NEW YORK, November 8, 2002 - Ernst & Young LLP Actuarial Services Group announced today the results of its Next Generation Retirement Planning Survey finding that a majority of pre-retirees (adults 55 plus who are still working full-time) are neglecting to account for basic economic conditions and lifestyle changes. According to the survey, 66 percent failed to consider market fluctuations or debt repayment needs (loans, mortgage, etc.), 53 percent did not factor in the impact of taxes on retirement investments and 47 percent did not account for inflation. Even more surprising, 81 percent did not consider the possibility of their parents getting ill, and over half did not account for personal illness (54%) or a sick spouse (53%). Additionally, only one-third (33%) expect to spend more than 20 years in retirement.

The pre-retiree respondents admit a vague understanding of their financial requirements with only 25 percent describing themselves as "very knowledgeable about their retirement cash flow management needs" (defined as having identified income needs through all phases of retirement). "The retirement crisis in this country goes deeper than the basic savings issue," explains Doug French, Global Director, Ernst & Young Actuarial Services. "There is a need for individuals to understand their true financial requirements throughout all stages of retirement as well as plan for the inevitable bumps in the road. Otherwise, they run a high-risk of outliving their assets."

Confidence Shaken - According to the study, only 17 percent of pre-retirees are very confident their monthly income will sustain their desired lifestyle in retirement and only 16 percent are very confident they have enough assets to meet retirement objectives. Those who do not identify themselves as "very confident" say unexpected lifestyle changes (54%) and negative stock market fluctuations (45%) contribute to their lack of self-assurance. Other factors that shake confidence include a feeling that retirement products are too confusing (28%) and that they lack the information needed to assess their current situation (28%).

Seeking Solutions or Changing Expectations? - The survey also identified the reaction of pre-retirees to the recent decline in financial markets. Only 13 percent of pre-retirees say they have changed their expectations as a result of the downturn -- making no financial adjustments and acknowledging and accepting they will have less money to use during retirement. Eight percent say they are actively managing their investments to attempt to meet their original financial expectations and 23 percent are managing their investments differently, but still recognize they will have less money to use in retirement. Over a third (36%) have not changed their expectations or their cash flow management.

Given a Second Chance... - The survey also asked pre-retirees what they would do differently if they could turn back the clock: * Forty-nine percent say they would become better educated about retirement products and services * Forty-six percent would develop a better budget to determine exactly how much money they would need to live comfortably during retirement * Forty-six percent say they would plan earlier * Forty percent would take advantage of employer sponsored programs * Over one third (34%) would purchase more guaranteed return products * Nearly a third (31%) would seek counsel from a financial advisor.

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