retirement, but suggests of the activities undertaken – from travel and cultural no sure-fire formula for maintaining good health. activities to hiking, hobbies or family-oriented Forty-four percent of ‘very happy’ retirees report endeavors – seems to matter little; what counts is themselves in ‘very good health,’ versus only ten being active. Even Workaholics prove to be much percent of ‘unhappy’ retirees. Furthermore, people happier than people with a low activity level. who report poorer health make fewer positive associations with retirement. But an obsession on health does not seem to pay off. People who fit into the Health-obsessed profile seem to be in no better health than those in other active groups. The answer Calculating Resources seems to lie in a balanced, reasonable approach to health. As the Beatles merrily pointed out during the 1960s, money cannot buy love. But money certainly can help people enjoy a lively, dynamic retirement. The issue is not accumulating wealth for its own sake, but rather having access to the financial resources Retirement Mindset needed to be able to enjoy whatever particular activities and lifestyle people select for themselves. The benefits of a healthy lifestyle, combined with financial preparation, are indisputable. But psychological preparation for retirement by assuming individual responsibility is also critical. Working people and retirees who fit into the active, dynamic Financial categories place greater emphasis on their individual responsibility than those who fall into the passive Preparedness groups. Simply thinking about retirement is an important step. The survey results show a direct correlation between financial preparation on the one hand, and personal happiness and quality of life on the other. Retirees who describe themselves as ‘very happy’ took an

AXA Retirement Scope / February 2006 39 © AXA - February 2006 - Contacts: Communications and Brand - AXA Group [email protected] / [email protected]