What Teachers Can Teach about Planning for Retirement: New AIG VALIC/Harris Interactive Study Suggests That Educators Are Better Prepared for Retirement Than Many U.S. Adults.

Act Early, Be a Proactive Planner, and Consult a Professional Advisor

HOUSTON -- A new study sponsored by AIG VALIC, a national leading provider of retirement plan services to for-profit and not-for-profit education, healthcare and government organizations, and conducted by Harris Interactive([R]), strongly suggests that teachers are well ahead of many U.S. adults in preparing for retirement. Based on comprehensive interviews with nearly 2,000 U.S. adults between the ages of 45 and 65, the study indicated that teachers not only exhibited better planning and saving habits than the general population, but they also expressed higher levels of confidence that they would hit established savings targets and achieve a comfortable retirement.

AIG VALIC sponsored the survey to better understand the similarities and differences of retirement preparation among one of its principal client groups - professional educators - compared to the general population. The results offer new insights into how and why some U.S. adults are more successful than others at preparing for the financial demands of a modern retirement that can extend beyond 30 years.

"Teachers clearly have much to teach us beyond our ABCs," said Bruce R. Abrams, President and CEO of VALIC and the VALIC Retirement Services Company. "The lessons revealed in this study are as simple as they are effective: Begin early, save regularly, be an active planner and take advantage of professional advice. And, perhaps the biggest lesson of all, you don't have to earn a huge income to build a solid nest egg."

While many teachers have an advantage in retirement preparation - a defined benefit pension that typically replaces about 24% of their working household income - the AIG VALIC 2006 Teachers Retirement Survey discovered that they also tend to be better planners and savers. Teachers in the study were more likely than non-teachers to report establishing a savings goal (48% vs 38%), saving money each month (65% vs 56%), developing a financial plan for retirement (26% vs 13%), and working with a professional advisor (34% vs 19%). Those who reported these behaviors also were more likely to feel "financially comfortable" and "looking forward" to retirement.

In stark contrast, those in the survey who felt least prepared for retirement typically had not developed a financial plan, did not have a savings goal and, when they had established a goal, expressed more concern about actually achieving it.

"It's good news that so many teachers have taken their retirement preparation seriously. They are potential role models for many other middle-income Americans," said Humphrey Taylor, Chairman of The Harris Poll([R] ), Harris Interactive.

Here are the ABCs of Retirement Planning:

* Act Early. Teachers have shown us that by starting early and saving each month, you can build substantial financial resources for retirement.

* Be a Proactive Planner. One key reason for teachers' greater success is their disciplined planning. Relative to other Americans, they are more likely to have developed specific retirement goals, created a financial plan to achieve them, and stuck to the plan.

* Consult a Professional Advisor. Teachers who expressed the greatest confidence in their preparations for retirement are much more likely to have worked with an advisor.

Key findings in the AIG VALIC 2006 Teachers Retirement Survey are shown on page four. Additional findings include:

Teachers Are More Confident About Their Preparations for Retirement C*

They are more likely to describe themselves as "very or fairly well prepared" than the general population (47% vs. 37%) and are more apt to say they are "financially comfortable or well-off" (54% vs. 44%).

C* And That Knowledge Translates into Fewer Worries About the Future.

Nearly one-half (47%) of teachers report they are looking forward to retirement "a great deal/a lot" compared to four in 10 (39%) of the general population. They are less likely to express concern about reaching retirement savings goals and more likely to express confidence that they will accumulate enough money to fund their preferred retirement lifestyle. In fact, teachers express fewer fears across the board than non-teachers.

More Broadly, Preparation Equates with a Confident, Positive View of Retirement C*

Among all adults, those with a plan are considerably more likely than those without a financial plan to claim they are financially prepared for retirement (76% vs. 35%), report a higher likelihood of reaching their retirement savings goal (52% vs. 35%), and less likely to express concern about it (5% vs. 18%). And those who feel better prepared are much more likely to have a financial advisor (36% vs. 8%).

C*While Lack of Preparedness Directly Affects Retirement Expectations.

Those who acknowledge being financially unprepared are less likely than those who feel they are financially prepared to say they look forward to retirement (27% vs. 58%), more likely to express concern about reaching retirement savings goals and securing health care coverage (43% vs.6%), and see a greater likelihood of working in retirement (9% vs. 46%).

Recognition Among the Financially Unprepared Often Comes Relatively Late C*

The average age of those feeling unprepared for retirement is about 48 among teachers and the general population, males and females.

C* And Is Often Triggered by Rising Costs, Especially Health Care Costs.

Health care costs are the number one concern cited about retirement, with six in ten (61%) adults saying they fear it "a great deal/a lot." One-half (50%) say they are concerned about paying for health care coverage; almost one-half (45%) say they would be willing to work a few extra years for coverage or go back to work after retirement for health care. Some would consider staying at a job they did not like for health insurance coverage (38%).

Despite It's Uncertain Future, Many People Still See Social Security as Their Major Source of Retirement Income. Social Security is ranked as the most important source of money in retirement for almost one-half (45%) of the general population. A similar number (50%) express fears that Social Security will be cut back or eliminated.

Methodology:

This survey was conducted online by Harris Interactive on behalf of AIG VALIC among a total of 1,988 adults in four distinct groups: adults 45 to 54 years of age (n=610) and between 55 and 65 years of age (n=583), and teachers and principals for K-12 schools between 45 and 54 years of age (n=406) and 55 and 65 years of age (n=389) within the United States between March 16 and 31, 2006. Figures for gender, age, income, education, region and ethnicity were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents' propensity to be online.

With a pure probability sample of 1,988 adults one could say with a ninety-five percent probability that the overall results have a sampling error of +/- 3 percentage points. Sampling error for results from sub-samples is higher and varies. However that does not take other sources of error into account. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated.

AIG VALIC is one of the leading retirement plan service providers in the United States. For more than half a century, it has specialized in providing retirement programs and related investment, recordkeeping and administrative services to employers and employees of for-profit and not-for-profit elementary and secondary education institutions, hospitals and healthcare organizations, higher education institutions and governmental entities. AIG VALIC serves 28,000 client groups and more than two million participants. AIG VALIC is the marketing name for the group of companies comprising VALIC Financial Advisors, Inc.; VALIC Retirement Services Company; and The Variable Annuity Life Insurance Company (VALIC); each of which is a subsidiary of American International Group, Inc.

Harris Interactive is the 13th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation.

American International Group, Inc. (AIG), world leaders in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in London, Paris, Switzerland and Tokyo.

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