MFS Retirement Survey Key Findings

MFS Retirement Survey Key Findings:

Perceptions about retirement — and work — are changing and becoming more fluid.

As life expectancy increases and health care expenses rise, the majority of pre-retirees plan to work until they are at least 68 years old, while current retirees, on average, retired at age 58.

Nearly half of pre-retirees plan to work during the first part of retirement; while a third plan to work throughout their retirement, changing the very concept of retirement itself.

There is a major shift in how the next generation of retirees views working in retirement. Only 16% of pre-retirees say they will never work in retirement, versus 59% of current retirees. Nearly half of pre-retirees plan to work at the start of their retirement; another third say they will work throughout it.

This dramatic shift gives advisors the chance to add value to investors by helping them plan for this anticipated new reality.

An increasing number of investors should discuss retirement income planning with their advisors. Yet nearly half of pre-retirees and more than a quarter of retirees have no formal retirement income plan in place.

70% of pre-retirees and 60% of retirees expressed some concern about health care expenses, and 64% of pre-retirees and half of retirees worried about inflation eroding their retirement savings.

MFS concludes that investors are anxious about making their money last throughout their lives — giving advisors an opportunity to offer solutions and strategies that help them address these concerns.

Investors are concerned about multiple threats to their retirement savings, in particular health care expenses, inflation, outliving their savings, cuts to Social Security, and investing too conservatively.

As investment responsibility shifts to the individual, the need for disciplined planning with an advisor increases greatly.

Unlike previous generations, pre-retirees cannot rely on secured retirement income sources. Only 23% of pre-retirees cite pension as an income source vs. 40% of current retirees.

Many retirees are forced to supplement their pensions and Social Security early on by drawing on personal savings, starting at a mean age of 64.2.

Half of investors change their allocations on the basis of discussions with their advisor, while around 30% consolidate their assets with one advisor.

More than half of advisors are most challenged by the basic elements of retirement income planning.

The majority of advisors surveyed admit they find it a challenge to discuss certain components of the retirement planning process with clients, including life expectancy issues (55%), planning for health care needs (53%), and tackling the technical aspects of a retirement income discussion (53%).

There is a sizable gap between investor concerns and advisor orientation: only half of advisors always account for health care expenses or offer tax optimization strategies during the planning process.

The MFS investor survey was conducted in September 2007, with responses from 204 pre-retirees and 229 retirees, between the age of 55 and 75, who were either working full-time or retired, used a paid financial advisor and reported at least $100,000 in investable assets (excluding retirement and real estate). Similarly, the MFS advisor survey included responses from 206 financial advisors who identified themselves as financial advisors, brokers, investment managers, certified financial planner or wealth managers in September and October 2007. Richard Day Research, Inc., an independent research firm not affiliated with MFS, conducted both surveys and did not identify MFS as the study sponsor.

MFS manages $200 billion in assets on behalf of more than 5 million individual and institutional investors worldwide as of December 31, 2007. The company traces its origins to 1924 and the creation of America’s first mutual fund.

MFS Investment Management

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