American Express 401k Participant Survey Reveals Generational Differences in Retirement Plan Investors.

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--Dec. 17, 2002

Younger workers may be too reliant on time and

find themselves less prepared later

American Express Retirement Services today released additional results from its 2002 Participant Satisfaction Survey, comparing the different retirement plan investing behavior of two major age groups participating in retirement plans: those people ages 30 and younger and those older than 30.

The survey found that respondents under 30 are 38 percent less likely to have calculated the amount of savings they will need for a comfortable retirement than respondents over 30. While goal setting is critical to being confident in their retirement preparation--overall, participants who have calculated a retirement goal are 146 percent more likely to be "very confident" in their retirement preparations than those who have not set a goal--the under 30 group may feel goal setting can wait. Yet, the lack of a defined goal and strategy to achieve it seems to impact this group's investing behavior: The under 30 group is 59 percent more likely to perceive that the advice of a friend or co-worker is "very important" overall than are older respondents, and is 52 percent more likely to make contribution or asset allocation decisions based on a hunch.

"Younger workers may feel more insulated from the pitfalls of investing for their retirement because they have more time on their side," said Rusty Field, vice president of Financial Planning and Education Services at American Express Retirement Services. "Their behavior seems to take this precious commodity for granted in some cases. Instead of setting goals and checking their progress over time, much of this data suggests that they are willing to take more stock in their own hunches and non-professional advice."

More consistent with their timeline to retirement, the under 30 group is 117 percent more likely to feel it needs additional financial education regarding financial life events apart from retirement than the older group, and 29 percent less likely to feel the need for additional pre- and post-retirement planning.

"Educating younger members of the work force about retirement savings has unique challenges and opportunities," said Field. "Financial education has to speak to where they are in life--the life events and financial decision they face today. At the same time, their present decisions have great impact on their future retirement savings. Those under 30 have different expectations from their company- sponsored retirement plan, and effective financial education must recognize the differences and connect their life now with what their life may be like in the future."

Not surprisingly, those in the under 30 set are also more likely to utilize the Internet in managing their accounts and obtaining information. These respondents are 28 percent more likely to have accessed their company-sponsored retirement plan account via the Internet than are older respondents and 44 percent more likely to prefer Internet content and/or tools to receive the information they need to reach their retirement goals.

"Obviously the Internet is a key method to reach and educate younger members of the work force," said Field. "While there is definitive data here that they prefer Web-based retirement planning education and tools, actual usage remains low across the industry. Again, they may not be as actively engaged in their retirement planning even though their preferred education medium is the Internet."

The participant satisfaction survey was mailed to more than 10,000 randomly selected 401(k) plan participants, and the results were based on 495 returned surveys--a return rate of 5 percent. The margin of error for the study results is plus or minus 4.5 percent at the 95 percent confidence level. To administer the survey, American Express Retirement Services teamed with Spectrem Group, a recognized leader in information and strategic consulting within the investment services industry; and Global Marketplace Insights, American Express' internal research department. The survey also measured overall participant satisfaction with plan features, services, investments and communications, and was designed to help plan sponsor clients study the satisfaction levels and needs of their plan participants.

American Express Retirement Services, a service group of American Express Financial Advisors, is a provider of services for defined contribution and 401(k) plans with total combined assets of more than $29 billion and a participant base of more than 1 million as of June 30, 2002. Based in Minneapolis, it provides corporations, unions and municipalities nationwide with a complete package of financial education, recordkeeping and trustee services for qualified retirement plans. For more information on American Express Retirement Services, visit http://www.americanexpress.com/sponsors.

Registered investments and financial planning services are offered through American Express Financial Advisors Inc., Member NASD. American Express Company is separate from American Express Financial Advisors Inc. and is not a broker-dealer. Retirement plan and trust related services are offered through American Express Trust Company.