Welcome to Retirement Simulation

Problem:
The median family wealth of Americans (excluding home equity) is $47,000. Moreover 4 of 10 workers today are not currently saving for retirement. Few workers have estimated what it will cost to live comfortably in retirement. Many workers over estimate the number of years they can continue to work after normal retirement age and underestimate the amount of money required in retirement.
From: Issue Brief 268 dated April, 2004 by the Employee Benefit Research Institute.

Response:
The hands-on simulation developed by ISU Extension visits eleven families (couples & singles) at ages 68, 75 and 85 through family profiles. With incomes from $12,000 to $105,000 the families pay for housing, utilities, food, clothing, hair care, prescriptions, insurance, autos, recreation, credit obligations, gifts and special situations like replacing a furnace, a funeral, moving to assisted living or long term care.

Impact:
Between January 5, 2004 and March 10, 2005, 195 participants explored retirement though the simulation.

Of the 145 participants who responded to evaluation questions:

• 97% (141) reported the simulation helped them think about their own retirement
• 88% (128) said the simulation helped them think about financial security of others in their community.

Four questions were added to the evaluation in September, 2004 to provide impact for the National Financial Security in Later Life Initiative:

What do you plan to do as a result of this activity? Check all that apply. Sixty answered these questions:

• 70% (42) Figure or review what it may cost you to live in retirement? (monthly or annually)
• 72% (43) Review your current net worth with an eye toward financial security in later life.
• 45% (27) Will you initiate or increase contributions to a retirement savings plan?
• 38% (23) Will you initiate or increase contributions to employer-provided retirement savings plan?

Comments from participants demonstrated changes in their retirement preparedness.

• The visual really made me stop and think about how fast changes in life can be and how it affects you financially. I never thought about what I'm going to do at retirement or the money its going to take to keep me comfortable. I thought that my older (golden) years were going to be fun!
• Highlighting the different stages of retirement was very beneficial. It was very interesting to see how things change with age and how tough the choices can be.
• Real visual – eye opener regarding how $ choices and unexpected life events impact old age and (possible) inability to have basic necessities. It is a good way for people to see how fast money goes and the importance of “no debt” and pre planning (cars, funeral, long term care, etc).
• Very well done, it makes me stop & think about retirement and some of the items you will be faced with. It is a reality check and provokes thought!
• Quite an eye opener. This is one of the best examples of information on retirement I've used. It made me think of what I can be doing today to use my resources more wisely. Nice tool – well thought out. I plan on sharing this with my husband and sons also!

Contact:
Ruth Freeman
Family Resource Management Field Specialist
104 W. Washington Street
Jefferson, Iowa 50129-1920
Phone 515-386-2138
Fax 515-386-3884
E-mail rofreema@iastate.edu