WSJ.com/Harris Interactive Survey: Majority of Adults Expect Retirement Income to Include Social Security

ROCHESTER, N.Y., Feb. 22 /PRNewswire/ -- A new Wall Street Journal Online/Harris Interactive Personal Finance Poll found that despite the general uncertainty regarding the solvency of Social Security, a majority (65%) of respondents expect Social Security to be a primary source of income during retirement. However, as the age of respondents falls, the proportion of respondents who expect to rely on Social Security also declines. Forty one percent of those ages 18 to 34 say that Social Security will be a primary source as compared to 84 percent over the age of 55. Furthermore, only those ages 18 to 34 (59%) expect to rely on 401K plans more than Social Security, while those ages 35 to 44 expect to rely on Social Security and 401K plans equally (60% each).

These are just some of the results of an online survey of 4,037 U.S. adults conducted by Harris Interactive(R) from January 8 to 10, 2007 for The Wall Street Journal Online.

Single households are more likely to say their primary source of income will be their 401k plan (53%) rather than Social Security (50%). Three-fourths of those who are divorced, widowed or separated believe Social Security will be their primary source of retirement income; this group has a higher proportion of retirees in it, so it is interesting to note that they expected this government benefit to be their primary source. Those married are more inclined to cite their traditional pension plan (35%) and the equity in their home (21%) as primary sources. For those self employed or working full time, about two-thirds (65%) say their 401k will be a main income source, while half of part-timers (50%) will still rely on working during retirement.

Retirement Savings are not safe

Among respondents planning for retirement, nearly a third (31%) have tapped into their retirement savings for some unforeseen event. Respondents who are divorced, widowed or separated are more likely than their cohorts to have tapped into their retirement savings (49% vs. 31% total). Respondents who are already behind on retirement planning, particularly those earning less than $35K, are most likely to have dipped into their retirement savings (41% vs. 31% of total). The primary reasons for dipping into retirement savings include medical emergencies (17%) and being laid off (13%). Furthermore, over six in 10 respondents who have tapped into their retirement savings have not fully repaid their borrowings.

Preferences on deferred payment of taxes on retirement saving is unclear

Uncertainty seems to be the general sentiment on the payment of taxes with regard to retirement savings. More than one-third of respondents (35%) are unsure whether they should defer the payment of taxes. Among respondents who make under $35K, this uncertainty grows, with 48 percent saying they are uncertain when they should pay taxes. Younger respondents (43%) are more inclined to pay taxes as they accumulate wealth whereas those older prefer to defer (45%).

TABLE 1A

EXPECTED PRIMARY SOURCES OF INCOME- BY AGE

"Which of the following, if any, do you expect to be your primary sources of

income during retirement?" Base: Plan To Retire Ages Ages Ages Ages Total 18-34 35-44 45-54 55 and over N=3,708 N=920 N=598 N=866 N=1,324 % % % % % Social Security 65 41 60 68 84 401(k) or other employer-sponsored retirement account savings 49 59 60 49 35 Part-time work during retirement 34 37 36 36 29 IRA investments 31 28 28 32 35 Traditional pension (defined-benefit plan) 30 19 23 30 41 Equity in my home 17 12 16 17 20 Inheritance 9 9 8 10 9 Financial support from family members 3 4 1 2 3 Note: Multiple-response question TABLE 1B EXPECTED PRIMARY SOURCES OF INCOME- BY MARITAL STATUS

"Which of the following, if any, do you expect to be your primary sources of

income during retirement?" Base: Plan To Retire Single/ Div./ Total Married Never Sep./ Married Wid. N=3,708 N=1,990 N=833 N=668 % % % % Social Security 65 69 50 76 401(k) or other employer- sponsored retirement account savings 49 53 53 30 Part-time work during retirement 34 33 38 32 IRA investments 31 36 29 23 Traditional pension (defined-benefit plan) 30 35 24 28 Equity in my home 17 21 11 13 Inheritance 9 9 10 8 Financial support from family members 3 2 3 3 Other 15 12% 20 15 Note: Multiple-response question TABLE 1C EXPECTED PRIMARY SOURCES OF INCOME- BY EMPLOYMENT STATUS

"Which of the following, if any, do you expect to be your primary sources of

income during retirement?" Base: Plan To Retire Full time/ Total Self Part Total Student Retired Empl time Unemp. N=3,708 N=1,920 N=498 N=206 N=370 N=825 % % % % % % Social Security 65 63 57 65 33 83 401(k) or other employer-sponsored retirement account savings 49 65 46 27 52 25 Part-time work during retirement 34 44 50 26 37 17 IRA investments 31 35 33 12 29 32 Traditional pension (defined-benefit plan) 30 28 32 17 27 45 Equity in my home 17 19 15 12 10 16 Inheritance 9 10 12 11 9 6 Financial support from family members 3 2 3 6 4 2 Other 15 12 16 20 24 18 Note: Multiple-response question TABLE 2A PREFERENCE FOR PAYING TAXES ON RETIREMENT SAVINGS - BY AGE

"If you had a choice, when would you prefer to pay taxes on your retirement

savings?" Base: All Respondents Ages Ages Ages Ages Total 18-34 35-44 45-54 55 and over N=4,037 N=1,021 N=660 N=949 N=1,407 % % % % % I would prefer to defer paying taxes until I withdraw my retirement savings. 34 19 31 40 45 I would prefer to pay taxes while accumulating retirement savings. 31 43 32 26 23 Not sure 35 38 37 35 32 Note: Percentages may not add up to 100% due to rounding. TABLE 2B PREFERENCE FOR PAYING TAXES ON RETIREMENT SAVINGS - BY INCOME

"If you had a choice, when would you prefer to pay taxes on your retirement

savings?" Base: All Respondents Less $35K $50K $75K Total Than - - and $35K $49.9K $74.9K over N=4,037 N=1,053 N=576 N=816 N=891 % % % % % I would prefer to defer paying taxes until I withdraw my retirement savings. 34 20 35 37 50 I would prefer to pay taxes while accumulating retirement savings. 31 33 32 34 29 Not sure 35 48 33 28 21 Note: Percentages may not add up to 100% due to rounding. TABLE 3A REASONS TO TAP INTO RETIREMENT SAVINGS - BY MARITAL STATUS "For which of the following reasons, if any, have you tapped into your retirement savings?' Base: Planning for Retirement Single/ Div./ Total Married Never Sep./ Married Wid. N=2,143 N=1,271 N=419 N=329 % % % % Have Tapped Into Retirement Savings (Net) 31 28 30 49 Being laid off from my job 8 7 8 13 Medical-/Health-related expenses 7 7 7 10 Down payment on a home 5 4 7 9 College expenses 4 4 6 6 Vacation expenses 2 2 4 4 Wedding expenses 2 2 2 1 Other 12 11 10 17 I have not tapped into my retirement savings. 69 72 70 51 Note: Multiple-response question TABLE 3B REASONS TO TAP INTO RETIREMENT SAVINGS - BY INCOME "For which of the following reasons, if any, have you tapped into your retirement savings?' Base: Planning for Retirement Less $35K $50K $75K Total Than - - and $35K $49.9K $74.9K over N=2,143 N=354 N=297 N=496 N=671 % % % % % Have Tapped Into Retirement Savings (Net) 31 41 33 27 27 Being laid off from my job 8 13 10 6 6 Medical-/Health-related expenses 7 17 9 7 4 Down payment on a home 5 3 6 4 6 College expenses 4 5 5 2 5 Vacation expenses 2 3 5 3 1 Wedding expenses 2 1 3 0 2 Other 12 13 13 10 11 I have not tapped into my retirement savings. 69 59 67 73 73 Note: Multiple-response question TABLE 4 REASONS TO TAP INTO RETIREMENT SAVINGS - BY MARITAL STATUS "Have you fully paid back all premature withdrawals from your retirement savings?" Base: Have Tapped into Retirement Savings Single/ Div./ Total Married Never Sep./ Married Wid. N=649 N=364 N=105 N=146 % % % % Yes 39 38 39 42 No 61 62 61 58 Note: Percentages may not add up to 100% due to rounding.

Downloadable PDFs of Wall Street Journal Online/Harris Interactive Personal Finance Polls are posted at http://www.harrisinteractive.com/news/newsletters_wsjfinance.asp.

Methodology

This survey was conducted online within the United States between January 8 to 10, 2007 among 4,037 adults (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income 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.

All surveys are subject to several sources of error. These include: sampling error (because only a sample of a population is interviewed); measurement error due to question wording and/or question order, deliberately or unintentionally inaccurate responses, nonresponse (including refusals), interviewer effects (when live interviewers are used) and weighting.

With one exception (sampling error) the magnitude of the errors that result cannot be estimated. There is, therefore, no way to calculate a finite "margin of error" for any survey and the use of these words should be avoided.

With pure probability samples, with 100 percent response rates, it is possible to calculate the probability that the sampling error (but not other sources of error) is not greater than some number. With a pure probability sample of 4,037 one could say with a ninety-five percent probability that the overall results would have a sampling error of +/-3 percentage points. Sampling error for data based on sub-samples may be higher and may vary. 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.

These statements conform to the principles of disclosure of the National Council on Public Polls.

About the Survey

The Wall Street Journal Online/Harris Interactive Personal Finance Poll is an exclusive poll that is published in the Personal Journal Edition of The Wall Street Journal Online at http://www.wsj.com/personaljournal.

About The Wall Street Journal Online

The Wall Street Journal Online at WSJ.com, published by Dow Jones & Company ; (http://www.dowjones.com/), is the largest paid subscription news site on the Web. Launched in 1996, the Online Journal continues to attract quality subscribers that are at the top of their industries, with 788,000 subscribers world-wide as of Q3, 2006.

The Online Journal provides in-depth business news and financial information 24 hours a day, seven days a week, with insight and analysis, including breaking business and technology news and analysis from around the world. It draws on the Dow Jones network of nearly 1,900 business and financial news staff-the largest network of business and financial journalists in the world. The Online Journal also features exclusive content, including interactive graphics on business and world news, and online-only columns about the automotive industry, technology, personal finance and more.

The Online Journal offers three industry-specific verticals: the award-winning Health, Media & Marketing and now Law. Health offers authoritative analysis, breaking news and commentary from top industry journalists. Media & Marketing is designed for professionals in the advertising, marketing, entertainment and media industries. Law is designed to provide law firms and attorneys timely information on events and trends important to the legal market. Subscribers to all also get access to the full content of the Online Journal.

In 2005, the Online Journal was awarded a Codie Award for Best Online News Service for the second consecutive year, and its Health Industry Edition was awarded Best Online Science or Technology Service for the third consecutive year. In 2004, the Online Journal received an EPpy Award for Best Internet Business Service over 1 million monthly visitors.

The Wall Street Journal Online network includes CareerJournal.com, OpinionJournal.com, StartupJournal.com, RealEstateJournal.com and CollegeJournal.com.

About the Financial Services Practice

The Harris Interactive Financial Services Practice provides custom, global research solutions to leading companies in the financial services industry. Research professionals with specific expertise across a range of financial services sectors, including banking, payment systems, securities and investments and insurance, act as strategic partners to their clients. The Financial Services Practice plays a key role in branding initiatives, customer profiling and segmentation, new product development, customer loyalty management, market planning initiatives and studies that support clients as thought leaders. (http://www.harrisinteractive.com/financial)

About Harris Interactive

Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides innovative research, 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. The company has built what it believes to be the world's largest panel of survey respondents, the Harris Poll Online. 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. More information about Harris Interactive may be obtained at http://www.harrisinteractive.com/.

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