f""“ “I“ “g . 1 minimum!"lullllluuwill: mun 293 Michigan State University This is to certify that the thesis entitled An Exploratory Study of the Financial Adjustment of a Selected Group of Single Female Retirees to Their Retirement Income presented by Betty Jeanne Sundling has been accepted towards fulfillment of the requirements for Ph.D. Aegean Family Ecology Major professor Date February 19, l979 0-7639 OVERDUE FINES ARE 25¢ PER DAY PER ITEM Return to book drOp to remove this checkout from your record. GD Copyright by BETTY JEANNE SUNDLING 1979 ii AN EXPLORATORX STUDY OF THE FINANCIAL ADJUSTMENT OF A SELECTED GROUP OF SINGLE FEMALE RETIREES TO THEIR RETIREMENT INCOME BY Betty Jeanne Sundling A DISSERTATION Submitted to Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Family Ecology 1979 ABSTRACT AN EXPLORATORY STUDY OF THE FINANCIAL ADJUSTMENT OF A SELECTED GROUP OF SINGLE FEMALE RETIREES TO THEIR RETIREMENT INCOME By Betty Jeanne Sundling The primary purpose of the investigation was to explore the financial adjustment of a group of single females to their retirement income with the secondary purpose being to ascertain whether single females could use any assistance in planning or adjusting to their retirement income. Population for the study was restricted to females who had been retired at least one year but not more than eight; had retired at the age of 60 years or older; had been single at least two years before they retired; and were living in Ingham, Eaton or Clinton County in the State of Michigan. Sample was composed of fourteen single white female retirees. Subjects were obtained by requesting single females who were members of the State Employee Retirees Association of the Lansing Area to volun- teer to be participants. An interview schedule constructed by the investigator was used to gather data. Respondents were asked to provide-information on implementation of preretirement strategies, implementation of post- retirement financial strategies, professional and nonprofessional Betty Jeanne Sundling contacts, and effect of the shift to a retirement income on twenty- eight consumption activities. General information was also obtained on financial planning and record keeping practices, financial status (income, asset holdings, and amount of debt), housing status, and health status. Participants were arbitrarily divided into two income groups according to their 1977 gross income: lower income group ($6,000 to $9,999), and higher income group (over $10,000). Data were examined to determine whether there were any differences between the financial adjustment practices of single female retirees in the two income groups. An examination of the data indicated that there were limited dif- ferences between the financial adjustment practices that single females in the two income groups used when they shifted to a retirement income. There was a slight tendency for retirees in the lower income group to implement some of the preretirement and postretirement strate- gies than retirees in the higher income group. In general, the findings of the study indicated that: (1) The single female retirees tended to execute only the preretirement finan- cial strategies that were applicable to their situation. (2) Most of the single female retirees did not have to use their savings and/or investments, shift their savings and/or investments, accept financial help from nonrelatives and/or relatives, find a job, or sell any of their possessions in order to pay for some of their retirement living expenses. (3) When the single females shifted to a retirement income, it had a minimal impact on the twenty-eight consumption activities Betty Jeanne Sundling examined in the investigation. (4) The factors which were more likely to influence the single female retirees to change their consumption patterns were personal and social factors rather than financial ones. (5) Single female preretirees and retirees were not extensively utiliz- ing the services of professionals. Analysis of the data suggested that professionals could assist single female preretirees and retirees to maximize their earnings from investments, make a will, plan an estate, take advantage of tax savings measures, and cope with the eroding impact that inflation can have on retirement incomes. To My Parents Mr. & Mrs. Ernest E. Sundling, Sr. and in memory of Dr. Carol Shaffer iii ACKNOWLEDGEMENTS Sincere appreciation is extended to my guidance committee: Dr. Norma Bobbitt, Dr. Jane Oyer, Dr. Peter Gladhart, and Dr. Allan Schmid. I am especially grateful to Dr. Bobbitt for consenting to chair my guidance committee after the death of Dr. Carol Shaffer as well as for her patience, support, and encouragement throughout my doctoral program. Special thanks is extended to Dr. Oyer for her expertise in the area of aging, Dr. Gladhart for his helpful suggestions in the area of family economics, and Dr. Schmid for his contributions in the area of public policy. I am particularly indebted to the State Employee Retirees Associa- tion of the Lansing Area for assisting me to obtain subjects for the investigation. Special thanks is extended to each of the fourteen state retirees who graciously gave of their time and shared their retirement experiences with me. Gratitude is also extended to my friends and fellow graduate students for their words of encouragement, suggestions, and support. An extra special thanks to my parents-—to my father for his encouragement and steadfast faith in all my endeavors and to my mother for her support and patience. iv TABLE OF CONTENTS Page LISTOFTABLESOOOO OOOOOOOOOOOOOOO OOOOOOOOOOOOO ..... O... ...... 0.. x LISTOF FIGURESOOOOOOOOOOOOOO0.00......0.00.00...OOOOOOOOOOOOOOO x111 CHAPTER I. IMRODUCTIONOOOOOOOOO000......OOOOOOOOOOOOOOOOOOOO0...... 1 Statement of the Problem.............................. 1 Rationale for Studying Financial Adjustment to 8 Retirement Income................................ 2 Rationale for Selecting Single Female Retirees........ 6 Selection of Single Retirees....................... 6 Selection of Single Females........................ 8 Purposes of the Study................................. 10 Conceptual Framework.................................. 11 Assumptions........................................... 16 Definitions........................................... 17 Theoretical Definitions............................ 17 Operational Definitions............................ 18 II. REVIm OF LITRATUREOOOOOO. ....... OOOOOOOOOOOOOOOOOOOOOOO 19 Retirement............................................ 20 Definition of Retirement..................... ...... 20 Age of Retirement.................................. 20 The Retirement Decision............................ 21 The Retired Population............................. 24 Demographic Data about Retirees................. 24 Demographic Data about Aged Population.......... 25 Consumption........................................... 29 Measurement of Consumption......................... 29 Factors Influencing Consumption.................... 30 Amount of Family Income......................... 30 Occupation of Head.............................. 31 Age of Head..................................... 33 Size of Family..... ....... ...................... 35 CHAPTER Page Economic Status of the Aged........................... 36 Components of Economic Status...................... 36 Income.......................................... 36 Savings......................................... 39 Home Equity..................................... 42 Liabilities..................................... 42 Measurement of Income Adequacy..................... 43 Objective Measures.............................. 43 Subjective Measures............................. 44 Trends in Economic Status.......................... 46 Change in Median Income......................... 46 Relative Income Status.......................... 46 Rate of Poverty................................. 47 Financial Adjustment to Retirement.................... 48 Preretirement P1anning............................. 48 Retirement History Study........................ 49 Savings...................................... 49 Home Equity.................................. 50 Liabilities.................................. 50 Surveys of Consumers............................ 50 Home Equity.................................. 51 Liabilities.................................. 51 Other Studies................................... 51 Financial Management during Retirement............. 52 Financial Management of Inflation.................. 55 Summary............................................... 58 III. METHODOLmY..0.00.....0.0......0.00000000000000000000000. 62 Selection of Sample................................... 62 Description of Sample................................. 64 Financial Planning and Record Keeping.............. 66 Financial Status................................... 68 Income.......................................... 68 Asset Holdings.................................. 71 Outstanding Debt................................ 71 Housing Status..................................... 72 Health Status...................................... 73 Summary............................................ 74 Development of the Interview Schedule................. 76 Rationale for Selection of the Personal Interview.. 76 Construction of the Interview Schedule............. 78 Procedures for Data Collection........................ 79 Procedures for Analyzing Data......................... 80 vi CHAPTER Page IV. FINDINGS................................................. 81 Research Question 1: Preretirement Financial Strategies......................................... 81 Estimating Gross Retirement Income................. 83 Attending Preretirement Meetings and/or Classes.... 84 Making Changes in Health Insurance Policies........ 84 Estimating Retirement Living Expenses.............. 84 Reading Books or Pamphlets about Retirement Finances........................................ 85 Purchasing Major Household Items................... 86 Making Changes in Life Insurance Policies.......... 87 Buying a Car....................................... 87 Making a Special Effort to Pay Outstanding Bills... 87 Giving Thought to Continue Living at Existing Residence....................................... 88 Starting to "Cut Back" on Living Expenses.......... 88 Research Question 2: Retirement Financial Strategies. 88 Used Savings and/or Investments.................... 90 Shifted Savings and/or Investments................. 90 Received Financial Help from Relatives and/or Non- relatives....................................... 90 Tried to Find a Jab................................ 91 Had to Sell Something.............................. 92 Research Question 3: Changes in Consumption Patterns. 92 Food............................................... 94 Type of Food Purchased at Grocery Store......... 96 Eating Out in Restaurants....................... 97 Canning and Freezing Food....................... 98 Participation in Government Food Programs....... 98 Health............................................. 98 Seeing Doctor................................... 99 Buying Prescription Medicines................... 100 Getting Medical Treatment....................... 100 Personal Care and Clothing......................... 101 Going to Beauty Parlor.......................... 101 Buying Ready-Made Clothes....................... 102 Recreation and Education........................... 103 Number of Hobbies............................... 104 Taking Vacation Trips........................... 104 Subscriptions to Magazines and Newspapers....... 105 Gifts and Contributions............................ 106 Number of Gifts Purchased....................... 108 Money Donated to Church......................... 109 Money Donated to Charitable Organizations....... ' 109 Financial Help Given Relatives.................. 110 Housing............................................ 111 Use of Telephone................................ 112 vii CHAPTER Page Consumption of Heat and Electricity............. 113 Keeping Exterior of House or MObile Home and Yard in Good Condition....................... 115 Redecorating Interior of Home or Mobile Home.... 116 Buying New Piece of Equipment................... 116 Redecorating Apartment.......................... 117 Transportation..................................... 117 Buying New Car.................................. 118 Having Car Serviced............................. 118 HOW’MuCh Car is Driven.......................... 118 Using Public Transportation..................... 119 Miscellaneous Activities........................... 120 Hunting for Bargains............................ 120 Looking for Tips on How to Manage Income........ 121 Research Question 4: Meeting Consumption Needs....... 121 Research Question 5: Money Matter Contacts with Professionals...................................... 126 Before Retirement.................................. 126 After Retirement................................... 127 Research Question 6: 'Money Matter Contacts with Nonprofessionals................................... 129 Single Female Retirees with Children............... 129 Single Female Retirees without Children............ 130 V. DISCUSSION OF FINDINGS.......................... ...... ... 133 Preretirement Financial Strategies.................... 133 Retirement Financial Strategies....................... 135 Changes in Consumption Patterns................l...... 138 Food............................................... 140 Health............................................. 141 Personal Care and Clothing......................... 142 Recreation and Education........................... 143 Gifts and Contributions............................ 143 Housing............................................ 146 Transportation..................................... 147 Miscellaneous Activities........................... 148 Meeting Consumption Needs............................. 150 Money Matter Contacts with Professionals.............. 153 Money Matter Contacts with Nonprofessionals.... ..... .. 154 VI. CONCLUSIONS AND MLIMTIONSOOOO......OOOOOO...00.0.00... 156 Conclusions........................................... 156 Limitations of the Study..................... ..... .... 159 Generalizing Results............................... 159 Use of Open Questions.............................. 160 Dependence on Recall............................... 161 viii CHAPTER Page Implications.......................................... 162 Implications for Research.......................... 162 Refine and Validate the Instrument.............. 162 Examine and Compare Other Groups of Single Retirees..................................... 163 Conduct a Time Series Study..................... 164 Implications for Professionals..................... 164 Before Retirement............................... 164 After Retirement................................ 165 Concluding Remarks.................................... 167 SELECTED BIBLIOGMPHYO O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O O 0 O O O O O O O O O 168 APPENDICES A. NWSLETIER ANNOUNCMNTS 0F stY I O 0 O O O O O O I O O O O O O O O O O O O O O 176 B. INTERVIEW SCIEDULEOOOOOOOOOOOO'.....OOOOOOOOOOOOOOOOOOOOOO 179 ix TABLE 10. 11. 12. 13. LIST OF TABLES 1975 Social Security Retirement Benefits by Selected Cl'laracterist1CSoooooo00.000000000000000000000000000cocoono Percent Distribution of the White Population 65 Years of Age and Older by Age Group and by Select Years............ 1975 Marital Status of Aged White Population by Number by Percent and by 8&000000000000.0000000000000000.0...... Summary of Expenditures, Percent Distribution by Size of Economdc Unit 65 to 74 Years of Age, North Central Region 1960-610000000000000000........OOOOOOOOOOOOO......OOOOOOOO Percent Distribution of Major Income Sources 1970 Newly Entitled Social Security Beneficiaries 62 Years of Age or Older by Marital Status and by Sex........................ 1976 Income Distribution of Aged White Population by select GrouPBOOOOOOOOOOOOC......OOOOOOOOOOOOOOOO0.0.0.0... 1967 Median Value of Financial Assets by Type of Retire- mmt Benefit mid by marital StatUSOO......OOOIOOQIOCOOOOOO Percent White Population 65 Years of Age and Older below Poverty Level by Economic Unit Type and by Select Years... Summary of Family Expenditures, Percent Distribution by Age of Family Head, All Urban Families and Single Con— sumers, North Central Region 1960-61...................... Criteria and Rationale for Selection of Participants...... Specific Characteristics of Retirees................ ...... Type of Financial Plan at Retirement by Time Period and by Income Level-..........OOOOOOOOOOOOOOO......OCOOOOOOOOOOOOO Reasons Financial Plan Not Used at Retirement and currmt1Yby Retiree.‘.....OOOOOOOOOOOO......OOOOOOOOO.... Page 25 27 28 35 38 40 41 47 57 63 65 66 67 TABLE Page 14. 1977 Income, Asset Holdings, and Outstanding Debt by Retiree.................................................. 69 15. Main Sources of Income by Income Level................... 70 16. Housing Status of Retirees by Income Level............... 72 17. Housing Status of Retirees by Single Status.............. 73 18. Health Evaluation by Retiree and by Health Criterion..... 74 19. Preretirement Financial Strategies Executed by Rank Order andby Income Level-O.......O......OOOOOOOOOOOOO.......... 82 20. Postretirement Financial Strategies Executed by Income LeveIOOOIOOOOOOO......OOOIOOOOOOOOOOIOO..........OOOOOOOO 89 21. Preretirement Income and 1977 Income by Retiree and by Number of Changes in Level of Consumption................ 93 22. Changes in Level of Consumption by Expenditure Category and by Income Level...................................... 95 23. Frequency of Eating Out in Restaurants by Income Level... 97 24. Frequency of Seeing Doctor by Income Level............... 99 25. Frequency of Going to Beauty Parlor by Income Level...... 102 26. Reasons Given for Not Buying More Clothes with Additional Income by Income Level................................... 103 27. Number of Magazines Being Taken by Income Level.......... 105 28. Changes in Gifts and Contributions Activities Preretire- ment Income to Retirement Income by Income Level......... 107 29. 1977 Estimated Money Spent on Gifts by Financial Amount and by Income Level...................................... 108 30. 1977 Estimated Money Donated to Charitable Organizations by Financial Amount and by Income Level.................. 110 31. Telephone Service by Income Level........................ 112 32. Estimated Long Distance Phone Calls per Month by Income Level.......OOIOOOOOOOI.....OIOOOOOOOOO......OOOOOOOOO... 113 xi TABLE 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. Page Changes in Level of Consumption of Heat and Electricity Since RetiremntOOOOOOOOO0.0.COOO....OIOOOOOOOOOOOOOOOOOOO 114 Help Used in Keeping Exterior of House and Yard in Good ConditionO.......OOO............OOOOOOOOOOOOOOOOOO0......O 115 1977 Estimated Miles Driven by Income Level............... 119 Use of Public Transportation by Retiree without Car....... 120 Responses by Hypothetical Financial Question by Expendi— ture Category and by Income Level......................... 124 Money Matter Discussions with Professionals Before and After Retirment.........OOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOOI 128 Money Matter Discussions with Nonprofessionals--Retirees with and without Children--Before and After Retirement.... 131 Responses to Hypothetical Situation-éMonthly Expenses Exceed Monthly Income by Response Category and by Income Level.....OOOOOOOOOOOOO...OOOOOOOOOOOCOOOOOOO......OOOOOOO 136 Strategies for Paying Large Periodical Bills by Response Category and by Income Level.............................. 137 1977 Estimated Money Spent on Gifts by Financial Amount and by Number Of ChildrenOOOO......OOOOIOOOO00.000.00.000. 145 xii LIST OF FIGURES FIGURE Page 1 O FinanCial Adjustmwt MOdel. C O O O O C O O O O O O O O O O O O O O O O O O O O O O O O O 12 2. Variables Influencing Retirement Decision................. 22 xiii CHAPTER I INTRODUCTION Statement of the Problem During the past century, major technical, demographic, social, and economic changes have taken place in the United States. In accommo- dating to these changes, new institutions have been established or existing institutions have been modified. One of the new institutions which has evolved is the retirement system--a system which was estab- lished so as to encourage older workers to withdraw from the labor force. Although the establishment of a retirement system has had an impact on all groups, there is one group which has felt the impact more than any other-the retirees--the group of individuals who have volun- tarily or involuntarily withdrawn from the labor force. These individ- uals have hadto make social and psychological adjustments as well as financial ones . For the past four decades, the adjustment to retirement has attracted the attention of a number of researchers, particularly those who were cognizant of two facts: the retired population was rapidly increasing in number as well as in proportion, and the problems of the retirees would shortly become one of the nation's major concerns. These researchers investigated specialized retirement issues such as: attitudes of retirees, preretirees, and/or spouses toward retirement; perceptions of financial adequacy; the effect of retirement on the health of retirees; the relationship between retirement and social interaction; personal, social, and/or psychological adjustments to retirement; reasons for retirement; and satisfaction with retirement. Although much work has already been done in the area of retire— ment, it continues to attract the attention of researchers. This con- tinued interest can be attributed to three factors: the number and proportion of the retired population will increase even further in the next four decades, additional information is needed about some of the adjustment areas, and there is a need to gather information about some of the retired sub-groups such as the group of single female retirees. The same three factors influenced the selection of the problem for this research study—~the financial adjustment of single female retirees to their retirement income. The rationale for this study is divided into two sections: the rationale for examining the financial adjustment to a retirement income, and the rationale for selecting the single female retiree as the unit of analysis. Rationale for Studyinnginancial Adjustment to A Retirement Income The area 6f adjustment to a retirement income was chosen for three reasons. First, there is a need to confirm whether or not current retirees are experiencing any difficulty when they shift from a pre- retirement income to a retirement income. The usual assumption is that a drastic reduction in income occurs when an individual retires and that the retiree will need to overhaul the family budget. Carp (1972) made reference to this adjustment when she wrote: . . . reduced income in retirement will probably require the retiree to overhaul the family budget and change his invest- ments and insurance. There may be family and living readjust— ments, the sale of property, and the consideration of employment opportunities. (pp. 213-214) Past literature tends to suggest that the adjustment to a retirement income is one of the most difficult adjustments that retirees must make. Atchley (1976, p. 121) found that forty percent or more of the retirees mentioned that they had difficulty in adjusting to their retirement income. According to Riley and Foner (1968, p. 54) the drop in income is about half the amount of the preretirement income. Second, there is a need to assemble descriptive data. Atchley (1975) advocates the collection of descriptive data so that a theory can be formulated on how people adjust to a decline in income. He noted that: With regard to adjustment to retirement, theories are needed to describe and explain 1) adjustment to changes in income and 2) adjustment to no longer having job responsibilities. As yet no theory concerning how people adjust to income decline has been developed. What is needed is descriptive data on the phases of adjustment and on the strategies [underlining mine] that are employed. However, at this point the descriptive data necessary to begin to develop such a theory have not been assembled. (p. 18) In 1972, Brotman recommended that the adjustment to a reduction in income be examined; however, the intent of his recommendation was to obtain information about the effects that a shift to a retirement income has had on expenditure patterns and what the personal cost has been to retirees. He wrote: Current retirement income schemes uniformly produce a sudden and severe drop in income level at the moment of retirement; yet insufficient study has been devoted to how the necessary adjustment to a reduced income modifies expenditure patterns and what the personal cost to the individual entails in the health protection, food, quality of life, etc. (p. 18) In their report on the American family and money, Yankelovich, Skelley and White (United States Congress, 1976) expressed concern over the strategies that many families are using to cope with an economic pinch. They noted that: While many families have begun to adjust to the economic pinch, it is feared that their choices of where to cut back and how to budget might be either unwise or ineffective. There have been reports, for example, that some families have decided to postpone medical and dental checkups as a means of saving money. And other families were said to be using up their savings in order to maintain their present standard of living. (p. 193) Exploratory investigations need to be done with the various segments of the retired population in order to identify the financial practices that retirees used when they shifted from a preretirement income to a retirement income and to determine the mechanisms that retirees use to cope with the eroding impact that inflation can have on their retirement incomes. During the past eight years, the rate of inflation has been exceptionally high. According to the United States Bureau of the Census (1978b, p. 205) the cost-of—living from 1970 to 1976, as measured by the Consumer Price Index, advanced from 126.8 to 185.9, an increase of 59.1 points. Third, there is a need for family ecologists/home economists to identify how they can help current retirees cope with the lower incomes they receive in comparison to other age groups such as the families and individuals from the preceding age group. The Bureau of the Census (1978a, pp. 86, 92) reported that the 1976 medium income for aged white families was $8,986 compared to $16,169 for white families whose heads were between the ages of fifty-five and sixty-four. In addition, the median money income for aged white unrelated individuals for the same year was $3,639 in contrast to $6,047 for white unrelated individuals between the ages of fifty-five and sixty-four. There is a strong possibility that future retirees may also need help. Although statements have been made that future retirees will be better educated, will accumulate more assets, and will have higher incomes, there is some speculation that there will be little or no improvement in their financial status. This dismal view is held by Atchley (1972). He argues that: The prospects for the future are not encouraging. The incomes of older people have increased over time, but relative to the general rise in income throughout the country, they have remained at a standstill. Little or no progress has been made in bringing retirement incomes more closely into line with pre-retirement levels. (p. 147) Morrison (1976) also forecasts that an inadequate income will continue to be a problem for future generations of aged persons. His prognosis was based on data from a study of 588 male hourly wage earners. In his study he found that although employees anticipated financial problems at retirement, they were not saving substantial amounts of money, their expectations about supplementary pension benefits through earnings were unrealistic, and their expectations about accumulated savings were unrealistic. Family ecologists/home economists are in a strategic position to help current and future retirees for two reasons. lThe first reason is that the American public is confident about the help and information that is available from family ecologists/home economists. This confid- ence was affirmed in the Yankelovich, Skelley and White (United States Congress, 1976, p. 279) survey on the American family and money. According to the survey, 61 percent of the participants indicated that they were confident about the assistance they receive from.this profes- sional group. The second reason is that one of the skills that family ecologists/home economists possesses is to assist families and individ- uals to utilize their available resources to meet their goals. Rationale for Selecting;§ingle Female Retirees The section on the rationale for selecting the sub-group of single female retirees will be presented in two parts: selection of single retirees, and selection of single females. Selection of Single Retirees The group of single retirees was selected for two reasons. First, in the past, researchers, educators, and policy makers have largely neglected the single elders, many of whom are retirees. Gubrium (1975) noted the sparse amount of attention that has been devoted to the study of them. He commented as follows: Research on single elders is sparse. There are two kinds of studies that have, at least to some extent, focused on them. One devotes attention to the relative isolation of the lives of single elders as it affects loneliness. The second con- siders the impact of marital desolation in old age on the evaluation of everyday life. (p. 31) In general, researchers have concentrated their efforts on the retired married units. Although there has been an upsurge of interest in the single elders, the interest has been on the social adjustment to widowhood, the financial problems of widows, and the problems of older women rather than on the financial adjustment to retirement. Second, the adjustment of single individuals to their retirement income needs to be examined by itself as the literature indicates that there are significant differences between the financial statuses of aged nonmarried units and aged married units. Generally aged non- married individuals receive substantially lower incomes, have smaller financial holdings, and live in rented dwellings. An examination of data collected by the Bureau of the Census (1978a, pp. 86, 92; 1978b, pp. 5, 21, 22) and the United States Department of Health, Education and welfare (1975b, pp. 105, 117) showed that: The 1976 median income received by aged white unrelated indi- viduals was approximately forty percent of the amount received by aged white families. The median money incomes were $3639 and $8986 respectively. Twenty-eight percent of the aged white unrelated individuals in 1976 were receiving incomes below the poverty level compared to approximately six percent of aged white families. Thirty-seven percent of the white nonmarried units in the 1968 Social Security Survey did not have any assets; whereas only twenty-two percent of the white married units did not have any assets. The average financial assets, excluding zero amounts, were $2500 and $4200 respectively. Thirty-eight percent of the white nonmarried units in the 1968 Social Security Survey owned their homes compared to seventy- seven percent of the white married units. ‘ Furthermore, the differences between nonmarried and married units are expected to continue. This expectation is based on a comparison of the financial asset statuses of retirees from two Social Security surveys: the 1968 Demographic and Economic Characteristics of the Aged (United States Department of Health, Education, and Welfare, 1975b), and the Retirement History Study (United States Department of Health, Education, and welfare, 1976). When the financial asset status of the retirees in the earlier study were compared with the financial status of the retirees in the later study, they were found to be similar. Selection of Single Females Although an investigation of both single females and single males would permit a researcher to compare the financial adjustment practices of the two retired sub-groups, the sample for the study was confined to the single females for‘three reasons. The first reason was that rela- tively little is known about retired single females. It is not known whether a shift to a retirement income has had any affect on the goods and services they buy, whether they are using their savings to help pay for their retirement living expenses; or whether they could use any pro- fessional help in planning or adjusting to their retirement finances. This dearth of knowledge about retired single females is attributed to the fact that it is a relatively new sub-group of retirees. It is only within the last four decades that an appreciable number of females have entered the work force and have been permitted to participate in retire- ment programs. The second reason that the unit of analysis was confined to the single female was that three representatives from the State Employee Retirees Association of the Lansing Area, who served as consultants, recommended that the sample be restricted to single females if state retirees were chosen as the target population. Their recommendation was based on the fact that most of the single retirees in their association were single females. According to the three representatives the majority of male retirees were married. The remaining reason was that if participants in a study of single retirees had to be limited to one of the two sexes, the investigator preferred to examine the group which is regarded as being more finan- cially disadvantaged. Findings from national surveys indicate that aged nonmarried females are more likely to receive lower annual incomes and be classified as poor than aged nonmarried males. According to the United States Bureau of the Census (1978a, p. 93) the 1976 median income for aged white unrelated females was $3,497 compared to $4,245 for aged white unrelated males. In addition, the Census Bureau (1978a, pp. 21-22) reported that in 1976 slightly more than 29 percent of the aged white unrelated females received incomes below the poverty level, while 22 percent of the aged white unrelated males were classified as being poor. The single females were confined to the white population as all the volunteers were white retirees. Since there are financial and demo- graphic differences between the white and nondwhite population, data from the white population were emphasized in the rationale for the study and in the review of literature. 10 Purposes of the Study The primary purpose of the study was to explore the financial adjustment of a group of single females to their retirement income. The specific research questions were: 1. 2. 4. What financial strategies did single females execute before they retired? Has it been necessary for single female retirees to supple- ment their retirement income to help pay for their living expenses? When single females shifted from a preretirement income to a retirement income, did they have to make any adjust— ments in some of their consumption patterns? Are the consumption needs of single female retirees being met? The secondary purpose of the investigation was to ascertain whether single female retirees need any help in planning or adjusting to their retirement income. The specific research questions were: 1. 2. Before they retired, did single females discuss any money matters related to their retirement income with a profes— sional person? Since they retired? Before they retired, did single females discuss any money matters related to their retirement income with a non- professional person? Since they retired? An interview schedule was designed to help answer these six research questions as well as to obtain supplementary information about single female retirees which could help to explain their financial status, their retirement consumption patterns, and their implementation of financial strategies. ll Conceptual Framework The framework of the study was a financial systems model. The system under investigation was a subgroup of the retired population-- single female retirees. The subgroup was regarded as being composed of single-never marrieds, widows, and divorcees. In the financial context, the single female retirees were viewed as using resources to achieve their respective goals. The paradigm.was a systems model. The three components of the model were: inputs, processes, and outputs. See Figure 1, page 12. The inputs (or resources) were identified as being income (money income and nonmoney) and non-income (time, energy, ability, skills, interests, etc.). The adjustment processes were limited to two categories: imple- mentation of preretirement financial strategies, and implementation of retirement financial strategies. Preretirement Stratggies 1. Found out what gross retirement income would be. 2. Estimated what retirement living expenses would be. 3. Started to "cut back" on retirenent living expenses. 4. Bought major household items. 5. Purchased a new car. 6. Made a special effort to pay outstanding bills. 7. Changed life insurance policies. 8. Changed health insurance policies. 9. Gave thought to whether to continue living where you were. 10. Attended preretirement meetings or classes. 12 .Hopoz uaoauoahv< Hafioamaam .H shaman womufiuom mamamm mecam "zEHmwm .mv9um ea woufimmngao muemeoeaook MuQA« .hmaoz« z z “newsman Amoflwoumuum oaooaH z o rTIII Hmwoamafim mo wofiumu fTIII flTIIIIo a wannabe IaoawaeaHv mummmuomm Amoouaomomv mHszH m H H > a _ > z z m m 13 11. Read books or pamphlets that discussed financial preparation for retirement or how to manage retirement finances. 12. Discussed money matters related to retirement with a pro- fessional person. 13. Discussed money matters related to retirement with a non- professional person. Retirement Strategies 1. Discussed money matters related to retirement with a pro- fessional person. 2. Discussed money matters related to retirement with a non- professional person. 3. Used savings and/or investments to pay for some of the living expenses . 4. Shifted savings and/or investments. 5. Received financial help from relatives. 6. Received financial help from nonrelatives. 7. Tried to find a job. 8. Sold a possession. 9. Changed quantity or quality of goods and services purchased. The outputs from the implementation and/or nonimplementation of finan- cial strategies were: changes in level of consumption, consumption needs met, consumption needs unmet, and changes in asset holdings. Changes in Level of Consumption Food 1. Type of food purchased at grocery store. 2. Eating out in restaurants. l4 3. Canning and freezing food. 4. Participation in government food programs. Health 5. Seeing doctor. 6. Buying prescription medicines. 7. Getting medical treatment. Personal Care and Clothing 8. Going to beauty parlor. 9. Buying ready-made clothes. Recreation and Education 10. Number of hobbies. 11. Taking vacation trips. 12. Subscriptions to magazines and newspapers. Gifts and Contributions 13. Number of gifts purchased. 14. Money donated to church. 15. Money donated to charitable organizations. 16. Financial help given relatives. Housing 17. (All retirees) Use of telephone. 18. (All retirees) Consumption of heat and electricity. 19. (Home owners) Keeping exterior of house or mobile home and yard in good condition. 20. (Home owners) Redecorating interior of home or mobile home. 21. (Home owners) Buying new piece of equipment. 22. (Renters) Redecorating apartment. 15 Transportation 23. 24. 25. 26. (Car owners) Buying new car. (Car owners) Having car serviced. (Car owners) How much car is driven. (Not car owners) Using public transportation. Miscellaneous Activities 27. 28. Hunting for bargains. Looking for tips on how to manage income. Met Consumption Needs (Unmet Consumption Needs) 1. Number of retirees who have: A. Foregone or changed some of their plans due to financial circumstances. B. Not foregone or changed any of their plans due to financial circumstances. Number of retirees who would do the following with a $500 financial gift: A. Buy a discretionary item, give it to a relative, or save it. B. Buy a non-discretionary item. Number of retirees who would do the following with a large financial gift: A. Buy a discretionary item, give it to a relative, or save it. B. Buy a non-discretionary item. Number of retirees who would do the following with an increase in income of $65 to $75 per month. A. Buy a discretionary item, give it to a relative, or "save it. B. Buy a non-discretionary item. Number of retirees who: A. Did not mention an item they could not buy or do with their present income. B. Mentioned an item they could not buy or do with their present income. 16 Changes in Assets Holdings 1. Number of retirees whose value of asset holdings during the past two years: A, Decreased. B. Increased. C. Remained the same. Changes in Amount of Outstanding Debt 1. Number of retirees whose amount of debt during the past two years: A, Decreased. B. Increased. C. Remained the same (includes retirees who did not have an outstanding debt during the past two years). Assumptions The assumptions for the study were: 1. National or regional data about aged individuals and families are representative data of retired individuals and families . 2. National or regional data about aged individuals who are between fifty-five and sixty-four years of age are repre- sentative data of preretirees. 3. National or regional data about families whose heads are between the ages of fifty-five and sixty-four years of age are representative data of preretired families. 4. National or regional consumer expenditure data about single aged consumers are representative data of single female retirees. 5. A single female who retires between the ages of sixty and seventy is a relatively healthy individual. 6. An interview schedule is an appropriate instrument to use for obtaining financial information from single female retirees. 7. A single female retiree will recall the information that is being solicited by the investigator. 17 8. A single female retiree will answer the interview questions honestly. 9. An interview item will mean exactly the same thing to every single female retiree being interviewed (Babbie, 1973, p. 172). 10. Every similar response given by different single female retirees will mean the same thing (Babbie, 1973, p. 172). Definitions Theoretical Definitions Interview Schedule--a set of questions which are asked and filled in by an interviewer in a face-to-face situation with a single female retiree (Kahn and Cannell, 1957, p. 133). Closed (or gestricted) Question-an interview question which requires a single female retiree to select an answer from a list pro- vided by the interviewer (Babbie, 1973, p. 141). Open (or Unrestricted)_Qggstion--an interview question which requires a single female retiree to provide her own answer (Babbie, 1973, pp. 140-141). Consumption-—the goods and services purchased by a single female retiree. Level of Consumption--the goods and services currently consumed lay a single female retiree. Liabilities-the amount of debt a single female retiree owes on a specified day. Mongy,Income--all the monetary receipts received by a single female retiree over a period of time (Bigelow, 1953, p. 46). Nonmongy Income--the goods and services available to a single female retiree from sources other than through purchases over a period Of time (Goodyear and Klohr, 1965, p. 21). Savings--the stock of liquid assets that a single female retiree Possesses on a specified day. Standard Budget--a budget which defines the goods and services required to provide a specified level of living for retirees. 18 Operational Definitions . Financial Adjustment--the process of arriving at a new balance between income and consumption expenditures when the money income received by a single female retiree changes. Quantification of process: 1. Preretirement strategies implemented by a single female retiree. 2. Retirement strategies implemented by a single female retiree. Quantification of new balance: 1. Increase (or decrease) in outstanding debt. 2. Increase (or decrease) in asset holdings. Retirement--the point when a single female severs her employment with an employer and receives a pension.of some kind (Back, 1969, p. 96). Single Female Retiree--a female who claims she has been single all her life or single at least two years before she retired. Lower Income Group--the group of single female retirees whose 1977 incomes ranged between $6,000 to $9,999 or whose 1977 incomes were less than $10,000. Higher (Upper) Income Group--the group of single female retirees whose 1977 incomes were in excess of $10,000. CHAPTER II REVIEW OF LITERATURE A broad survey of literature and related research was undertaken for three reasons. First, the adjustment of retirees to their retire- ment income has not been extensively explored. Second, the subgroup of single female retirees has largely been neglected by researchers, government officials, and educators. Third, it was necessary to obtain background information about the decision to retire, consumption patterns of aged economic units, economic status of the aged, and financial adjustment to retirement so that an interview schedule could be constructed. The review includes general information about four major subject areas, consumption information about families and single consumers, economic data about married and nonmarried preretirees, and economic data about married and nonmarried retirees. Since the sample was restricted to white retirees, the review emphasizes findings about the white population. The chapter has been divided into five main sections: retirement, consumption, economic status of the aged, financial adjustment to retirement, and summary of the review of literature. 19 20 Retirement The retirement section contains background information about the definition of retirement, age of retirement, the retirement decision, and the retired population. Definition of Retirement The meaning of the term retirement is ambiguous. It has been defined in various ways by different people such as economists, psychol- ogists, sociologists, workers, and employers. Back (1969) discussed two different types of retirement: social retirement and economic retirement. He noted that one of the economist's definitions of retire- ment was "the point at which the worker severs relations with the employer and receives a pension of some kind" (p. 96). Age of Retirement After the enactment of the Social Security Act of 1935, sixty-five years of age became accepted as the conventional or "normal" age of retirement. In the early 19603, the age of eligibility to receive a social security benefit was lowered to sixty-two years of age. Thus many workers, despite a reduction in retirement benefits, chose the option to retire before the conventional age of retirement. A number of studies in the 19508 and 19603 confirmed this trend (Barfield and Morgan, 1969; Corson and McConnell, 1956; Epstein and Murray, 1967; Friedmann and Havighurst, 1954; Riley and Foner, 1968; and Streib and Thompson, 1957). 21 Two trends have occurred since early retirement became a viable option. First, individuals with health problems began retiring at an earlier age than individuals who did not have health problems. The exceptions to this trend were individuals who planned their finances so they could retire early. Second, some of the individuals who retired before the conventional age of retirement were regretting their deci- sion. Atchley (1970) observed this disenchantment with early retire- ment. There is some evidence that the rampant inflation since 1973 is giving people second thoughts about early retirement. The desire to retire is still there, but the long-run purchas- ing power of fixed pensions is increasingly in doubt. (p. 42) The contents of an article in Aging_(August 1975, pp. 16-17) support Atchley's observation. According to the article, many of the early retirees who participated in the Ohio State University's study, The Preretirement Years, were not finding retirement as attractive as they had expected it would be. The Retirement Decision The decision to retire is influenced by many variables. Walker and Price (1974, p. 38) identified three general variables: environ- mental, institutional, and individual. Figure 2, on the following page, shows the interrelationships between these three variables. Numerous studies have been conducted to identify the specific variables which influence the decision to retire, to ascertain the prevalence of mandatory retirement, or to determine the stability of the retirement decision. 22 ENVIRONMENTAL VARIABLES Demographic Environment of the Institutions Government Pro- grams and Policies Cultural Views k—a INSTITUTIONAL VARIABLES Institutional Policies and Values Private Benefits Institutional Preparation Individual Preparation INDIVIDUAL VARIABLES Health Financial Factors Family Attitudes Expectations l Figure 2. In a Social Security Administration's survey of 1969 beneficiaries, RETIREMENT DECISION Variables Influencing Retirement Decision. the main reason given by the participants for retiring was health. However, when Reno (1971, p. 5) analyzed the responses by age of retiree, she found that health reasons decreased with age; whereas job-related reasons and reached general retirement age increased with age. In the 1973 wave of the Retirement History Study, the Social Security Administration's ten-year study of the retirement process, 51 percent of the men and 44 percent of the women cited health as the reason they retired. because they wanted to retire; whereas one-tenth retired for job-related reasons (Bond, 1976, pp. 7-8). Approximately one-third of both sexes retired 23 The Institute for Interdisciplinary Studies (1972) identified six additional factors which influence the decision to retire: age, sex, race, occupational status, employment opportunities, and post- retirement income. Postretirement income was rarely mentioned by retirees if they were asked why they retired or why they left their last job; however, if preretirees were asked about retirement plans or why they preferred to continue working, then expected retirement income was mentioned as an important factor. The relationship of expected retirement income to the decision to retire has been the focus of several studies with preretirees. Gordon (1961) and Thompson and Streib (1958) found that anticipation of a low retirement income was a major reason given by many individuals for not wanting to retire. A positive relationship between expected retirement income and planned early retirement was a finding that emerged from three studies (Barfield and Morgan, 1969; Katona, 1965; and Parnes and Nestel, 1975). The general hypothesis that Parnes and Nestel (1975, p. 190) tested and found support for was that aside from compulsory retirement, the retirement decision was influenced by financial need (number of dependents), financial resources in the absense of work, ability to work, economic and noneconomic rewards in continuing to work, and rela- tive preference for leisure and income. In her study of the prevalence of compulsory retirement, Reno (1972, p. 4) found that only 30 percent of the wage and salary workers who were granted social security awards during the last half of 1969 had been working for an employer who had a compulsory retirement program. 24 The most common compulsory age of retirement was sixty-five, while the second most prevalent one was seventy. A decade earlier, Palmore (1964, p. 5) found that 61 percent of the 1963 retirees had made their own decision to retire; whereas the remaining 39 percent were employer-made decisions. Grad (1977) examined whether the decision to retire that was made by 1970-72 retirees was a permanent one. She found that after one year of retirement only six percent of the retirees had their benefits sus- pended due to earnings from work, and after three years of retirement an additional two percent of the retirees had their benefits suspended. This low proportion of suspension of benefits was accepted as evidence that there was a high degree of stability in the decision to retire. The Retired Population The section on the retired population will be divided into two parts: demographic data about retirees, and demographic data about the aged population. Demographic Dataggbout Retigggg Although demographic data about retirees are collected by various agencies (i.e., Social Security Administration, Civil Service Commission, Bureau of Labor Statistics, Veterans Administration, etc.), the agency which supplies the most complete information about the total number of retirees is the Social Security Administration. This is attributed to the fact that approximately 80 percent of the retirees are covered by OASDHI. According to the United States Bureau of the Census (1977, p. 330), the number of individuals receiving a social security 25 retirement benefit in 1975 totaled 16.6 million. Of these 9.2 million were males, and 7.4 million were females. See the following table. Table 1. 1975 Social Security Retirement Benefits by Selected Charac- teristics Sex Selected Characteristic Male Female Number receiving benefits . . . . . (in thousands) 9,164 7,424 Type of benefit Full . . (in thousands) 4,712 2,527 Reduced . (in thousands) 4,452 4,897 Age of Retiree 62 to 64 . (in percent) 9 3 65 to 69 . (in percent) 32 2 70 to 74 . (in percent) 25.6 24.2 75 and over (in percent) 32 9 Average monthly benefit . . . . . . (in dollars) 228 182 In the 1975 Current Operating Statistics (1977, p. 84) report of the Census Bureau, the breakdown by family characteristics was: 6.1 million retired male workers, 7.4 million retired female workers, and 3.1 retired workers with spouse and/or children. Demogrgphic Data about Aged Population Demographic data about the aged population can be used as supple- mentary information about retirees for two reasons. First, a large percent of the aged population are retirees. Second, the data include all retirees who are sixty-five years of age or older regardless of source of income. However, to use data about the aged population as 26 supplementary data, it would be necessary to make two assumptions: national and regional data about families whose heads are sixty-five years of age or older are representative data of retired families, and national and regional data about unrelated individuals who are sixty- five years of age or older are representative data of retired single individuals. Five demographic statistics about the aged which can provide supplementary information about the retired population are: the number and percent of individuals who are aged, the ratio of aged females to aged males, the composition of the aged population, the average remain- ing years of life of individuals over sixty-five years of age, and the marital status of the elderly. Since the turn of the century, the number and percent of aged white individuals have increased. A recent Census Bureau population report (1975b) indicated that in 1975 the number of aged white individu- als totaled 20.4 million. Of this population, 8.3 million were males and 12.1 million were females. According to projections made by the Bureau of the Census (1975a, p. 66), the aged population will continue to increase in number and percent for the next four or five decades. It is projected that by the year 2000 the number of aged white individ- uals will be 27.1 million (10.6 million aged white males and 16.5 million aged white females). For the past seven decades or more, the ratio of aged white females to aged white males has increased. In 1975, there were 145.6 aged white females per 100 aged white males. Projections made by the Bureau of the Census (1975a, pp. 41, 66) indicate that by the year 2000 27 there will be 155.8 aged white females to every 100 aged white males. The aging segment of the white population is aging. The composi- tion of the aged population for the years 1900, 1975, and 2000 are listed in Table 2 (United States Bureau of the Census, 1965, p. 23; 1975a, pp. 41, 66). Table 2. Percent Distribution of the White Population 65 Years of Age and Older by Age Group and by Select Years Percent by Year Age cm“? 1900 1975 2000 65 to 69 Years 42.6 35.8 28.7 70 to 74 Years 28.8 26.1 26.3 75 Years and Older 28.6 38.1 45.0 The contents of Table 2 show that from 1900 to 1975 two major shifts have occurred within the aging population. The two shifts are: the percent of aged white individuals in the 65 to 69 age group decreased from 42.6 to 35.8 percent, and the percent 75 years and older increased from 28.6 to 38.1 percent. In addition, the contents indicate that the aging of the aged population will continue for several additional decades. Since the turn of the century the average remaining years of life for individuals who are sixty-five years of age has increased. Brotman (1977b, p. 13) reported that in 1974 the average remaining years of life for a sixty-five year old white male was 13.4 years compared to 17.6 years for a sixty-five year old white female. The Bureau of the Census 28 (1976a, p. 41) projects that the average remaining years of life for a sixty-five year old male in the year 2000 will be 13.6 years in con- trast to 18.1 years for a sixty-five year old female. In 1975, the Census Bureau (1975d) published a report on the mari- tal status and living arrangements of 160 million citizens. Table 3 is a summary of the marital status of the aged white population (p. 8). Marital status has been cross-tabulated with sex of the aged individual. Table 3. 1975* Marital Status of Aged White Population by Number by Percent and by Sex Sex Marital Status Male Female Number . . (in thousands) 7,893 11,314* Single 352 661 Widowed 1,005 5,855 Divorced 183 281 Married, spouse present 6,251 4,385 Married, spouse absent Separated 55 78 Other 47 54 Percent . . . . (total) 100.0 100.0 Single 4.5 5.8 Widowed 12.7 51.8 Divorced 2.3 2.5 Married, spouse present 79.2 38.7 Married, spouse absent Separated 0.6 0.7 Other 0.7 0.5 * March 1975. ** Adjustment was made for rounding of figures. The contents of the table show three things about the 1975 marital status of the aged. First, approximately 81 percent of the aged males were married; whereas slightly more than 19 percent were not married 29 (single, widowed, and divorced). Second, 40 percent of the aged females were married while 60 percent were not married. Third, the majority of nonmarried females were widows. The distribution of the nonmarried aged females was: widowed (86 percent), single (10 percent), and divorced (4 percent). Consumption The review of literature in the area of consumption includes general information about consumption; and specific information about the consumption patterns of middle—aged families, retired families, aged families, and aged single consumers. The section has been sub- divided into two parts: measurement of consumption and factors influ- encing consumption. Measurement of Consumption Cochrane and Bell (1956) defined four consumption measurements: Plane (or Level) of Consumption-~the list of goods and services acquired in the market place and actually consumed. (p. 16) Standard of Consumption--the list of goods and services that may be acquired in the market place which people think they should consume. (p. 16) Plane (or Level) of Living--the list of goods, services, and conditions actually consumed or experienced. (p. 16) Standard of Living--the list of goods, serVices and conditions which the individual or group strives to attain, to maintain if once attained, and to regain, if lost. (p. 16) Most consumer expenditures surveys have been measurements of the plane (or level) of consumption of various economic units. 30 Factors Influencing Consumption Only four of the factors which can influence the consumption level of an economic unit were reviewed. The factors were: amount of family income, occupation of head, age of head, and size of family. Amount of Family Income Canoyer and Vaile (1971, pp. 132-133) noted that the first statis- tical study of the relationship between income and consumption was com- pleted by Engel in 1857. According to Burk (1978), Engel examined the relationship between income and food expenditures and formulated a law which stated that ". . . the poorer a family is, the greater the propor- tion of the total expenditures which it must use to procure food" (p.8). The relationship between income class and age of head was examined in the 1960-61 Survey of Consumer Expenditures. An analysis of the North Central regional data for urban areas indicated that as income increased, urban families whose heads were between the ages of sixty- five and seventy-four and single consumers who were between the ages of sixty-five and seventy-four years allocated: l. A decreasing proportion to food and housing. 2. An increasing proportion to clothing. The proportion in- creased from 2.3 percent for the lowest income group (under $1,000)to 13.3 percent for the highest income group ($15,000 and over). 3. A decreasing proportion to medical care up to the income level of $5,000 and then a gradual increasing proportion. When the percentages for the housing, food, and medical care expenditure categories were added together, the total percent allocated to this tri- expenditure category decreased as income increased. The total percent decreased from 87.3 percent for the lowest income group to 51.6 percent 31 for the highest income group (United States Bureau of Labor Statistics, 1964b, p. 28). Occupation of Head Bond (1976) noted the change in expenditure patterns that occurs with retirement. At the same time that income declines, the desire-—if not the need--to spend more for such things as leisure and medical care increases. Expenditures for medical care are rising, and some of the cost of this care may be met by insurance. The cost of leisure activities is not. On the other hand, some of the decline in income brought on by retirement may be offset by decreased spending for work-related items such as commuting costs, food away from home, and clothing. In addition to the expenditure items that may change as indi- viduals stop working, there are the constant items that must always be paid for-food and housing. Fewer persons in a house- hold may mean less expense for food but higher per capita costs. Except for those who will complete mortgage payments during this period, housing costs--utilities, taxes, insurance, and rental payments for renters-dwill also rise. As retirees spend more time at home, they may need more fuel. Eventually they may need household help. Leisure activities are costly, especially those involving travel. Greater participation may be expected only for those whose incomes remain steady or whose reduced income is balanced by decreasing spending. (p. 14) In a technical paper, Ross (1976, p. 13) categorized the expenditure change that occurs with retirement into three groups: the expenditures related to the aging process (elimination of the costs of rearing children, educating children, and mortgage payments); the expenditures from retirement (additional exemptions from Federal Income Tax, eligibility for Medicare, and property relief measures); and the expendi— tures related to changes in life style (elimination of work-related expenses, reduction in payroll tax liability, and increase in expendi- tures for leisure). 32 Two studies which investigated the expenditure pattern of retirees were the LIFE study of Consumer Expenditures (Alfred Politz Research, Inc., 1957) and the 1960—61 Survey of Consumer Expenditures (United States Bureau of Labor Statistics, 1964a, 1964b). In the Alfred Politz Research survey (1957, p. 20) the allocation pattern of the "retired or head not employed" was: food, tobacco, and beverages (31 percent); housing which included home operation, home improvement, home furnishings, and equipment (26 percent); automotive (12 percent); clothing (12 percent); medical and personal care (6 percent); recreation and recreation equipment (5 percent); and other goods and services (8 percent). The allocation pattern for the "retired or head not employed group" was very similar to the allocation pattern for consuming units whose heads were sixty-five or more years of age (pp. 20, 27). An examination of the data from the 1960-61 Survey of Consumer Expenditures indicated that the retired group living in the North Central Region allocated a higher proportion of their incomes to the tri-expenditure category of housing, food, and medical care than did the other occupational groups. The average percent that each group allo- cated to the tri-expenditure category in 1960-61 were: retired (71.5 percent), unskilled wage earners (62.0 percent), self-employed (60.1 percent), clerical and sales (60.0 percent); semi-skilled wage earners (59.0 percent); skilled wage earners (58.3 percent), and salaried pro- fessionals and officials (58.1 percent). In addition, the retired group allocated a smaller proportion of their income to clothing and transpor- tation than did the other six occupational groups (United States Bureau of Labor Statistics, 1964b, p. 13). 33 Data from the Alfred Politz Research survey and the 1960-61 Survey of Consumer Expenditures cannot be compared. Three reasons why the findings cannot be compared are: the expenditure categories were not identical, the occupational groups were not identical, and the increase in the standard of living between 1957 and 1960 could have changed the content of some of the expenditure categories. Age of Head A number of cross-sectional surveys have examined the relationship between age of head and consumer expenditures. Three of these studies were reviewed: Life Study of Consumer Expenditures--A Background for Marketing Decisions (Alfred Politz Research, Inc., 1957); 1960-61 Survey of Consumer Expenditures (United States Bureau of Labor Statistics, 1964a, 1964b); and Expenditure Patterns of the American Family (National Industrial Conference Board, 1965). The findings from the three surveys were similar. In general, the results of the surveys indicated that: 1. The proportion allocated to food, medical care, and other goods and services increases with the age of the head. 2. The proportion allocated to recreation and transportation decreases with the age of the head. 3. The proportion allocated to clothing increases with the age of the head until middle age, and then decreases with the age of head. 4. The proportion allocated to housing decreases with the age of the head until middle age, and then increases with the age of the head. The range of middle age years varied from one survey to another. Jaffe (1972) used the data from the 1960-61 Survey of Consumer Expenditures to compare the relative per capita expenditures of families 34 whose heads were between the ages of fifty-five and sixty-four with two aged families: families whose heads were between the ages of sixty- five and seventy-four, and families whose heads were seventy-five years of age and older. His calculations were obtained by dividing the per capita expenditure of the youngest group into the per capita expendi- tures for each of the older groups. He concluded that the total expendi- tures per capita for the aged families were approximately ten percent apgzg the expenditure per capita for families whose heads were between the ages of fifty-five and sixty-four. Goldstein (1960, p. 291) suggested that more attention should be given to the needs of the seventy-five and over age group. He contended that the consumption pattern of units whose heads are seventy-five years of age or more and the consumption pattern of units whose heads are between the ages of sixty-five and seventy-four are not the same. An examination of the data from the 1960-61 Survey of Consumer Expenditures indicated that the top four expenditure categories for the sixty-five to seventy-four year old units were housing, food, transportation, and medical care respectively; whereas the ranking for the seventy-five years of age or more units was housing, food, medical care, and trans- portation (United States Bureau of Labor Statistics, 1964a, p. 11). Although Goldstein (1960, p. 280) acknowledged that both income and life cycle do influence the consumption patterns of the aged, he argued that income was the more influential factor. He based his argu- ment on the observation that older units who continue to have high incomes tend to follow their former pattern of consumption. He attrib- uted the low level of spending to low income rather than reduced need. 35 Jaffe (1972) examined the relative per capita expenditures of three types of families: heads between the ages of fifty-five and sixty-four, heads between the ages of sixty-five and seventy-four, and heads seventy-five years or older. He concluded that: Older persons continue to spend money on consumer goods, insofar as they have the income well beyond the age 75. There is no sign of an overall cutback in per capita expenditures. From this we can'only infer that increasing age is not neces- sarily accompanied by an inclination to consume less. Retired persons like to consume at least as much as younger persons who are in the labor force. (p. 41) Size of Family In the analysis of the 1960-61 Survey of Consumer Expenditures, the relationship between size of family, age of head, and consumer expenditures was examined. Table 4 is a summary of the percent distri- bution of expenditures in the North Central Region for three 65 to 74 year old economic units: one-person (single consumer), two-person, and three-person (United States Department of Health, Education, and Welfare, 1964b, pp. 10, 12, 13). Table 4. Summary of Expenditures, Percent Distribution by Size of Economic Unit 65 to 74 Years of Age, North Central Region 1960-61 Size of Economic Unit One Two Three Expenditure Catggpry Person Person Person Food 26.0 25.9 24.6 Housing 41.4 31.6 25.5 Clothing 6.4 6.9 9.4 Personal Care 2.9 2.8 2.5 Medical Care 9.9 9.5 9.8 Recreation 2.3 2.7 4.5 Education and Reading 1.3 1.2 2.4 Transportation 5.7 13.9 17.2 Tobacco and Alcoholic Beverages 2.1 2.7 2.4 Other Expenditures 2.1 2.7 1.7 36 The contents of Table 4 show that the one-person unit allocated a larger proportion of its income to the tri—expenditure category of food, housing, and medical care than did the two-person and three—person unit. The total percentages were 77.3 percent, 67.0 percent, and 59.9 percent respectively. A survey of the income allocation of_aged males or aged females was not found. However, the data from the North Central Region could be utilized if an assumption is made that the expenditure pattern of single consumers in the North Central Region is representative data of aged males and aged females who live in the State of Michigan. Economic Status of the Aged The economic status of the aged section is limited to three topics: components of economic status, measurement of economic status, and trends in economic status of the aged. Components of Economic Status The major components of economic status that were reviewed were income, savings, home equity, and liabilities. Income Income is one of the most.important indicators of economic status. The two main types of income are money income and income-in-kind (or nonmoney income). Money income is all the monetary receipts that an economic unit receives during a specified period of time (Bigelow, 1953, p. 46). Income-in-kind includes the goods and services which are available to an economic unit from sources other than through purchases) 37 for a specified period of time (Goodyear and Klohr, 1965, p. 21). Money income is regarded as being the more important type of income. The four most prevalent sources of money income for the aged in the year 1967, as reported in the Social Security Administration's Demographic and Economic Characteristics of the Aged Survey (DECA), were retirement benefits (social security benefits, other public pensions, and private pensions), income from assets, earningg, and (public assistance respectively. The ranking of income sources by their importance was: retirement benefits (46 percent), earnings (29 percendfi income from assets (15 percent), and public assistance (4 percent). The difference between the rankings in prevalence and importance of income source is due to the fact that many older people do receive income from assets but the amount of income received from assets is low (United States Department of Health, Education, and Welfare, 1975, pp. 14, 18). In 1970, the Social Security Administration (United States Bureau of the Census, l975e, p. 287) surveyed approximately 314,000 newly entitled beneficiaries 62 years of age or older to determine their major sources of income. The findings from the survey are contained in Table 5, on the following page. Major sources of income have been cross-tabulated with marital status and sex of beneficiary. The contents of the table show four things. First, a higher percent of the non- married units had only one source of incmme. Approximately one—half of the nonmarried units were receiving only a social security benefit come pared to one-fifth of the married units. Second, about one-eighth of 38 Table 5. Percent Distribution of Major Income Sources 1970* Newly Entitled Social Security Beneficiaries 62 Years of Age or Older by Marital Status and by Sex Married Nonmarried Men and Women and Major Source of Income Wives Husbands Men Women Total Percent 100 100 100 100 Social Security 23 21 48 48 Social Security, second pension,** no earnings 30 23 24 22 Social Security, earnings, no second pension 35 44 26 27 Social Security, second pension, and earnings 13 12 2 3 Median income (in dollars) $5,350 $6,080 $2,350 $2,160 Number (in thousands) 131 91 39 53 * January through June 1970. ** Second pensions include all public retirement benefits other than social security, and private group pension. 39 the married units had three sources of income in contrast to one- fiftieth of the nonmarried units. Third, two-thirds of the married units had two sources of income compared to one-half of the nonmarried units. Fourth, 71 percent of the newly entitled beneficiaries were married individuals and 29 percent were nonmarried individuals. An examination of money income data published by the Census Bureau (1978a) showed that the median money income for aged white families in 1976 was $8,986 compared to $3,639 for aged white unrelated individuals (p. 86). The median money incomes for aged white unrelated males and aged white unrelated females were $4,245 and $3,497 respectively (pp. 92-93). The income distributions for aged white families, aged white unrelated males, and aged white unrelated females are listed in Table 6, on the following page. Generally the elderly do not receive any financial support from their children. If financial support is received, the recipient is more likely to be an aged female rather than an aged male. Savings Findings from the 1968 DECA Survey indicated that homeowners, married couples, aged white units, and retired individuals or couples living alone tended to have larger financial holdings than nonhomeowners, nonmarrieds, aged black units, and retired individuals or couples living with relatives (United States Department of Health, Education, and Welfare, 1975). According to the data from the survey, ownership of assets was common among the aged white population but the value of holdings was low. In 1967, sixty-nine percent of the aged white population owned 40 Table 6. 1976 Income Distribution of Aged White Population by Select Groups Type of Group Unrelated Unrelated Income Level Families Males Females (percent) (percent) (percent) Under $3,000 3.7 28.5 36.2 $3,000 to $5,999 23.3 41.3 41.9 $6,000 to $7,999 16.2 12.0 9.0 $8,000 to $9,999 12.7 6.7 4.3 $10,000 to $14,999 20.2 6.3 5.3 $15,000 to $19,999 10.8 2.6 2.0 $20,000 to $25,000 5.3 1.1 0.5 Over $25,000 7.9 1.5 0.8 Median income (in dollars) $8,986 $4,245 $3,497 Number (in thousands) 7,362 1,332 5,042 41 some form of asset, the most common form'being money in the bank. Thirty-one percent of all aged units did not have any assets. The percent of married couples not having any assets was 22 percent com- pared to 34 percent for nonmarried men and 38 percent for nonmarried women (p. 115). In 1967, the median value of assets for married couples who were receiving both an OASDHI benefit and another public pension was $3,725 if zero amounts were excluded; whereas the median value for nonmarried women was $4,976. The median value for married couples whose only retirement benefit was an OASDHI benefit was $3,075, compared to $2,500 for nonmarried men and $2,000 for nonmarried women (p. 117). Table 7 is a summary of the median value of financial assets by type of retire- ment benefit, by marital status, and by sex of retiree. Table 7. 1967 Median Value of Financial Assets* by Type of Retirement Benefit and by Marital Status Married Nonmarried Type of Retirement Benefit Couples Men Women OASDHI Benefits (no other pension) $3,075 $2,500 $2,000 OASDHI Benefits and Private group pension 6,000 4,400 4,150 Other public pension 3,725 ** 4,976 Public pension other than OASDHI 3,000 ** 2,550 No retirement benefits 5,500 ** 900 * Median of units who reported having financial assets. ** Not shown where base is less than 100,000. 42 Home Equity Among the aged, homeownership is common. In 1970, according to the United States Bureau of the Census (1974c, p. 41), sixty-eight per- cent of the aged households were owner-occupied. In the 1970-71 Surveys of Consumers, Mandel et a1. (1973, p. 28), found that seventy- six percent of the aged owned their homes, while 9 percent were renters. Findings from studies suggest that homeownership among the aged is related to income level, race, and marital status. Among the aged white surveyed in the 1968 DECA study, 77 percent of the married units owned their homes compared to 38 percent of the nonmarried units. The median home equity for married units was $12,000; whereas the median home equity for both nonmarried males and nonmarried females was $10,000 (United States Department of Health, Education, and Welfare, l975b, pp. 105-107). In 1970, sixteen percent of the aged who were interviewed in the Institute for Social Research's consumer survey were living in mortgaged homes. The median mortgage debt was $4,500 (Katona et al., 1971, p. 43). Liabilities Older people tend to have a lower amount of debt than other age groups. According to the 1971-72 Surveys of Consumers, 82 percent of the families whose heads were between the ages of sixty-five and seventy- four years did not have any debts. A large proportion of the families did not use gasoline credit cards (72 percent), bank credit cards (89 percent), or store credit cards (63 percent) (Mandel et al., 1973, pp. 12, 16, 18, 19). 43 Measurement of Income Adequacy The income adequacy of an aged family or an aged unrelated person can be measured by two broad approaches: objective measures and sub- jective measures. Objective Measures The general approach with objective income measures is to compare the gross money income received by an economic unit with a standard money income. The most important advantage of Objective measures is that they are easy to use. The main disadvantage is that money statis- tics do not give a complete picture of the financial statuses of indi- viduals and/or families. Four reasons why objective measures are not accurate are: they exclude the contributions of assets and nonmoney forms of income, they overlook the impact of family debts, they overlook the fact that the needs and desires of an economic unit may change over time, and they exclude the nondiscretionary benefits that accrue to an aged family (reduced income taxes, reduced FICA taxes, lower housing costs for aged persons who own their homes mortgage free, and reduced medical care costs due to Medicare). A number of money income standard measures have been used to distinguish the individuals who have an adequate income from those who do not. The measures include poverty indexes, budgets, absolute in- comes, and a preretirement earnings ratio. The two most commonly used Objective income measures are the Social Security Administration's poverty and low income index (SSA), and the Budget for Retired Couples. The SSA Index was deve10ped in 1964. The index includes 124 dif- ferent thresholds. The cutoff points are determined by taking the 44 United States Department of Agriculture's economy budget and making adjustments for family size, family composition, age of family head, farm-nonfarm living, and urban-rural residence. The 1976 weighted average thresholds for non-farm aged units were: single aged male, $2,758; single aged female, $2,722; two-person family with aged male head, $3,447; and two-person family with aged female head, $3,428 (United States Bureau of the Census, 1978b, p. 206). The Budget for Retired Couples was developed in 1946-47. The original budget was for a retired couple living at an intermediate level of living. In the spring of 1967, budgets for two additional levels of living were formulated--lower level and higher level. McGraw (1977, p. 53) reported that the amounts for the three budgets in August 1976 were: lower, $4,695; intermediate $6,738; and higher $10,048. The approximate amounts for a retired single individual are $2,583, $3,706, and $5,526 respectively. Subjective Measures Subjective measures include the measures where individuals are asked to evaluate how adequate they think their income is. The assump- tion behind these measures is that individuals can determine the adequacy of their finances. The major advantage of using subjective measures with older people is that they are easy criteria to use, while the major disadvantage is that an older person tends to understate what a reasonable income would be. Peterson (undated, pp. 7-8) noted that the three objections that most economists have to using a perceptual or subjective method are: persons judging their income adequacy do not use the same scale, some 45 individuals may think they need a very large or unlimited income to meet their needs, and some retirees may feel that their income is ade- quate regardless of how low it actually is. Subjective measures were used in a number of small surveys (Barfield and Morgan, 1969; Hanson, 1962, 1965; Hunter and Maurice, 1953; McCann, 1967; Peterson, 1972; Shanas, 1962, and Youmans, 1967). However, different subjective questions were used in most of the surveys such as "How would you describe the ability of your family's present income to meet food, housing, and clothing needs of your family: it's more than adequate, it's just enough, it's not quite enough, or it's not at all adequate?" (Peterson, undated, p. 52); "Do you have to go without things because you don't have enough money?" (Youmans, 1967, p. 101); and "Which of the following statements best describes your ability to get along on income: you can't make ends meet, you have just enough to get along on, or you have more than you need to get along on?" (Hunter and Maurice, 1953, p. 95). Since different questions were used, results from the surveys can not be compared. Peterson (1972) surveyed aged individuals to ascertain their past, present, and future perceptions of financial adequacy. He found that the perception of financial adequacy declined over time. The percent— ages were: past (51 percent), present (35 percent), and future (25 per- cent). The individuals who were more likely to consider their financial status as being inadequate were: nonmarrieds, females, blacks, low. income people, aged individuals living alone, aged individuals with less education, and those renting or buying a home. 46 Trends in Economic Status Three trends which provide additional insight into the economic status of aged families and aged individuals are: change in median income, relative income status, and rate of poverty. Chaage in Median Income The median income for aged white economic units has been increas- ing for several decades. From 1970 to 1976, the median income for aged white families increased from $5,263 to $8,986, an increase of 70.7 percent; whereas the median income for aged white unrelated individuals advanced from $2,005 to $3,639, an increase of 81.5 percent (United States Bureau of the Census, 1971, p. 37; United States Bureau of the Census, 1978a, pp. 86, 92). During the same period of time the Consumer Price Index rose from 126.8 to 185.9, an increase of 59.1 points (United States Bureau of the Census, 1978b, p. 205). Relative Income Status The median money income received by aged white families or aged white unrelated individuals is substantially less than that received by white families whose heads are between the ages of fifty-five and sixty- four or white unrelated individuals between the ages of fifty-five and sixty-four years of age. Statistics published by the Bureau of the Census (1978a, pp. 86, 93) showed that in 1976 the median money income received by aged white families was $8,986 or 53.1 percent of the median money income received by aged white families whose heads were between the ages of fifty-five to sixty-four; whereas the median money income received by aged white unrelated individuals was $3,639 or 60.2 percent 47 of the median money income received by white unrelated individuals between the ages of fifty-five and sixty-four. Rate of Poverty The majority of the aged are not classified as being poor. poverty rates for the aged white population by economic unit type for 1970 and 1976 are listed in the following table (United States Bureau of the Census, 1978b, pp. 5, 21, 22). Table 8. Percent White Population 65 Years of Age and Older below Poverty Level by Economic Unit Type and by Select Years Percent by Year Economic Unit Type 1970 1976 Unrelated Individuals 44.8 27.7 Male 36.0 22.1 Female 47.5 29.2 Families 12.9 6.4 Male Head 13.2 6.6 Female Head 12.6 6.1 All Aged 22.5 13.2 The contents of Table 8 show three things: first, the percent of aged white who are poor has declined since 1970; second, a higher percent of white unrelated individuals have received and are continuing to receive incomes below the poverty level compared to aged families; and third, a higher percent of the aged white females have received and are continu- ing to receiVe incomes below the poverty level compared to aged white males. The 48 Financial Adjustment to Retirement The review of literature and related research on the financial adjustment to retirement has been organized into three sub-sections: preretirement planning, financial management during retirement, and financial management of inflation. Preretirement Planning Morgan et a1. (1962) found that two-thirds of the preretirees in their survey had made no retirement plans; whereas about one-half of the retirees in the Institute of Life Insurance survey (1964) had done little or no planning. In the latter study, only fifteen percent had made extensive plans. The preretirement situation.was summarized by Morgan et a1. (1962) There are many families who approach retirement with vague notions about their retirement income. . . . The most con- crete plans for retirement are participation in retirement programs and social security. . . . They are unlikely to have either savings, substantial equity in their homes, or protection against medical expenses. Other studies at the Survey Research Center indicate that most people find it very difficult to think ahead and to estimate how much income they will need when they retire. Most of them do not know what income to expect from social security, other pensions, or their own savings. While expectations become somewhat firmer among those over fifty-five years old, the general impression is that most people have only a vague idea whether their retirement will be financially difficult or not. (p. 444) Schulz (1976a, p. 70) attributed the lack of preparedness to the presence of uncertainty. He noted that it was difficult for a prere- tiree to plan an effective or efficient retirement program when he does 49 not know for certain how long he will live, what his future income will be, when he will retire, what his basic retirement needs will be, which lifestyle he will prefer, what the rate of inflation will be during his retirement years, or what will happen to his relative economic status during retirement. The remainder of the review on preretirement planning will be a presentation of financial information from research studies. The order of review is: Retirement History Study, Surveys of Consumers, and other studies. Retirement HistorygStudy Findings from the 1969 wave of the Retirement History Study, the Social Security Administration's longitudinal study about the retirement process, provide information about the amount of savings, home equity and liability of preretirees who are between the ages of fifty-five and sixty-three (United States Department of Health, Education, and Welfare, 1976). Savings. Asset ownership was common among the preretirees sur- veyed by the Social Security Administration. Seventy-five percent of the preretirees reported having some type of savings but the value of the assets was low. The median value of assets was $1,261 if zero amounts were included compared to $3,116 if zero amounts were excluded (p. 75). Findings from the Retirement History Study indicate that two factors which can influence the amount of asset holdings of a preretiree are sex and marital status. Age was not an important factor. The median value of assets, excluding zero amounts, for three types of aged 50 units were: married men $3,660; nonmarried men, $2,589; and nonmarried women, $2,296. A significant percent of the preretirees did pg£_have any finan- cial assets: married men (18 percent), nonmarried men (38 percent), and nonmarried women (33 percent). Home Equity. Home ownership was common among the preretirees. Married men were more likely to be homeowners than nonmarried persons. The median home equity was $13,700. Forty percent of the preretirees owned a mortgage, the median amount of the mortgages being $5,400 (p. 73). It was anticipated that by the time the preretirees reached the age of retirement, many of the mortgages would be paid. Liabilities. The amount of debt owned by preretirees was low. The median debt for all preretirees was $642. Amount of debt was re- lated to sex and marital status. The median debt for nonmarried women was $381 compared to $527 for nonmarried men and $881 for married men. Approximately ten percent of the preretirees had debts that exceeded their income (p. 78). Auto debts and store debts were the most common form of debts among the men; whereas store debts were most frequent among the women (p. 76). Surveys of Consumers Past issues of the Surveys of Consumers have contained information about homeownership and installment debt of families whose heads are between the ages of fifty-five and sixty-four years. Data about their home equity and liabilities can be assumed to be representative informa- tion about preretirees. 51 Home_§quity. Homeownership was common among the families whose heads were between the ages of fifty-five and sixty-four. In the 1971-72 survey, 74 percent of the respondents were homeowners; whereas 22 percent were renters (Mandel et al., 1973, p. 28). One-third of the respondents in the 1970 survey were in the process of buying their houses or trailers. The median mortgage debt was $5,000 (Katona et al., 1971, p. 43). Liabilities. The majority of preretirees (64 percent) did not have any debts. A large proportion of the preretirees did not use gasoline cards (65 percent), bank credit cards (85 percent), or store credit cards (52 percent) (Mandel et al., 1973, pp. 10, 16, 18, 19). Other Studies When the Louis Harris and Associates (1973) surveyed American families about attitudes about aging, the aged respondents in the sample were asked to specify what they would do differently if they could repeat their preretirement experience. The responses most frequently given by the aged respondents were: nothing (46 percent), more savings and investments (27 percent), get more or better education (14 percent), and get a different or better job (9 percent). The particular items mentioned under more savings and investments were: save more money, get insurance or more insurance, invest in land or buy property, buy a new house, and make more or better investments. Parnes and Nestel (1975) compared the preretirement and retirement incomes and assets of 110 "early" white retirees. According to the researchers, the median retirement income of the retirees was $4,444 compared to a median preretirement income of $6,956. The median value 52 of assets in 1971 was $13,330; whereas the median value in 1966 had been $11,685. A follow-up study of these retirees (Agigg, 1975, pp. 16-17) found that many of them were not finding retirement as attractive as they had anticipated it would be. Dissatisfaction was attributed to poor health and poverty. Financial Management during Retirement According to Riley and Foner (1968, p. 454) most retired economic units receive a gross income that is one-half the amount of their pre- retirement income. The adjustment that a retiree experiences when he encounters a drastic reduction in income can partially be explained by some of the consumption function theories--that is whether the retiree relates his consumption of goods and services to his current level of income, his past peak income, or to the current income of the community. A retiree who relates his consumption to past peak income rather than to current level of income would have a more difficult time adjusting to a drastic reduction in income. According to the relative income hypothesis,which was formulated by Deusenberry (1957L adjusting to a reduction in income involves a change of consumption habits. To illustrate the process, Deusenberry used a hypothetical, but oversimplified, example of how an individual would adjust to a fifty percent permanent reduction in income: Immediately after the change he will tend to act in the same way as before. When the situations which led him to make expendi- tures before recur, he will continue to respond by making the same expenditures. But if he does then he will find that his assets are being reduced; or if he had none he will find that 53 late in the income period he has to forego purchases which seem more important than those made earlier. In retrospect, he will regret some of his expenditures. In the ensuing periods that . same stimuli as before will arise, but eventually he will learn to reject some expenditures and respond by buying cheap substi- tutes for the goods formerly purchased. Eventually he will reach a new consumption pattern. . . . This pattern is likely to become habitual in the same way as the original pattern. (p. 21) Deusenberry also contended that if an individual frequently observes his neighbors purchasing superior goods, he will eventually increase his level of consumption. Jaffe's (1972, p. 41) Observation that re- tired persons like to consume at least as much as younger persons who are in the labor force lends some support to Deusenberry's theory. Relatively few studies have been conducted to determine how retirees adjusted to their retirement income or to ascertain what coping mechanisms were used. Goldstein (1960), after examining the data from the 1950 Survey of Consumer Expenditures, concluded that even if the income level of aged economic units was low, they were more successful than units whose heads were under the age of 55 years in keeping their expenditures within income limits. He qualified his finding by stating: This does not necessarily indicate that the consumption level of the aged is adequate. Rather it suggests that the aged, unlike the younger groups, are forced [underlining mine] to live within the amount available to them from money income. (p. 271) Streib and Schneider (1971, p. 89) found that most of the retirees in their survey had been very resourceful in adapting to their reduced income. In a prior study, Thompson and Streib (1958, p. 26) noted that in the initial adjustment to a reduced income, retirees experienced a feeling of economic deprivation; however, the feeling became less pro- nounced after the immediate impact of retirement was over. 54 Messer (1969) surveyed three-thousand early retirees of the Civil Service Commission to ascertain how they were doing financially. Approximately eighty-four percent of the retirees in her survey reported that they were doing alright or better; whereas thirteen percent had to make drastic reductions in their standard of living. Many of the retirees who responded that they were doing well either had supplemen- tary incomes from investments or were working. In her study of financial management practices of a group of middle-class and upper—class retired couples, Pulley (1973) found that the couples were not having any financial problems; however, it was con- jectured that in the long-run the financial resources of many of the retired couples would be depleted (Plonk and Pulley, 1977, p. 258). Some of the strategies that the retired couples had used to adjust to an increase in expenditures were: converted lowereturn assets to high— return assets; took part-time jobs; substituted other resources, such as time and skill, for money; reduced expenditures in the areas of cloth- ing, food, travel, and entertainment; and sold their automobile. An important finding from Pihlblad, Adams, and Rosencranz's(l972) study p0m .memeumumz waeeuoeo .maeeuoeo ~.mm ~.~m «.mm s.o~ m.m~ m.~m H.Nm o.m~ fiance .waemaom s.e m.~ ~.m o.s m.m o.m m.m e.m mmmmuw>mm oeeoaooea was ouumnoe «.0N m.m~ e.e~ q.m~ m.e~ H.mN a.e~ o.q~ Hence .eooe Hm>o «sumo soumm «mums «eumm emumm mm Hence muommumo ouaueeaoaxm was me Hoes: memo» ow comm mafismm mo ow< Holcoma dogwom Houueoo :uuoz .mumaemaoo mameem woo moaaafiom some: HH< .ommm hawamm mo ow< he :ofiusnfiuumfin mooouom .mououupooaxm hawamm mo humafiaw .m manna 58 supported the observation that inflation does force older consumers to cut back on their level of living. The areas of cutback were food away from home, purchase of household equipment and furniture, recreation, food at home, and fuel and utilities. The areas of least cutback were medical care, homeownership, rent, clothing, and education. Summagy Four areas of literature were reviewed: retirement, consumption, economic status of the aged, and financial adjustment to retirement. The decision to retire is a complex one. It is influenced by a number of interrelated factors including health, age, sex, race, occu- pational status, employment status, expected retirement income, and retirement regulations. The most important factor, according to Social Security surveys, was health. The majority of the decisions to retire have been retiree-made rather than employerdmade. Although data from Social Security surveys provide demographic information about retirees, the information is restricted to their retirees and is limited in scope. One supplementary source of informa- tion is the national or regional data about aged families and aged un- related individuals. An analysis of national data showed that since 1900 the number and percent of the aged white population have increased, the ratio of aged white families to aged white males has increased, the aged white population is aging, and the average remaining years of life for individuals over the age of sixty-five years has increased. Projections indicate that these four trends will continue for the next 59 four or five decades. These trends are important as they influence national policy on age of retirement, contributions to retirement funds, and amount of retirement income. Consumption can be measured either by the items an individual actually consumes (plane or level of consumption) or by the items that an individual thinks he should consume (standard of consumption). Most consumption expenditure studies have been measurements of the plane or level of consumption. Four factors which influence the amount and kind of goods and services consumed by economic units 'were reviewed: amount of family income, size of family, age of head, and occupation of head. It was noted that as income or family size increased, the total percent of income spent on the tri-expenditure category of housing, food, and medical care decreased; whereas the total percent increased with age of the individual. The retired population allocated a larger percent of their income to the tri-expenditure category than did the nonretired population. Income is one of the most important indicators of economic status. The four most prevalent sources of money income for the aged were identified as being retirement benefits, income from assets, earnings, and public assistance. An examination of financial information about the aged population showed that there are differences between aged white families and aged white unrelated individuals. Aged white families are more likely to have higher annual incomes, have larger financial holdings, and live in owner-occupied households than aged white unrelated individuals. 60 There are financial differences between aged white unrelated males and aged white unrelated females but the differences are less dramatic. The two general types of measures that are used to measure income adequacy are objective income measures and subjective income measures. The general approach with an objective income measure is to compare the actual money received by an economic unit with a standard money income; whereas the approach with a subjective measure is to ask an individual to evaluate how adequate he thinks his income is. The measures most frequently used are objective measures such as the Social Security Administration's poverty and low income index (SSA) and the Budget for Retired Couples. There has been some improvement in the financial position of aged people. Their annual incomes have increased at a rate slightly higher than the increase in the Consumer Price Index, and the number and per- cent of aged people who are poor have declined. Findings from two surveys conducted with preretirees indicate that the majority of them have not made any retirement plans, and that most preretirees have only a vague idea of whether their retirement will be financially difficult or not. Several past studies have shown that most retirees do have some asset holdings but the value of the holdings is low. Findings indicate that the amount of savings is related to homeownership, race, marital status, and living arrangement. Age of head was not a factor. Homeownership is common among retirees. Results from surveys sug- gest that homeownership is related to income, race, and marital status. 61 The amount of debt that retirees or aged individuals have is low. Amount of debt is related to sex and marital status. Relatively few postretirement studies have been conducted to ascertain how retirees have adjusted to their retirement income or to determine what coping mechanisms were used when preretirees shifted to a retirement income. There is some speculation that in the long run retirees will encounter financial problems. This speculation is based on: the rate of inflation, the percent of retirees receiving a fixed income, and the percent of retirees receiving an income from only one source. Inflation has had an eroding impact on the income of retirees. Findings from one study indicated that inflation does force older con- sumers to cut back on their level of living. The reductions, however, are made in the area of discretionary expenses. CHAPTER III METHODOLOGY The study was undertaken primarily to explore the financial adjustment of a group of single females to their retirement income and, secondly, to ascertain if single female retirees need any professional help in planning or adjusting to their retirement income. The chapter on methodology will be divided into five sections: selection of sample, description of sample, development of the interview schedule, procedures for data collection, and procedures for analyzing data. Selection of Sample The original criteria for participants of the study were: must have been retired at least two years but not more than four, must have retired at the normal age of retirement, must be a single female retiree, and must live in the Tri-County Area (Ingham, Eaton, and Clinton Counties). Upon recommendations made by the panel of experts and due to field conditions, the first two requirements were modified as follows: must have been retired at least one year but not more than eight, and must have retired at the age of 60 years or older. For the final set of criteria and the rationale for the selection of each criterion see Table 10. 62 Table 10. 63 Criteria and Rationale for Selection of Participants Criterion Rationale Participant must have been retired at least one year but not more than eight. Participant must have retired at the age of 60 years or older. Participant must be a single female retiree. Participant must live in the Tri-County Area (Ingham, Eaton, and Clinton Counties). To control for some differences in income level, standard of living, and needs. To reduce the length of the recall period. To obtain a complete year of retirement income . To obtain a sample of retirees who would be less likely to have health problems or limiting physical impairments. To increase the probability of obtaining participants. Note: Many state employees retire before the normal age of retire- ment. To obtain information about a special sub—group of retirees. To increase the probability of obtaining participants. Note: the majority of single retirees in the state retiree association were females. To simplify the design and analy- sis. Note: There are financial differ- ences between married and single females. To control for place of residence and geographic region. To reduce travel time. Note: To increase the probability of obtaining volunteers, it was necessary to relax the original criteria. 64 Subjects for the study were secured by asking single female retirees who had retired from employment with the State of Michigan to volunteer to be participants. Although using volunteers as subjects can introduce bias, this selection method was used as state regulations prohibit the distribution of names and addresses of state retirees to unauthorized individuals. The investigator notified the state retirees about the study by making a personal plea at a monthly meeting of the State Employee Retirees Association of the Lansing Area; by placing two announcements in the Saga Nags, the official newsletter for the Retirees Association (see Appendix A); and by having members of the association ask their friends to participate in the study. Volunteers were screened to determine whether they met the final set of criteria that had been established for participants. Description of Sample The sample consisted of fourteen single white female retirees who were residing in the Tri-County Area (Ingham, Eaton, and Clinton Counties). The retiree I.D. number, single status classification, number of living children, age of retirement, and year of retirement for each retiree are listed in Table 11, on the following page. Analysis of the single status classification, age of retirement, and year of retirement showed that: The sample was composed of six widows (43 percent), five single-never-marrieds (36 percent), and three divorcees (21 percent). 65 Table 11. Specific Characteristics of Retirees Single Number of Retiree Status Living Retirement I.D. Number* Class Children Age Year 4014W3-67/71 Widow 3 67 1971 4024WO-62/70 Widow 0 62 1970 403-W3-62/72 Widow 3 62 1972 504-D2-65/77** Divorcee 2 65 1977 505-80-69/74 Single NM - 69 1974 506-W2-69/72 Widow 2 69 1972 507-Wl-65/73*** Widow 1 65 1973 608-Dl-62/76 Divorcee l 62 1976 609-Dl-63/72 Divorcee l 63 1972 610-80-62/74 Single NM - 62 1974 . 7ll-SO-64/72 Single NM - 54 1972 712-SO-64/75 Single NM - 64 1975 713-W1-67/75 Widow l 67 1975 714-SO-65/76 Single NM - 65 1976 *Retiree I.D. Number - (Income Group/ Interviewee Number)-(Single Status Classification/Number of Living Children)-(Age at Retirement/ Year of Retirement). **Retired very early in 1977. ***Volunteer was not a retired state employee. However, volunteer was accepted as a participant because her income characteristics were similar to that of a state retiree. Note: Income Categories: 4-$6,000 to $7,999; 5--$8,000 to $9,999; 66 Seven females retired before they were 65 years of age, while seven retired at the age of 65 years or older. Seven females retired from 1970 to 1973, compared to seven who retired from 1974 to early 1977. The remainder of the section on description of sample will be divided into five parts: financial planning and record keeping, financial status (income, asset holdings, and outstanding debt), housing status, health status, and summary. Financial Planning and Record Keeping Table 12 is a summary of the type of financial plan by time period that the retirees claimed they were using at the time of their retirement. The footnote at the end of the table includes information about the type of financial plan retirees are currently using. Table 12. Type of Financial Plan at Retirement by Time Period and by Income Level 1977 Income Level Retirees Type of Plan by Under Over Total Percent Time Period $10,000 $10,000 Number of Total (Nh7) (u-7) (N=l4) Mental Monthly 4* l 5 35.7 Yearly 2** l 3 21.4 Written Monthly 0 1 1 7.1 Yearly 0 0 0 0 No plan (includes no plan, no particular plan, not sure whether I use a plan) 1 4 5 35.7 Note: Currently twelve of the retirees claim they are using the same financial plan as they did at the time of their retirement. The two changes which were reported were: *one retiree shifted from a mental plan to a written/mental plan; **one retiree shifted from a yearly plan to a five-year plan. 67 The contents of the table indicate five things. First, the majority of retirees (64 percent) used a financial plan. Second, the most fre- quently used financial plan was a mental plan. Third, the majority of retirees used a.monthly financial plan. Fourth, the use of a financial plan appeared to be related to income level of the retiree. Fifth, 86 percent of the retirees claimed they were using the same type of financial plan as they had been using at the time of their retirement. The reasons that the retirees gave for not using a financial plan are listed in Table 13. An examination of the comments tends to suggest that these retirees have not encountered any financial difficulties. Table 13. Reasons Financial Plan Not Used at Retirement and Currently by Retiree Retiree Reason I.D. Number At Retirement Currently (Nss) (N=5) 402-W3-67/7l Knew what I could spend. --- Never really had a plan. Lived within.my income. 609-SO-65/76 Never stopped to think about --- it. 711-SO-64/72 --- As I want things I get them. 712-SO—64/75 Knew it was going to be Am careful on what I buy. alright. Got along O.K. before so knew I would get along O.K. when I retired. 714-80-65/76 I don't spend a lot of -- money. Income is more than expenses. 68 Most of the retirees reported that they do not keep extensive financial records. Retirees with income property and/or an unpaid mortgage were more likely to keep extensive records. The expense records that many retirees kept were: income records, household expenses, utility bills, and car expenses. At least three retirees did not keep records of food expenditures and/or day—to-day expenses. The most common type of record that retirees kept was their check- book. Other records, in descending order of frequency, were: canceled checks, receipts, and bills. Financial Status Per recommendations found in the literature, closed questions were used to approximate the 1977 gross income, asset holdings, and out- standing debt of each retiree. The responses for each financial question by retiree are listed in Table 14, on the following page. Income In 1977, all fourteen retirees had annual incomes in excess of $6,000. The income distribution of the retirees, by income category, was: $6,000 to $7,999 (3); $8,000 to $9,999 (4); $10,000 to $14,999 (3); and over $15,000 (4). The annual incomes of all the retirees were higher than the Social Security Administration's poverty and low income threshold for single aged females. According to the Bureau of the Census (1978b, p. 206), the 1976 threshold for a single aged female was $2,722. In addition, the annual incomes of the retirees were higher than the three budget levels which have been established for retired individuals. 69 Table 14. 1977 Income, Asset Holdings, and Outstanding Debt by Retiree Retiree Asset Outstanding I.D. Number Income Holdings Debt 401-W3-67/71 $6,000 to 7,999 $20,000 to 30,000 None 402-WO 62/70 $6,000 to 7,999 Over $30,000 None 403-W3-62/72 $6,000 to 7,999 Over $30,000 None 504-D2-65/77 $8,000 to 9,999 $10,000 to 20,000 $4,000* 505-80-69/74 $8,000 to 9,999 Over $30,000 $2,000** 506-W2-69/72 $8,000 to 9,999 Over $30,000 None 507-Wl-65/73 $8,000 to 9,999 Over $30,000 $11,000*** 608-D1—62/76 $10,000 to 12,999 $5,000 to $10,000 None 609-D1-63/72 $10,000 to 12,999 Over $30,000 None 6lO-SO-62/74 $10,000 to 12,999 Over $30,000 None 7ll-SO-64/72 Over $15,000 Over $30,000 None 712-80-64/75 Over $15,000 Over $30,000 None 713-W1-67/75 Over $15,000 Over $30,000 None 714-80-65/76 Over $15,000 Over $30,000 $14,000**** * Retiree could pay off mortgage. Mortgage being used for tax purposes. ** Retiree will pay off the mortgage as soon as she receives an inheritance payment ($60,000). *** Retiree could pay off mortgage. Mortgage being used for tax purposes. **** Retiree could pay off mortgage. Farm being used as a tax shelter. 70 The approximate budget levels for retired single individuals in August 1976 were: lower, $2,583; intermediate, $3,706; and higher, $5,526 (McGraw, 1977, p. 53). The main source of income for a retiree was influenced by years of service, preretirement income, and amount of investments. Table 15 is a summary of the main sources of income of retirees by income level. Table 15. Main Sources of Income by Income Level 1977 Income Level Total Under Over Number Source of Income $10,000 $10,000 Retirees (ns7) (n-7) (N=14) Social Security 7 0 7 Pension 0 3 3 Pension/Social Security 0 2 2 Earnings O 1 1 Other* 0 l l * Current source is a land contract. Land contract will be paid next year. After the land contract is paid, main source of income will be retiree's pension. As is evidenced in the above table, the main source of income for the retirees in the lower income group was their social security stipend. The main source of income for the retirees in the higher income group varied. The two most frequently mentioned sources were pension and pension/social security. 71 Asset Holdings Eleven retirees (79 percent) had asset holdings which totaled over $30,000, while three retirees (21 percent) had asset holdings under $30,000. The distribution of the later three was: one had asset holdings between $5,000 to $10,000; one between $10,000 to $20,000, and one between $20,000 to $30,000. According to the retirees, the value of their asset holdings had not decreased during the past two years. Ten retirees (71 percent) reported that the amount of their asset holdings had remained the same for the past two years; whereas four retirees (29 percent) stated that their asset holdings had increased in value. The increases were attributed to letting earnings from.interest accumulate, an increase in value of stocks, and an increase in the value of property. Outstanding Debt Ten retirees did get have an outstanding debt. The remaining four had an unpaid mortgage. The mortgages were: a house ($4,000), a mobile home ($2,000) , a house ($11,000), and a farm ($14,000) . The retirees who had an unpaid mortgage implied that they were not concerned about their indebtedness as they were not anticipating any financial problems. In three instances, the unpaid mortgage was being used for income tax purposes. When the retirees were asked whether the amount of debt they had was substantially more than, substantially less than, or about the same as the amount of debt they had two years ago, five retirees replied that the amount of debt they had was substantially less; whereas the remaining nine had not had an outstanding debt for the past two years. 72 Housing_Status Nine of the retirees (64 percent) owned or were buying their homes; while five retirees (36 percent) were renters. In Table 16, the housing status of retirees has been cross-tabulated with income level of retiree. Table 16. Housing Status of Retirees by Income Level 1977 Income Level Retirees Under Over Total Percent Housing Status $10,000 $10,000 Number Total (N=7) (Ne7) (N=14) House Buying 2 l 3 21.4 Own 4 1 5 35.7 MObile Home Buying 1 O l 7.1 Apartment Partly Furnished 0 1 1 7.1 Unfurnished 0 4 4 28.6 The contents of the table indicate that the housing status of this group of retirees was related to level of income. All seven retirees in the lower income group (100 percent) were living in a house or mobile home that they owned or were buying compared to two retirees in the higher income group (28 percent). The remaining five retirees in the higher income group (72 percent) were living in rented apartments. 'Housing status of retirees and single status have been cross-tabu- lated in Table 17, on the following page. The tabulations show that all six widows (100 percent) were living in houses they own or were buying 73 Table 17. Housing Status of Retirees by Single Status Single Status Single Total Never Number Housing Status Married Widow Divorced Retirees (N=5) (N-6) (N=3) (N-l4) House Buying 1 l l 3 Own 0 5 0 5 MObile Home Buying 1 O 0 1 Apartment Partly Furnished 1 0 0 1 Furnished 2 0 2 4 in contrast to one single-never-married (20 percent) and one divorcee (33 percent). The majority of single-never-marrieds and divorcees were living in rented apartments. Health Status The health status of the retirees was evaluated by examining the responses of the retirees to three questions: During the last two months, how many days did you have to stay in bed for all, or most of the day, because you were ill? Which best describes how your doctor would rate the status of your health? Which best describes how you would rate the status of your health? The responses of each retiree to the three health questions are listed in Table 18, on the following page. 74 Table 18. Health Evaluation by Retiree and by Health Criterion Health Criterion Number of Health Status Retiree Days in Bed Doctor's Retiree's I.D. Number Last Two Months Rating Rating 4014W3-67/71 None Good Good 4024WO-62/70 None Good Good 403eW3-62/72 None Fair/Good Good 504-D2-65/77 None Good Good 505-80-69/74 About 1 day Good Good 506-W2-69/72 About 1 day Good Good 5074Wl-65/73 None Good Good 608-D1-62/76 None Good Good 609-D1-62/73 None Good Good 6lO-SO-62/74 None Good Fair 7ll-SO-64/72 None Good Good 712-SO-64/75 None Good Good 7134Wl-67/75 None Good Good 714-80-65/76 None Fair Fair All the retirees in the study were considered to be healthy individuals. Responses to the three consumption activities under the health expendi- ture category tended to confirm this contention. Summary The single female retirees in the sample are not typical of aged unrelated females for three reasons. First, the annual money incomes of the retirees are higher than the majority of aged unrelated females. According to the 1976 distribution of income for aged white unrelated females (United States Department of Health, Education, and Welfare, 1978a, p. 93) the fourteen retirees were in the upper 22 percent of the aged unrelated female population. During that year, the median money income for aged unrelated females was $3,497. 75 The difference in annual incomes is attributed to the fact that the retirees in the study were receiving income from three sources (social security, state pension fund, and investments); whereas many aged unrelated females may not receive any income, may receive income from one or two sources, and/or may receive a.sma11 stipend. Second, the asset holdings of the single female retirees may exceed the asset holdings of the majority of unmarried female retirees who receive only an OASDHI benefit or most of the unmarried female retirees who receive both an OASDHI benefit and a public benefit. The United States Department of Health, Education, and Welfare (l975b, pp. 115-117) reported that the median value of assets in 1967 for unmarried female retirees who receive both an OASDHI benefit and a public benefit was $4,976 if zero amounts were excluded, and $2,907 if zero amounts were included. Third, the retirees had three sources of income (social security benefit, a state pension, and earnings from investments); whereas the majority of female retirees have one or two sources of income. Accord- ing to a Census Bureau (l975e) survey of 1970 newly entitled social security beneficiaries, only three percent of the nonmarried women had three sources of income, while 49 percent had two sources of income and 48 percent had only one source of income. It is not possible to make further comparisons of this group of single white female retirees with other groups of single female retirees or with aged unrelated females due to the lack of data. To date most researchers, government officials, and educators have not extensively examined the financial planning and record keeping practices, financial 76 status, housing status, and/or health status of aged single females or single female retirees. Development of the Interview Schedule The section on development of the interview schedule is presented in two sub-sections: rationale for selection of the personal interview and construction of the interview schedule. Rationale for Selection of the Pepaonal Interview The technique selected for collecting the data was the personal interview. It was chosen over the written questionnaire for seven reasons. First, the personal interview is considered to be one of the most powerful and useful survey tools that a social scientist can use (Kerlinger, 1964, p. 487). Second, the personal interview is a more flexible data collecting device. It permits an interviewer to obtain additional information about an interviewee by observing the interviewee and/or surroundings and by asking appropriate probe questions. A flexible device should be used with retirees as there is a greater probability that these indi- viduals could have physical limitations, such as impairment of vision or arthritis, which could interfere with their completing a written ques- tionnaire. Third, there is less opportunity for nonresponse bias to occur with a personal interview because the response rate is higher. The literature indicated that nonresponse bias can occur if the response 77 rate is low as differences do exist between the group of individuals who respond to a written questionnaire and the group of individuals who do not respond. Fourth, there is a greater probability that a larger proportion of questions will be completed if a personal interview is used. With a personal interview, respondents are less likely to select the "don't know" option or leave questions unanswered. Fifth, a personal interview can provide a social outlet for a single female retiree; whereas the written questionnaire can not. It is a well-known fact that many retirees are lonesome. A personal interview could help fill this social need. Sixth, it is easier for a researcher to control nonrandom response errors. With a personal interview, a researcher can control the order in which questions are presented to the respondents. In addi- tion, a researcher can prevent respondents from going over the question- naire to change some of their answers, discourage other people from influencing a respondent's answers, and prevent other individuals from filling in a questionnaire for a respondent. And last, the investigator was desirous for professional reasons to gain experience in the preparation of an interview schedule, inter- viewing, and the analysis of free responses. The investigator can use the knowledge and experience to plan future research projects, assist and guide university students in research projects, and/or teach a unit on survey techniques. 78 Construction of the Interview Schedule The interview schedule which was used in the study was con- structed by the researcher (see Appendix B). An interview schedule was constructed because an appropriate instrument was nOt located during the search of literature and related research. The contents of the schedule were based on readings in the following subjects areas: preretirement strategies, postretirement strategies, economic status of aged unrelated individuals, financial management, and construction of interview schedules (Bingham and Moore, 1959; Goode and Hatt, 1952; Kahn and Cannell, 1968; Oppenheimer, 1966; Payne, 1951; and Selltiz, Wrightsman, and Cook, 1976). The three planning operations suggested by Kahn and Cannell (1958, pp. 97—98) for developing an interview schedule or a written question- naire were used in designing the instrument: 1. State the purposes of the study. 2. Identify the information that must be Obtained to meet the purposes of the study. Formulate specific objectives. 3. Draw up interview schedule so that the responses of the participants will fulfill the specific objectives. The information that was identified as being necessary to meet the pur- poses of the study was: preretirement and retirement sources of income, preretirement (year before retirement) and retirement (1977) gross income, implementation of preretirement and retirement financial strate- gies, impact of the shift from a preretirement income to a retirement income on specific consumption activities, use of professional and non- professional sources of information, and suggestions for professional services. 79 A mixture of open and closed questions were used. Open questions were used in areas where additional information was needed or where individualized responses were desired; whereas closed questions were used to classify respondents according to an attribute or to separate the respondents who could provide specific information from those who could not. Perceptual questions on whether the shift to a retirement income had affected consumption patterns were used to facilitate the collection of data and to eliminate mathematical manipulation of expendi- tures into constant dollars. The interview schedule was presented to a panel of experts. The schedule was revised based upon suggestions made by the panel and pre- tested by three single female retirees who met the criteria which had been established for participants. The schedule was further revised based upon analysis of the responses, reactions of the retirees, and suggestions made by the retirees. Procedures for Data Collection Data were collected during Spring 1978. subjects were inter- viewed in their homes, apartments, or mobile homes. Length of inter- view sessions ranged from 90 minutes to 180 minutes. The wide range in length of sessions was attributed to: the researcher treated the interview session as a social contact as well as an information- getting encounter, and the comments of some of the participants were more lengthy. 80 All the interviews were conducted exclusively by the author. Interviewer recorded all responses and took complete written notes on all comments which were made by the respondents. A tape recorder was not used for recording comments of the retirees. Two reasons why a tape recorder was not used were: to reduce participant anxiety, and to avoid interruptions to change tapes. Procedures for Analyzing Data Statistical procedures were not used to analyze the data because the study was an exploratory one, and the number of retirees totaled only fourteen. Raw data for each question were assembled and hand—tabulated. Data from the majority of questions were tabulated by income level of retiree. Two income levels were used: lower income ($6,000 to $9,999), and higher income (over $10,000). Descriptive summaries were prepared for each of the six research questions. The research questions are listed on page 10 and on the following page. CHAPTER IV FINDINGS This chapter is a report of the findings from each research ques- tion. The order, by research question, is: 1. What financial strategies did single females execute before they retired? 2. Has it been necessary for single female retirees to supple- ment their retirement income to help pay for their living expenses? 3. When single females shifted from a preretirement income to a retirement income did they have to make any adjustments in some of their consumption patterns? 4. Are the consumption needs of single female retirees being met? 5. Before they retired, did single females discuss any money matters related to their retirement income with a profes- sional person? Since they retired? 6. Before they retired, did single females discuss any money matters related to their retirement income with a non- professional person? Since they retired? Research Question 1: Preretirement Financial Strategies What financial strategies did single females execute before they retired? Information about preretirement financial planning was secured by asking the single females whether or not they had executed eleven dif- ferent financial strategies. The results from each strategy are listed in Table 19. 81 82 Table 19. Preretirement Financial Strategies Executed by Rank Order and by Income Level 19 77 Income Level Total Under Over "Yes" Preretirement Financial Strategy $10,000 $10,000 Responses (Ni7) (N-7) (N-l4) DID YOU. I O O 0 Find out what your gross retirement income would be? 7 7 14 Attend any preretirement meetings _ and/or classes? 4 7 11 Make changes in your health insurance policies? 5* 2* 7* Estimate what your retirement living expenses would be? 4 2 6 Read any books or pamphlets that discussed financial preparation for retirement or how to manage your retire- ment income? Buy any major household items? 2 Make changes in your life insurance policies? 1 Buy a car? Make a special effort to pay off your outstanding bills? 2 0 2 Give any thought as to whether you would continue living where you were? 1 0 1 Start to "cut back" on any of your living expenses? 0 0 0 Total Strategies Executed 30 26 56 Total Strategies Not Executed 47 51 98 Total Strategies 77 77 154 * Adjustments were made for the seven retirees who retired at the age of 65 years and had applied for medicare coverage. 83 The findings for each strategy will be presented separately. The presentation will be according to rank order: estimating gross retirement income, attending preretirement meetings and/or classes, making changes in health insurance policies, estimating retirement living expenses, reading books or pamphlets about retirement finances, . purchasing major household items, making changes in life insurance policies, buying a car, making a special effort to pay outstanding bills, giving thought to continue living at existing residence, and starting to "cut back" on living expenses. Estimating_Gross Retirement Income Fourteen retirees (100 percent) stated that before they retired they found out what their gross retirement income would be. Retirees either made a special effort to find out what the gross amount would be, had a co-worker or superior tell them what the approximate amount would be, or were given the information at 8 preretirement meeting. Five retirees reported that they had underestimated the gross amount of their retirement income. The miscalculations were attributed to unexpected events (i.e., retiree found she was entitled to two addi- tional years of work credit, revisions in social security benefits, and an unanticipated increase in earnings from the stock.market)- Several retirees noted that they had miscalculated the amount of their net (take-home) retirement income. In some instances, the retire- ment take-home pay was more than the preretirement take-home pay. One retiree (608-Dl-62/76) reported that her monthly retirement take-home pay was $110 more than her monthly preretirement take-home pay. 84 Attending Preretirement Meetings and/or Classes Eleven retirees reported that they had attended a preretirement meeting. Various reasons were given for attending the State-sponsored preretirement meeting such as "curiousity," "find out whether there were some other things I should know about," "get encouragement," "disspell doubts," "get some ideas," "he sure of all facets," " to find out all I could," and "I might learn something." Retirees noted that financial information was presented at the preretirement meeting but it was not extensive in nature. Making Changas in Health Insurance Policies Retirees mentioned that when individuals retire from employment with the State of Michigan, they continue to be eligible for the health benefits which are provided for state employees. Consequently, only two changes in health insurance policies were reported: one retiree (504-D2-65/77) shifted the income protection feature on her private health policy to an extra health protection feature, and one retiree (507-W1-65/73) signed up for the AARP health insurance policy. The seven retirees who had applied for medicare failed to mention this change in health protection. Data were adjusted to reflect these addi- tional changes. Estimatinngetirement Living_Expenses Six retirees reported that prior to their retirement they had estimated what their retirement living expenses would be. One retiree (505-80-69/74) noted that she had miscalculated her retirement living expenses. The miscalculation was attributed to purchasing more 85 expensive furniture than initially planned and underestimating how much she would drive her car after she retired. The eight retirees who claimed that they had not estimated their retirement living expenses cited various reasons. The reasons that retirees gave for not estimating their retirement living expenses were: Retiree I.D. Number Retiree Comment 4014W3-67/71 Not one to budget. Never had too much. I figured I would have to live on what I had. 402-WO-62/70 I figured I had enough money to live on. I didn't figure on inflation. 506-W2-69/72 Forced to retire. I expected I would have enough. 609-D1-62/73 I assumed my expenses would continue to be the same. 711—SO-64/72 I am naturally conservative. 712-SO-64/75 Sure I could live with what I was getting. 713-W1-67/75 I knew what they would be. 714-SO—65/76 I knew there was going to be enough for my style of living--just roughly knew. Reading Books or Pamphlets about Retirement Finances Books or pamphlets about retirement finances were not popular preretirement sources of information for the retirees. Only six of the retirees said that they had read a book or a pamphlet dealing with the financial aspect of retirement. Sources most often mentioned were social security pamphlets. 86 The reasons that eight retirees cited for not reading any books or pamphlets that discussed financial preparation for retirement or how to manage one's money after retirement were: Retiree I.D. Number 401-W3-67/71 402-WO—62/70 504-D2-65/77 505-80-69/74 506-W2-69/72 609-D1-63/72 610-SO—62/74 713-Wl-67/75 Retiree Comment Wasn't interested. Had been on my own too long. Thought I could figure it out as it came. Doing alright the way it was. I don't spend extravagantly. I figured that I knew quite a bit-~1earned some things through sad experiences. Not worried about it. Didn't think about it. I had my own ideas. I wasn't interested in it. Purchasing Major Household Items Prior to their retirement, only four retirees had purchased a major household item. The items included a piece of furniture, carpet- ing, a Franklin stove, and a water softener. The two reasons given by the remaining three retirees for not buying a major household item were: they "did not need to" because the major household items they had were in good condition (eight retirees), and they "did not need to" because the major household items were furnished by the apartment owners (two retirees). 87 MakipgTChangaa in Life Insurance Policies Changes in life insurance policies were reported by three retirees. The changes were: dropped credit union policy (403-W3-62/73), canceled annuity policy and invested money with the savings and loan (610-SO-62/74), and canceled a paid-up policy (711-SO-64/72). Eight retirees were carrying the life insurance policy which the State of Michigan provides for its employees and retirees. One retiree (7ll-SO-64/72) did not have a life insurance policy, while the majority of retirees had either two or three policies. Buyingga Car Eleven of the respondents owned a car. Only two of the eleven re- ported that before they retired they had purchased a car. The major reason why the remaining nine car owners had not purchased a car prior to their retirement was that they "did not need to." Several of the retirees noted that they purchase a new or used car every five or six years, while others purchase a new or used car more frequently. Makingpa Special Effort to Pay Outstanding_ B_11_1_s Only two retirees responded that prior to their retirement they made a special effort to pay their outstanding bills. The major reason that nine retirees gave for not making a special effort to pay their outstanding bills was that they "did nOt have any." Four of the retirees reported that they carried an outstanding debt over into retirement. In all cases, the item was a form of real estate--a house, a mobile home, or a farm. Three of the retirees 88 were using their mortgages for income tax purposes. Givinnghought to Continue Livingnat ExistingrResidence Only one retiree (505-30-69/74) reported that she had made a con- scious decision on where she would live after she retired. The retiree purchased a new mobile home. The remaining thirteen retirees claimed that they had not given much thought on where they would live after they retired; however, replies to a probe question revealed that they had all subconsciously decided to "stay where they were." Startingpto "Cut Back" on LivingnExpenses A11 fourteen retirees responded that before they retired they had not "cut back" on any of their living expenses. The reasons the re- tirees gave by rank order of response category were: "did not need to" (5), live conservatively or have always been careful (4), income was adequate (3), and "was not worried" (2). Research Question 2: Retirement Financial Strategies Has it been necessary for single female retirees to supple- ment their retirement income to help pay for their living_ enpenses? Data for the research question were collected by asking the single female retirees whether they had executed six postretirement financial strategies. The tabulated results by income level of retiree are listed in Table 20. Findings from each of the strategies will be presented as follows: used savings and/or investments, shifted savings and/or 89 Table 20. Postretirement Financial Strategies Executed by Income Level 1977 Income Level Total Under Over "Yes" Postretirement Financial Strategy $10,000 $10,000 Responses (N-7) (N87) (N814) HAVE YOU... Used savings and/or investments to help pay for some of your living expenses 3 0 3 Shifted any of your savings and/or investments 0* 0* 0* Received financial help from relatives 0 0 0 Received financial help from non- relatives Tried to find a job Had to sell anything Total Strategies Executed 3 0 3 Total Strategies Not Executed 39 42 81 Total Strategies 42 42 84 *Four retirees in the lower income group and six retirees in the higher income group reported that they had shifted some of their savings and/ or investments. However, the purpose of the shifts was "to get more interest" or "to increase interest" rather than to pay for retirement living expenses. 9O investments, received financial help from relatives and/or nonrelatives, tried to find a job, and had to sell something. Used Savings and/or Investments Three retirees reported that they had used part of their savings to help pay for some of their living expenses. All three retirees were from the lower income group. The living expenses that savings were used for were: new roof for house (403-W3-62/72), a car (505-80-69/74), and new siding and a new roof for the house (506-W2-69/72). Shifted Savings and/or Investments Since retirement, ten retirees shifted some of their savings and/or investments--four retirees in the lower income group (under $10,000) and six retirees in the higher income group (over $10,000). The major reasons the retirees gave for shifting their savings and/or investments were "to increase interest" and "to get more interest." Each retiree mentioned a different shift of savings or invest- ments. The shifts included: switched banks, switched bonds to a savings account, took stock and invested money in capital savings, shifted certificates of deposit to a higher rate of interest, shifted short-term investments to long-term investments, shifted savings to certificates of deposit, sold stock and invested in Merrill Lynch, and shifted growth funds to bond funds. Received Financial Help from Relatives and/or Nonrelatives All fourteen retirees responded that since they retired they had not received any financial help from a relative or a nonrelative. 91 One retiree (4024W3-67/71) reported that she had borrowed money from the credit union to pay for new siding for her house. Tried to Find a Job Fourteen retirees (100 percent) reported that since they retired they have not had to find a job in order to pay for some of their retirement living expenses. Two retirees stated that they would like to have a job. The reasons the retirees gave for wanting a job were personal ones. One retiree (506—W2-69/72) wanted a part—time job because she "lived to work," while the other retiree (714-SO-65/76) wanted a jOb so she could "get out and around." The twelve retirees who replied that they did not want a job made the following comments: Retiree I.D. Number Retiree Comment 401-W3-67/71 I am too busy doing volunteer work. 402-WO-62/70 Enjoy my retirement. I do volunteer work. 4034W3-62/72 I like it as it is. I don't want a job for money. Thirty years was enough. 504-D2-65/77 Worked long enough. I want to play. 505-80-69/74 Like my freedom. 5074W1-65/73 I feel we have a number of young people who need jobs. I do volunteer work. 608-D1-62/76 Enjoy my retirement. 609-D1-63/72 I want to be free so I can go when I want to o 610-SO-62/74 Tired of working. 92 Retiree I.D. Number Retiree Comment 711-SO-64/72 I don't want to sit in an office all day. I do volunteer work. 712-80-64/75 I like being free. 713-W1-67/75 I am too busy. Had to Sell Something None of the retirees reported that they had to sell any of their possessions in order to obtain additional money. One retiree (505-80-69/74) reported the sale of a land contract but the purpose of the sale was to eliminate the hassle of managing it rather than to obtain money to pay for retirement living expenses. Research Question 3: Changes in Consumption Patterns When single females shifted from a preretirement income to a retirement income, did they have to make adjustments in some of their consumption activities? Information on the research question about changes in consumption that were related to a shift to a retirement income was collected by asking single female retirees whether any of the changes they made in twenty-eight consumption activities could be attributed to the shift to a retirement income. The responses were summarized in two contexts: changes in level of consumption by retiree, and changes in level of consumption by expenditure categnny. The changes in level of consumption by retiree are listed in Table 21. The contents of the table show that when the single females shifted to a retirement income only four retirees 93 Table 21. Preretirement Income* and 1977 Income by Retiree and by Number of Changes in Level of Consumption Number of Income . Changes in Retiree Level of I.D. Number Preretirement* 1977 Income Consumption** 401-W3-67/71 $6,000 to $7,999 $6,000 to $7,999 0 402-WO—62/70 $13,000 to $14,999 $6,000 to $7,999 4 4034W3-62/72 $10,000 to $12,999 $6,000 to $7,999 7 504-D2-65/77 $10,000 to $12,999 $8,000 to $9,999 0 505-80-69/74 $10,000 to $12,999 $8,000 to $9,999 0 5064W2-69/72 $8,000 to $9,999 $8,000 to $9,999 0 507-W1-65/73 Over $15,000 $8,000 to $9,999 0 608-D1-62/76 $13,000 to $14,999 $10,000 to $12,999*** 0 609-D1-63/72 $13,000 to $14,999 $10,000 to $12,999*** 0 6lO-SO-62/74 $8,000 to $9,999 $10,000 to $12,999*** 3 7ll-SO—64/72 Over $15,000 Over $15,000 0 712-SO-64/75 $13,000 to $14,999 Over $15,000 0 713-Wl-67/75 Over $15,000 Over $15,000 4 714-SO-65/76 Over $15,000 Over $15,000 0 * Income year before retirement. ** The total changes per retiree could vary from 22 to 26. *** Original income group was $10,000 to $14,999. An additional probe revealed that the 1977 gross income of retiree ranged between $10,000 and $12,999. 94 reported changes in some of their consumption activities--two retirees in the $6,000 to $7,999 income group, one retiree in the $10,000 to $12,999 income group, and one retiree in the over $15,000 income group. Changes in level of consumption by expenditure category and by income level of retiree are summarized in Table 22. The contents of the table show two things. First, out of a possible 348 consumption changes that could have occurred when the single females shifted to a retirement income, only eighteen changes were reported. The distribu- tion of changes by expenditure category by rank order was: gifts and contributions (9), housing (4), food (1), personal care and clothing (1), recreation and education (1), transportation (1), miscellaneous activities (1), and health (0). Second, the changes in level of consumption were related to income level. Eleven decreases were reported by retirees in the lower income group (under $10,000), while seven increases were reported by retirees in the higher income group (over $10,000). The remainder of the section on Research Question 3 will be a presentation of the findings from each expenditure category. The order will be: food, health, personal care and clothing, recreation and edu— cation, gifts and contributions, housing, transportation, and miscellan- eous activities. Food There were fifty-six possible consumption changes in the food expenditure category. Of these, only one change in level of consumption was reported by a retiree. The retiree (610-SO-62/74) claimed that when 95 * Table 22. Changes in Level of Consumption by Expenditure Category and by Income Level 1977 Income Level Consumption Changes Under Over (Possible Expenditure Category $10,000 $10,000 Number Number) Food 0 + l 1 (56) Health 0 0 0 (42) Personal Care and Clothing — 1 0 1 (28) Recreation and Education - 1 0 l (42) Gifts and Contributions — 4 + 5 9 (56) Housing - 3 + l 4. (60) Transportation - 1 O l (36) Miscellaneous Activities - 1 0 l (28) Number of Changes: Decrease 11 O 11 Increase 0 7 7 No Change 167 163 330 Total Possible Changes 178 170 348 *Note: The direction of change has been designated as follows: (-) decrease, and (+) increase. 96 she shifted from a preretirement income to a retirement income she was financially able to eat out more frequently. The remainder of the food expenditure category section will be confined to the findings from the four consumption activities: type of food purchased at grocery store, eating out in restaurants, canning and freezing food, and participation in government food programs. Type of Food Purchased at Grocery Store All fourteen retirees indicated that when they shifted to a re- tirement income, it did not have any effect on the type of food they purchase at the grocery store. A check of current food buying habits revealed that eleven retirees (79 percent) were still buying the same type of food at the grocery store as they had before they retired. The reasons given by the remaining three retirees (21 percent) for changing the type of food they purchase at the grocery store were not financial ones. Each retiree gave a different personal reason for the change. Retiree I.D. Number Reason for Change 608-D1-62/76 I have more time to cook--to use less expensive foods. 609-D1-62/73 Better foods-have changed my habits-- more nutrious--eliminated meat. 7ll-SO-64/72 I have had to learn to eat differently due to an operation. Two retirees commented that since they retired they purchase a different amount of food at the grocery store. In both instances the factor for the change was a personal one. One retiree (504-D2—65/77) stated that she was buying a smaller amount because she was eating out more 97 frequently, while the second retiree (714-SO-65/76) who was preparing more of her meals at home was buying a larger amount. Eating Out in Restaurants Table 23 is a summary of the frequency with which retirees are currently eating out in restaurants. Table 23. Frequency of Eating Out in Restaurants by Income Level 1977 Income Level Percent Frequency of Eating Out Under Over of in Restaurants $10,000 $10,000 Total (N-7) (N=7) (N-l4) Once a month 1 0 7.1 Once a week 1 3 28.6 Two or three times a week 3 4 50.0 Four or five times a week 2 O 14.3 An examination of the data shows that nine retirees (64 percent) were eating out at least two or three times a weeks-five retirees from the lower income group and four retirees from the higher income group. When retirees were asked to compare their current practices with their preretirement practices, six retirees (43 percent) indicated that they were eating out more often now, while four retirees (29 percent) were eating out less often. The reason given for each change in frequency was an increase in opportunity and a decrease in opportunity respectively. 98 A common meal that was eaten out by several retirees was lunch. Reasons cited for eating lunch away from home were: "lunches are less expensive," "I don't like to go out at night," and "I eat out when I do volunteer work." Canning and FreezingpFood Thirteen retirees reported that for a number of years they have done little or no canning or freezing of food. Only one retiree (714-SO-65/76) claimed that she canned and froze a substantial amount of food. Retirees attributed their disinterest in canning of food as: "too much bother," "don't have enough storage space," "have no garden," " "cheaper to buy on sale," and "no time." "not worth it for one person, The most frequent reason given for not freezing food was "my freezer is too small." Two retirees questioned the practability of freezing food for just one person, while another retiree reported that she did not have a freezer. Participation in Government Food Programs When they retired, all fourteen retirees reported they did not become an active participant in a major government food program for older citizens. Health When the retirees were asked whether the shift to a retirement income had any affect on three health consumption activities, not one retiree reported an increase or a decrease in level of consumption. 99 All fourteen retirees had an insurance policy that reimbursed them for some of their medical expenses. Seven retirees were covered by medicare when they retired. Currently thirteen retirees are partici- pants in the medicare program, while the remaining retiree will be eligible for medicare in 1979. The remainder of the health section.will be a presentation of additional information that was collected about the three health consump- tion activities that were examined in the study: seeing doctor, buying prescription medicines, and getting medical treatment. SeeingrDoctor Table 24 is a summary of how often the single female retirees were seeing their doctor. Frequency of seeing doctor is cross-tabulated with income level of retiree. Table 24. Frequency of Seeing Doctor by Income Level 1977 Income Level Percent Under Over of Frequency of Seeing Doctor $10,000 $10,000 Retirees (N=7) (N-7) (N-l4) Less than once a year 1 0 7.1 Once a year 1 2 21.4 Every six months 2 3 35.7 Every three months 2 1 21.4 Every two months 1 1 14.3 100 Currently, ten retirees (71 percent) were seeing their doctor at least twice a year-~five retirees from the lower income group and five retirees from the higher income group. The four remaining retirees (29 percent) were seeing their doctor less frequently—-the purpose of their visits being to partake in the physical screening which the State of Michigan provides for its retirees. When retirees were asked to compare the number of their preretire- ment visits to a doctor with their current visits, twelve retirees claimed that there had been no change. The two retirees who reported that they were currently seeing their doctor more frequently were under medical care for a special health problem. Although these retirees were seeing a doctor more frequently, they rated their health status as good and thought that their doctor would also rate the status of their health as good. Buying Prescription Medicines Nine of the retirees were taking some type of medication-the predominant medication.being high blood pressure pills. Although one of the provisions in their health insurance policies is a reimbursement for the cost of their prescription medicines, many of the retirees have not received any reimbursements nor have they submitted any reimburse— ment claims to their insurance companies. The major reason cited was that the cost of their prescription medicines rarely exceeds.the amount of their deductible. Getting Medical Treatment All fourteen retirees indicated that the shift to a retirement income had no deterring effect on their getting needed medical treatment. 101 Five retirees replied that the provisions in their health insur- ance policies adequately cover the cost of any medical treatment they may need, while five retirees said it did not. The remaining four made the following comments: "don't know for sure," "haven't had to use it," "I think so," and "I guess it would." Personal Care and Clothing Responses of the retirees indicated that the shift to a retirement income had little or no effect on the two consumption activities under the personal care and clothing expenditure category: going to beauty parlor, and buying ready-made clothes. Only one change in level of consumption was reported. The retiree claimed that since retirement she had to buy more of her clothes on sale. The remainder of the section will be confined to findings from each consumption activity. Goingpto Beauty_Par1or Table 25 is a summary of how often the single female retirees stated they go to a beauty parlor. The frequency of visits is cross— tabulated with income level of retiree. Ten retirees (71 percent) indicated that they go to a beauty parlor at least once every ten days-- six retirees from the lower income group (under $10,000) and four retirees from the higher income group (over $10,000). Only one retiree noted a change in level of activity since her retirement. The retiree (5064W2-69/72) reported that she was going to a beauty parlor more frequently now. The increase in frequency was attributed to a change in hair style and a reoccurrence of a back probluu. 102 Table 25. Frequency of Going to Beauty Parlor by Income Level 1977 Income Level Percent Under Over of Frequency of Going to Beauty Parlor $10,000 $10,000 Retirees (N=7) (N87) (N814) Once a week 5 3 57.1 Every ten days 1 1 14.3 Every five weeks (for haircut) 0 1 7.1 Every three months 0 1 7.1 Every four months 1 O 7.1 Never go 0 l 7.1 Buying Ready-Made Clothes Only one retiree (4034W3-62/72) claimed that she had to modify her readydmade clothing purchasing behavior when she shifted from a preretirement income to a retirement income. The retiree commented that after she retired she found she could "no longer buy them at the drop of the hat" like she did before she retired. Thirteen retirees were continuing to buy their clothes at the same stores as they had before they retired. The one retiree who reported a change in clothing stores did not cite a financial reason for the shift. The underlying factor was convenience. She found that after she retired it was more convenient for her to shop at stores at a nearby mall than to continue shopping at stores located in downtown Lansing. 103 Furthermore, thirteen retirees stated that if they had additional income, they would not buy any more clothes. One of the retirees (504-D2-65/77), however, nOted that she would buy better clothes. The responses of the retirees to a probe on why they would not buy any more clothes are categorized by response category in the following table. Table 26. Reasons Given for Not Buying More Clothes with Additional Income by Income Level Income Level Total Under Over Number of Response Category $10,000 $10,000 Responses Don't need as many (includes don't need any more, and don't feel I need any more) 2 2 4 Have all I need now (includes have enough, have enough clothes, and have enough now) 4 2 6 Buy all I need now (includes buy all the clothes I need) 0 2 2 Others (includes waste of money if I don't need them, and have too many now) 1 1 2 Note: The number of retirees totaled thirteen. The number of responses totaled fourteen as one retiree in the lower income group cited two reasons. Recreation and Education Out of a possible combination of forty-two consumption activity changes in the recreation and education expenditure category, only one change in level of consumption was reported to have occurred when the single females shifted to a retirement income. 104 The remainder of the section will be a presentation of additional information that was obtained on each of the consumption activities in the recreation and education expenditure category: number of hobbies, taking vacation trips, and subscriptions to magazines and newspapers. Number of HObbies Analysis of the responses of the retirees to a question on whether there had been a change, since they retired, in the number of their hobbies indicated that four retirees had increased the number of their hobbies; three had not increased the number of their hobbies but had increased the amount of time they were spending on them; and seven were continuing to maintain the same number of hobbies they had. Not one retiree reported a reduction in the number of hobbies. Taking Vacation Trips The shift to a retirement income did not appear to have any influence on the vacation trips that thirteen retirees had been taking. The remaining retiree (4034W3-62/70) noted that when she retired she had to reduce the number of long vacation trips she had been taking. Since retirement eight retirees were taking more vacation trips, two were taking longer or more extensive trips, while two were spending their winters in Florida. The predominant factor in the increase in number and length of trips was having more time, while opportunity to travel was the second most important factor. Only three retirees responded that they would take more vacation trips if they had additional income. However, when retirees were asked what they would do if they were given a large amount of money or were granted a $65.00 to $75.00 monthly increase in retirement income, three 105 additional retirees speculated that they would use the extra money to take a special trip. The factors that deterred several retirees from taking more vaca- tion trips were not financial ones. Included among the deterrent factors were: lack of a traveling companion, having to care for a dog, wanting to finish remodeling a farmhouse, no longer feeling the need "to get away,‘ and a fear of terrorism. subscriptions to Magazines and Newspapers Currently the retirees subscribe to a moderate number of maga- zines. A summary of the number of magazines that single female retirees by income level are taking is presented in the following table. Table 27. Number of Magazines Being Taken by Income Level 1977 Income Level Percent Under Over of Number of Magazines $10,000 $10,000 Total (N=7) (N=7) (N=l4) None 2 O 14.3 One or two 0 3 21.4 Three or four 3 2 35.7 Five or six 1 2 21.4 Seven or more 1 0 7.1 As evidenced in the above table, nine retirees (71 percent) subscribe to at least three or four magazines--five retirees in the lower income group and four retirees in the higher income group. 106 - Four retirees noted that they were subscribing to more magazines now than they did prior to their retirement. In three instances, the increase was attributed to having more time to read. 0n the other hand, four retirees reported that they had reduced the number of their maga- zine subscriptions. The reasons that retirees gave for reducing the number of their subscriptions to magazines were: "don't have much time to read," "I found that I wasn't taking time to read them," and "I winter in Florida--too much trouble to change address." Twelve retirees were Currently taking or buying a newspaper. The remaining two retirees who were not taking a newspaper cited a personal reason rather than a financial one for discontinuing their subscription to a newspaper. Gifts and Contributions The shift to a retirement income had a moderate effect on the consumption activities included under the gifts and contributions expenditure category. The changes in consumption activities are summar- ized in Table 28, on the following page. The contents of the table show that out of a possible fifty—six changes in consumption activities in the gifts and contributions expenditure category, nine changes in level of consumption were reported-four decreases at the lower income group (under $10,000) and five increases at the two higher income group (over $10,000). The remainder of the section will be confined to the findings from the four consumption activities in the gifts and contributions expenditure category. 107 Table 28. Changes* in Gifts and Contributions Activities Preretirement Income to Retirement Income by Income Level 1977 Income Level Total Number Under Over of Consumption Gifts and Contributions Activity $10,000 $10,000 Changes Number of gifts purchased - 2 + l 3 Money donated to church 0 + 2 2 ‘Money donated to charitable organizations - 2 + 2 4 Financial help given relatives 0 O 0 Number of Changes Increase O + 5 5 Decrease - 4 O 4 No Change 24 23 47 Total 28 28 56 *Note: The direction of change has been designated as follows: (-) decrease, and (+) increase. 108 Number of Gifts Purchased Three retirees (21 percent) recalled that when they shifted to a retirement income, it had an affect on the number of gifts they buy. The three changes in consumption were: eliminated the purchase of extra things like gifts and cards for friends (402-WO-62/70), eliminated the purchase of gifts for unimportant events (403-W3-62/72), and increased the number and quality of gifts (713-W1-67/75). When retirees were asked to compare their preretirement gift pur- chasing behavior with their current gift purchasing behavior, nine retirees responded that there has been no change in the number of gifts they purchase; whereas three reported a decrease, and two an increase. The amount of money that retirees estimated they spent for gifts in 1977 is summarized in the following table. Table 29. 1977 Estimated Money Spent on Gifts by Financial Amount and by Income Level Financial Amount Total Approx. Less $50 $100 $200 Number Average 1977 Income Level than to to to Over of Re- Spent by $50 $100 $200 $300 $300 tirees Inc.Lev. $6,000 to $7,999 0 0 2 1 0 3 $183 $8,000 to $9,999 0 0 l 1 2 4 $250+ $10,000 to $14,999 0 1 1 l 0 3 $158 Over $15,000 1 0 l l l 4 $181+ Total Retirees by Gift Level 1 l 5 4 3 l4 109 The most common range of money spent on gifts in 1977 was $100 to $200, followed closely by $200 to $300, and then over $300. Money Donated to Church Nine retirees were church members. When they retired, two of the nine retirees recalled that they were able due to their retirement income to increase the amount of money they donate to their churches. Six of the retirees stated that they had contributed more money to their churches in 1977 than they had before they retired. The reasons for the increase in contributions were: Retiree I.D. Number Reason for Increase 40l-W3-67/71 Go to more circle meetings now. 403-W3-62/72 Special (church) drives. 505-80-69/74 Helping church to buy a new building. 712-50-64/75 Want to help building fund and debt retirement. 713-W1-67/75 I am in a tithing program. Money Donated to Charitable Organizations Four retirees reported that when they shifted to a retirement income, it did influence the amount of money they donate to charitable organizations. The four changes in level of consumption were: reduced the number of organizations and reduced the amount contributed (402-WO—62/70), cut down the number of organizations--contribute only to pet ones (4034W3-62/72), give more to charitable organizations (610-SO-62/74), and increased the amount given to charitable organiza- tions (713-Wl-67/75). 110 Table 30 is a summary of the amount of money by income level that the retirees estimated they donated to charitable organizations in 1977. Table 30. 1977 Estimated Money Donated to Charitable Organizations by Financial Amount and by Income Level 1977 Income Level Financial Amount Under Over Total Number Donated $10,000 $10,000 of Retirees (N=7) (N=7) (N314) Less than $50 4 3 7 $50 to $100 3 0 3 More than $100 0 4 4 The contents of the table show two things. First, the most common amount of money that was donated to charitable organizations in 1977 was less than$50. Second, the four retirees who donated more than $100 to charitable organizations were from the higher income group, while seven of the ten retirees (70 percent) who donated less than $100 were from the lower income group. Financial Help Given Relatives Thirteen retirees stated that the shift to a retirement income did not have any affect on their ability to give financial help to their relatives. The remaining retiree (4024W3—67/7l) stated that she had informed her family that when she retired she would be less able to help' them financially. 111 Two retirees were currently giving financial help to relatives. One retiree (506-W2-69/72) reported that she was paying some of her daughter's living expenses; helping a grandson furnish a house; and helping another grandson to pay his living, medical, and dental expenses. The second retiree (609-D1-63/72) was financing her grand- daughter's education. To meet these financial obligations, the retirees were using their savings as well as their retirement income. Three of the twelve retirees who were not helping any of their relatives financially made special comments. Their comments were: "I don't have a family" (4034WO-62/70), "Generally I don't give finan- cial help to relatives--they don't need it" (7ll-SO-64/72), and "They don't need it" (712-80-64/75). Housing An examination of the data showed that out of a possible sixty consumption changes in the housing expenditure category only four changes in level of consumption were reported--three decreases and one increase-~when the single female shifted to a retirement income. The three decreases were: went to a measured system on the telephone service (4024WO-62/70), postponed repair work on house (4034W3-62/72), and postponed redecorating the interior of the house (403-W3-62/72). The remaining retiree (7134Wl-65/75) noted that after retiring she was able to increase the number of long distance telephone calls made to relatives. The remainder of the section will be limited to the findings from the six housing consumption activities: use of telephone, consumption 112 of heat and electricity, keeping exterior of house or mObile home and yard in good condition, redecorating interior of house or mobile home, buying new piece of equipment, and redecorating apartment. Use of Telephone All fourteen retirees had a telephone. Table 31 is a summary of the type of telephone service (number of parties on the line) by income level of retiree. Table 31. Telephone Service by Income Level 1977 Income Level Number of Parties Under Over Percent of on Line $10,000 $10,000 Retirees (N-7) (N=7) (N814) One 5 4 64.3 Two 2 2 28.6 Four 0 1* 7.1 * Retiree lives in country. A total of nine retirees had a private 1ine--five retirees (71 percent) from the lower income group, and four retirees (57 percent) from.the higher income group. Only two retirees recalled that when they shifted to a retirement income it had an impact on the amount of money they spend on phone service. One retiree, to reduce expenses, went to a measured system; while the other retiree increased the number of long distance phone calls made to relatives. 113 Nine retirees reported that they were currently making the same number of long distance phone calls as they did before they retired; whereas four were making more calls, and one was making less calls. Table 32 is a summary of the estimated number of long distance phone calls per month being made by the retirees. Table 32. Estimated Long Distance Phone Calls per Month by Income Level 1977 Income Level Long Distance Phone Under Over Percent of Calls per Month $10,000 $10,000 Total Retirees (N=7) (N=7) (N-l4) None 1 0 7.1 One to three 4 5 64.3 Four to six 2 1 21.4 Seven or more 0 1* 7.1 * Retiree lives in country. Phone calls are to dentists, doctors, etc. The majority of retirees in both income groups estimated they were mak- ing between one to three long distance telephone calls a month-~four retirees (57 percent) from the lower income group and five retirees (71 percent) from the higher income group. Retirees indicated that most of the long distance phone calls are made to relatives. Consumption of Heat and Electricity All fourteen retirees indicated that when they shifted to a retire- ment income it did not have any effect on the amount of heat or electri- city they consume. 114 Table 33 is a summary of the responses of the retirees to two questions: were retirees currently using the same amount of heat as ‘they did before they retired, and were retirees currently using the same amount of electricity as they did before they retired? Table 33. Changes in Level of Consumption of Heat and Electricity Since Retirement Change in Heat Electricity Level of Number of Nomber of Consumption Retirees Reason Given Retirees Reason Given (N=7) (N=7) Increased 1 Am home more. 4 Am home more Consumption 1 Do more TV 'watching. Decreased 3 Concern over 1 Concern over Consumption energy crisis. energy crisis. No Change in 9 -- 8 -- Consumption "The contents of Table 33 show three things. First, the majority of retirees are consuming about the same amount of heat or electricity as they did before they retired. Second, the main factor that influenced several retirees to reduce their consumption of heat and electricity was concern over the energy crisis. Third, the main factor that influenced a number of retirees to increase their consumption of elec- tricity was "being home more." 115 Kegping Exterior of House or Mobile Home and Yard in Good Condition Nine retirees were home owners. Of these, eight retirees claimed that the shift to a retirement income did not have any influence on the amount of money they could spend on maintaining the exteriors of their houses and their yards. One retiree (4034W3-62/72) reported that since retirement she has had to postpone painting the exterior of her house. Table 34 is a summary of the help retirees were using to maintain the exteriors of their houses and their yards in good condition. Table 34. Help Used in Keeping Exterior of House and Yard in Good Condition Number of Percent of Help Used by Retiree Retirees Retirees (N=9) Hire all or most of it done 4 44.4 A relative helps. Hire children to remove snow or mow lawn 1 11.1 Hire part of it. Do part of it myself 1 11.1 Do all or most of it myself 3 33.3 As illustrated in the table, three retirees reported that they were doing all or most of the maintenance work on their houses and yards. The remaining eleven were either hiring individuals, accepting help from relatives or neighbors, or having a company do most of the mainte— nance work. Only one retiree (401-W3-67/71) comented that she was not able to "keep up" her yard. 116 Three of the retirees noted that they were contemplating on having some repair work done on their houses. The maintenance work included a new roof for house (4014W3-67/7l), repair and repaint porch (4034W3- 62/72), and new siding on house (504-D2-65/77). Redecorating Interior of Home or Mobile Home Eight of the nine retirees who were homeowners claimed that when they shifted to a retirement income it did not influence the amount of money that they could allocate to redecorating and repairing the inside of their homes. The one retiree (403-W3-62/72) who reported a change in level of consumption noted that she had to postpone repairing and redecorating her house. Since retirement the single females indicated that they have con- tinued, and are going to continue, to purchase home furnishings items and to redecorate their houses. Seven retirees reported that they are planning on doing some redecorating within the next three or four years. The plans that were mentioned were: four will repaint one or two rooms, one will repair a bathroom, and one will redo her living room.(wallpaper walls, buy new drapes, and buy a new carpet). Egying New Piece of Equipment All of the nine retirees who were homeowners reported that the shift to a retirement income did not affect their ability to buy a new piece of equipment. Retirees implied that the only circumstance under which they would purchase a new piece of equipment would be to replace one that "quits functioning." 117 Only two retirees were planning on buying a new piece of equipment within the next three or four years. The remaining seven homeowners indicated that they had no immediate plans to buy a new piece of equip- ment for their home. The major reason given for not planning to purchase a new piece of equipment within the near future was that they did not need to, as their present equipment was still in good condition. Redecorating Apartment The five retirees who were apartment dwellers indicated that the shift to a retirement income was not a deterrent to their spending money on redecorating their apartments. Two retirees reported that they were planning on doing some redecorating within the next three or four years, while two other retirees noted they were going to buy some new furniture within the same period of time. The agreement about the upkeep of an apartment varied. In one apartment house the tenet was responsible for redecorating the apartment, while in another apartment house the manage- ment was responsible for repainting the walls of the apartment. One of the retirees (711-SO-64/72) lived in a partially furnished apartment. Transportation Out of a possible thirty—six transportation consumption changes, only one change in level of consumption was reported when the retirees shifted from a preretirement income to a retirement income. The re- mainder of the section will be a presentation of the information which was collected on the four transportation consumption activities: buying new car, having car serviced, how much car is driven, and using public transportation. 118 Egying New Car Eleven of the fourteen retirees were car owners. Of these, only one car owner (403-W3-62/72) recalled that the shift to a retirement income had an affect on her decision to purchase a new car. The retiree claimed that she had to postpone the purchase of a new car. Since they retired, the single females have continued to buy new cars or used ones in good condition. During the past two years, 1976 and 1977, five retirees reported they had purchased a new or used car. In addition, five retirees stated that they are planning on buying a new car within the next three or four years. Several retirees noted that they usually buy a new car every five or six years, whereas other retirees purchase a new car more frequently. Most of the car owners indicated that they pay cash whenever they buy a car. Having Car Serviced All the car owners were continuing to have their cars serviced regularly. Retirees reported that they follow the recommendations for servicing made by their respective car manufacturers. How Much Car is Driven All eleven car owners indicated that after they retired they did not feel that their retirement income placed a constraint on how much they drove their cars. Table 35, on the following page, is a summary of the number of miles the retirees estimated they drove their cars in 1977. As is evidenced in the table, the retirees in the lower income group (under $10,000) were driving their cars less than the retirees in the higher income group (over $10,000). 119 Table 35. 1977 Estimated Miles Driven by Income Level Estimated Number 1977 Income Level Percent of Miles Under Over of Total Driven $10,000 $10,000 Retirees (N85) (N=6) (N-ll) Don't know 1 0 9.1 3,000.2; 4,000 2 1 27.3 5,000 52 6,000 2 1 27.3 8,000 tg_9,000 . 0 l 9.1 12,000 25 more 0 3 27.3 Using Public Transportation The three retirees who did not own.a car indicated that the shift to a retirement income did not have any affect on their use of public transportation. The retirees reported that they mainly rely on public transportation rather than on rides from relatives, friends, or neighbors for "getting around" the Lansing area. One retiree was living near the city center. The frequency of use of taxi service and the local bus service for each of the three retirees are listed in Table 36, on the following page. As seen in Table 36, the three retirees rarely use a taxi for running errands; however, they are frequent users of the local bus service. 120 Table 36. Use of Public Transportation by Retiree without Car Frequency of Use Retiree I.D. Number Taxi Local Bus (N-3) (N=3) 402—W3-67/7l Only in an emergency. Six times a week. 506-W2-69/72 Once a week. Four to six times a week. 6lO-SO-62/74 Once a month. Three times a week. Miscellaneous Activities The two consumption activities under the miscellaneous expenditure category were: hunting for bargains, and looking for tips on how to manage income. Only one single female reported a change in level of activity when she retired. The retiree (403-W0-62/72) stated that after retirement she spent more time shOpping for clothes on sale than she did before she retired. The remainder of the section is a presentation of the information that was collected about the two consumption activities. Huntiggpfor Bargains Five retirees indicated that they do some bargain hunting. Two of them reported that they do a small amount of bargain hunting, while three stated they do a moderate amount. In the latter instance, one retiree (504-D2—65/77) stated that she always has hunted for bargains for financial reasons; whereas the remaining two retirees cited a 121 ' and "more time non-financial factor--the challenge to "get it cheaper,‘ . . . to take advantage of sales." Nine retirees claimed that they do not spend much time hunting for bargains. The reasons that seven retirees gave for not being inter- ested in hunting for bargains were: Retiree I.D. Number Retiree Comment 401-W3-67/7l Too tiring-transportation a problem. 505-80-69/74 I want to spend my time doing other things. 506-W2-69/72 Distrust bargains. Don't have transportation. 7ll-SO-64/72 I rather do something else. It would be a chore. I don't want to accumulate. . . . 712-SO-64/75 I can't find what I want. 713-Wl-67/76 I don't like to--takes too much time. 714-SO-65/76 I don't need things as much. Several retirees admitted that they do spend time hunting for a bargain if they need a special item such as a piece of equipment. Looking for Tips on How to Manage Income All fourteen retirees responded that they were not interested in getting more information on how to manage their retirement income. One retiree (504-D2-65/77) noted that what she needed was "more income to manage. . . 3' Research Question 4: Meeting Consumption Needs Were the consumption needs of single female retirees being met? 122 The meeting of consumption needs was assessed by asking retirees to respond to five sub—questions: a general question on whether there were things that they would like to buy or to do but could not with their present income, three hypothetical questions on what retirees would do it they were recipients of different amounts of money, and a question on what had been their most serious financial problem since they retired. Sub-question: Are there things that you would like to buy or to do but you can't with your present income? Four retirees stated that there were things they would like to buy or to do but could not with their present income. The distribution of responses by rank order was: buying new furniture (2), buying things or presents for relatives (2), travel (2), redecorate house (1), and give money to relatives (1). Sub-question: Suppose you were given $500-~what would you do with it? The most frequently given response to the question of what a retiree would do if she were given $500 was to save or invest it. The response was given by eight retirees--four retirees from the lower income group and four retirees from the higher income group. A comparable number of retirees from.both income groups stated that they would save or invest the money, help relatives financially, and travel. The minor difference was that one retiree (403-W3-62/72) in the lower income group said she would "spend it on the house--paint it--maybe buy some clothes"; whereas one retiree (609-Dl-63/72) in the higher income group stated she would "put it in the bank temporarily-- later use it for something extra special." 123 Table 37 is a summary of the responses of the retirees to this question and two other hypothetical questions. The number of responses exceeds the number of retirees as several retirees gave more than one suggestion per question. sub-question: Suppose your retirement income was increased $65 to $75 a month--what would you do with the additional income? The number of responses elicited by retirees in the lower income group totaled ten. The distribution by response category was: spend money on a non-discretionary item such as a new outfit, new furniture, and redecorating items (4); use it for a discretionary item such as going on a trip (2); save or invest the additional income (2); and spend money on the children (1). One retiree did not know what she would do with the hypothetical increase in income. A total of seven responses were given by the seven retirees in the higher income group. Of these, five retirees responded that they would save or invest the additional income; and two, the money would be spent on a special item such as eating out more often. Sub-question: Suppose you were given a large amount of money-- what would you do with it? The rank order of responses elicited by the retirees in the higher income group was: save or invest the money (50 percent), spend the money on a discretionary item such as a trip or a car (40 percent), and move to a more expensive apartment (10 percent). The responses for the retirees in the lower income group were: give financial help to rela- tives (36 percent), repair or remodel house (18 percent), move to a new house (18 percent), and save or invest the money (9 percent). 124 Table 37. Responses by Hypothetical Financial Question by Expenditure Category and by Income Level Financial Qpestion-4What would you do if Your income was ‘You were given You were given increased $65 a large amount $500? to $75 a month? of money? Expenditure Under Over Under Over Under Over Category/Activity $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 (N=7) (N=7) (N=7) (N=7) (N=7) (N-7) Food Eat out more. 0 0 0 l 0 0 Health* 0 O 0 0 0 0 Personal Care and Clothing Buy clothes. 1 0 1 O 0 0 Gifts and Contribu— tions Give help to rela— tives. 2 l l 0 4 0 Give money to college. 0 O 0 0 0 1 Recreation and Educa- tion Travel or save and take trip. 1 l 2 0 1 2 Transportation Buy car. 0 0 0 0 l 1 Housing Repair, decorate, buy new furniture. 1 0 3 0 Remodel house. 0 0 0 0 Move (new or dif— ferent house or apartment). 0 0 0 0 2 l Idld c> Save or Invest.’ 4 4 2 5 1 5 Misc. (Save and buy something special) 0 l 0 1 0 0 Don't know 0 0 l 0 0 0 Total Activities 9 7 10 7 11 10 * The health category was included in the table to indicate that there were no responses in this expenditure category. 125 Sub-question: Since you retired, what do you feel has been your most serious financial problem? Only three retirees--two from the lower income group and one from the higher income group-~claimed that since they retired they have ' encountered a serious financial problem. Retiree I.D. Number Financial Problem 401-W3-67/7l Aluminum siding on house was a major invest- ment. Borrowed money from credit union. Took three to four years to pay for it. 5064W2-69/72 I have had to help my family. 714-SO-65/76 Wondering how to invest the money I had. The two retirees in the lower income group had a problem with an unexpected expense, while the retiree in the higher income group had a decision-making problem on how to invest her money. In retrospect, not one of the single females had anticipated on having any financial difficulties. The major reason'given by the retirees for not anticipating any financial problems after they retired was that their financial resources were adequate enough to meet their retirement needs. Furthermore, the retirees were not anticipating that they would encounter any financial problem within the next five years. The most frequent response given for not anticipating a finan- cial problem in the near future was that the retiree felt that her financial resources would continue to be adequate. This response was given by seven retirees--two from the lower income group, and five from the higher income group. A large number of retirees were concerned about unforeseen events. Nine of the retirees expressed a concern about inflation and/or serious health problems. 126 All fourteen retirees claimed that they have not had to forego or change any of their plans due to financial circumstances. One retiree (403-W3-62/72) commented that she has had to miss some opportunities. Research Question 5: Money Matter Contacts with Professionals Before they retired, did single females discuss any money matters related to their retirement with a professional pgrson? Since they retired? Two open questions were used to identify the preretirement and retirement professional contacts of the retirees. The responses of the retirees to each question are listed in Table 38, page 128. Findings from each question will be presented separately. Before Retirement Before they retired five retirees (three single-never-marrieds, two widows, and no divorcees) claimed that they had discussed a money matter related to their retirement with a professional person. The professionals that the retirees contacted were an attorney, an investor, and/or a broker. Retirees sought help on financial matters such as mak- ing a will, investing savings, setting up a living trust, and planning an estate. Nine retirees reported that they had not utilized the services of a professional person. Two major reasons why retirees had not utilized the services of professionals were: they did not feel that they needed to, and they were confident about their ability to handle their finan— cial affairs. The responses of seven of the retirees were as follows: 127 Retiree I.D. Number Retiree Comment 4014W3-67/7l Didn't feel it was necessary. 402-WO-62/70 Didn't figure I needed it. Had business experience. 504-D2-65/77 There wasn't that much money involved. 5064W2-69/72 I didn't expect to retire before I did. I didn't expect to make any big life changes. 608-Dl-62/76 No need to. 712-SO-64/75 I thought that I could decide in time on what I would do. 713-Wl—67/76 I felt I could handle my financial things myself. None of the retirees were able to provide any suggestions for pre- retirement professional help; however, one retiree (4034W3-62/72) noted that she could have used help in "getting me started-create awareness." After Retirement The number of retirees who discussed a money matter related to their retirement with a professional person totaled four: two single- neverdmarrieds, two widows, and no divorcees. Retirees consulted either an attorney or an investor. The financial matters that retirees dis- cussed with the professionals were wills, investments, and living trusts. Two reasons that the ten remaining retirees gave for not seek- ing professional assistance in the area of retirement finances were: did not need to(9), and did not have that much money to invest (1). Only one retiree (712-SO-67/75) made a suggestion for postretire— ment professional help. The topic, a very individualized one, was living trusts. 128 Table 38. Money Matter Discussions with Professionals Before and After Retirement Before Retirement After Retirement Retiree Professional Person: Professional Person: I.D. Number Money Matter Discussed Money Matter Discussed 4034W3-62/72 505-80—69 /74 506-W2-69/72 Lawyer: Will Investor: Investing funds. Attorney: New will. How to get more liquid assets. Investor: Investments. Transferring shares from credit union to certifi- cates of deposit. Attorney: New will. Set up trust fund. Investor: Cash in mutual funds and reinvest the money. 5074Wl-65/73 Attorney: Estate --- 7ll-SO-64/72 Broker: Everything . . --- stocks, investments, bonds, buying car. 712-SO-64/75 --- Attorney: Set up a liv- ing trust. 7134Wl-67/75 -—- Investor: Investments. 714-80—65/76 Investor: Mutual funds and --- advantages of a living trust. Note: The following interviewees did not contact a professional either before or after they retired: 4014W3-67/71, 402-WO-62/70, 504-D2-65/77, 608—Dl-62/76, 609-D1-63/72, and 610-SO-62/74. 129 Research Question 6: Money Matter Contacts with Nonprofessionals Before they retired, did single females discuss any money matters related to their retirement with a nonprofessional person? Since they retired? Open questions were used to obtain information about nonprofes- sional contacts before retirement and after retirement. The responses of the retirees to the questions are listed in Table 39, pages 130-131. Findings will be presented under two headings: single female retirees with children, and single female retirees without children. Single Female Retirees with Children Prior to their retirement, six of the eight retirees with children indicated that they had discussed money matters related to their retire- ment with a nonprofessional person. The six retirees had either sought the opinions of their children about their forthcoming retirement or shared financial information with them. Only one retiree reported that she had talked to a retired friend about how retirees were "getting along financially." The two retirees who stated that they had not discussed money matters with a nonprofessional person cited either independence or abil- ity to figure it out as the reason they had not utilized nonprofessionals as a preretirement source of information. The nonprofessional contacts after retirement were: three retirees discussed money matters with both their children and retired friends, while two retirees had confined their financial discussions to their children. The remaining three retirees claimed they had not discussed any financial matters with either a relative or another retiree. 130 Single Female Retirees without Children The group of single female retirees without children was composed of five single-never-marrieds and one widow. Prior to their retirement only three of the single-neverdmarrieds had discussed a money matter related to their retirement with a nonprofessional person. Two of the retirees had discussed financial matters with some of their retired friends, while the third retiree had discussed financial matters with both her brother and father. The reasons that the remaining three single females without chil- dren (two single-never-marrieds and one widow) gave for not discussing money matters with a nonprofessional person prior to their retirement were: "didn't need it," "none of their business," and "didn't think they would have any answers." After retirement the five single—neverdmarrieds claimed that they had discussed a money matter related to their retirement with a nonpro- fessional person. Retirees tended to share financial information with relatives and exchange financial experiences with other retirees. 131 Table 39. Money Matter Discussions with Nonprofessionals--Retirees with and without Children--Before and After Retirement Before Retirement After Retirement Retiree Nonprofessional Person: Nonprofessional Person: I.D. Number Money Matter Discussed Money Matter Discussed Retirees with Children 4014W3-67/71 4034W3-62/72 504-D2-65/77 5064W2-69/72 5074Wl-65/73 608—D1-62/76 609-D1-63/72 7134W1-67/75 Children: Whether or not to retire and how much money I would be getting. --- (Had it pretty well figured out and didn't feel that they could help me. Isn't any of their business.) Children: Told them what I had to live on. Retired Friend: Generally on how others were getting along financially. --- (I am not the kind of person to discuss it with anyone. I am independent.) Daughter: Estate. Sale of cottage. Told her what I was planning on doing. Daughter: My retirement options. Daughter: Options for retirement. Daughter: ments. Types of invest- Children: General conver- sations about finances. Children: Income-~whether it was adequate for my needs. Retired Friend: How she was getting along. -- (No need to.) Children: My investments. Retired Friend: Amount of pension and social secur- ity, and insurance. Daughter: Keeping her advised on my money matters. Daughter: Income and financial status. Retiree: Financial expenses. —-— (I haven't felt the need.) continued 132 Table 39-Cont'd. Before Retirement Retiree Nonprofessional Person: I.D. Number Money Matter Discussed After Retirement Nonprofessional Person: Money Matter Discussed Retirees without Children 402-WO-62/70 --- (Didn't figure I needed it. I am alone and independent.) 505-SO-69/74 --- (None of their business.) 6lO-SO-62/74 -—- (I didn't think they would have any answers.) 7ll-SO-64/72 Retirees: How they were doing. 712—SO-64/75 Retirees: General way-- just about retiring. 7l4-SO-65/76 Brother: Found farm for me. Father: About moving to this area. --- (No need to.) Sister: Shared (finan- cial) information. Retired Friend: Whether we were making ends meet and how surprised we were on how it was covering everything. Retired: Shared experi- ences. Friend: Casually about retirement income. Liv- ing trust. Relatives: Told them about living trust. Brother: Some points about selling property in Florida. CHAPTER V DISCUSSION OF FINDINGS The findings from the research questions will be discussed in the following order: preretirement financial strategies, retirement finan- cial strategies, changes in consumption patterns, meeting consumption needs, money matter contacts with professionals, and money matter con- tacts with nonprofessionals. Preretirement Financial Strategies An analysis of the replies of the retirees to eleven preretirement strategy questions and related probe questions tended to suggest that financially the single females were prepared for retirement. Findings supporting this conclusion were: 1. Prior to their retirement, all the retirees had inquired or were informed about the amount of retirement income they would receive . 2. At the time of their retirement, ten retirees did not have an outstanding debt. The four retirees who did have an out- standing debt were not concerned about it. 3. Prior to their retirement, eleven retirees had attended a preretirement meeting. 4. At the time of their retirement, the nine car owners either had recently purchased a new car or owned an older car in good condition. 5. When they retired, the major household items that single females owned were in good condition. 133 134 6. Prior to their retirement, all the single females had made a decision on where they would live after they retired. Thirteen of the decisions appeared to be subconscious ones, while the remaining one was a conscious one. In the latter case, the decision was more obvious as the retiree purchased a new mdbile home. Furthermore, the majority of single females did not change their health "cut insurance policies other than to apply for medicare if eligible, back" on their living expenses, or undertake to estimate their retire- ment living expenses. Most retirees knew what their retirement living expenses would be as they were not planning on making any major changes in their life style, and they were anticipating that their retirement living expenses would be approximately the same as their preretirement living expenses. Only six retirees reported that they had read a pamphlet or a book on retirement finances. The small number of retirees who reported that they read written material about retirement finances may indicate one or more of the following: retirees may not be aware of the written information that is available on retirement finances, retirees are not interested in reading or do not need to read about retirement finances, or the instrument was not sensitive enough to identify the written material that retirees did read on retirement finances. Before a defin- ite statement can be made about the execution of this preretirement strategy it should be reexamined by using a closed question rather than an open question. 135 Retirement Financial Strategies The six postretirement financial strategies that were examined in the survey were: used savings and/or investments, shifted savings and/ or investments, received financial help from relatives, received finan- cial help from nonrelatives, tried to find a job, and had to sell some- thing. Only three retirees reported that they had initiated one of the strategies to help pay for some of their retirement living expenses. Two reasons why the remaining eleven retirees did not initiate any of the postretirement financial strategies were: their retirement income was adequate enough to meet their retirement living expenses, and re- tirees were living well within their incomes. Most of the retirees indicated that prior to their retirement they had established a conserv- ative life style. The strategy that the three retirees implemented was using some of their savings and/or investments. The savings were used for a special living expense such as paying for house repairs and buying a car. Retirees were reluctant to use their savings to pay for some of their regular living expenses. It is conjectured that this reluctance can be attributed to at least two things: some of the retirees are planning on leaving an estate to their children, and retirees would like to have some savings in case they encounter adverse financial circumr stances. In the past, these retirees have experienced drastic financial circumstances (i.e., the depression, death of a spouse, or separation from a spouse). 136 The reluctance to use savings was demonstrated by the responses the retirees made to a hypothetical question on what they would do if they found for a particular month that their retirement living expenses were exceeding their retirement income. Only three (21 percent) of the retirees stated that they would draw the money out of their savings while the remaining eleven (79 percent) said they would either try to manage their expenses before using their savings, cut down or curtail expenses, do nothing, or make some prearrangements. Table 40 is a sume mary of the responses of the retirees by response category and by income level. Table 40. Responses to Hypothetical Situation-~Monthly Expenses Exceed Monthly Income by Response Category and by Income Level 1977 Income Level Retirees Under Over Percent Response Category $10,000 $10,000 Number of Total (N=7) (N=7) (N=l4) Cut down or curtail expenses 0 4 4 28.6 Try to manage first, then use savings 3 O 3 21.4 Draw money out of savings 1 2 3 21.4 Do nothing 2 l 3 21.4 Other* 1 0 l 7.1 * Would go back and check my records. I would make some prearrangements. Cushion myself. 137 To avoid withdrawing monies from their savings accounts to pay for large biannual cu? annual living expenses, retirees either plan ahead for these expenses or maintain large checking account balances. These financial practices were noted by the responses retirees made to a ques- tion on how they manage to pay large periodical bills such as house taxes or automobile insurance. Twelve retirees claimed that they either plan ahead or maintain large checking account balances. These responses were made by seven retirees from the lower income group and five retirees from the higher income group. See Table 41 for the summary of the re- sponses of the retirees by response category and by income level of the retiree. Table 41. Strategies for Paying Large Periodical Bills by Response Category and by Income Level 1977 Income Level Retirees Under Over Percent Response Category $10,000 $10,000 Number of Total (N57) 4(N=7) (N814) Pay bills from my checking account or revolvinggfund (keep a lot of money in my check- ing account; put more in checking account; have enough money in my checking account) 6 3 9 64.3 Plan ahead (plan ahead to take care of them; don't make any major purchases when a major bill is due; keep money in a special household account--bank account) 1 2 3 21.4 Pay then out of my savigga Account 0 l l 7.1 Don't have such bills* 0 l l 7.1 * Retiree does not own a car or a house. 138 A total of eight retirees reported that they maintain substantial bank balances. Four noted that they maintain a $500 balance, one a $1,000 balance, two a $1,500 balance, and one a $2,000 balance. Retirees were maintaining these large bank balances even if they knew they were losing earnings from interest. Changes in Consumption Patterns A total of twenty-eight activities were used to examine whether the shift to a retirement income had any impact on the consuming behavior of single female retirees. The responses were tabulated by retiree, by expenditure category, and by consumption activity. The tabulation by retiree showed that only four retirees claimed that the shift to a retirement income had an impact on their consumption activities. Changes in Income Level Retiree Consumption Year Before I.D. Number Level Retirement 1977 402-WO-62/70 - 4 $13,000 to $14,999 $6,000 to $7,999 403-W3-62/72 - 7 $10,000 to $12,999 $6,000 to $7 ,999 610-SO-62/74 + 3 $8,000 to $9,999 $10,000 to $12,999 713-Wl-67/75 + 4 Over $15,000 Over $15,000 A comparison of the estimated income that each of the four retirees received the year before retirement and in the year 1977 showed that the two retirees who reported decreases in consumption experienced siz— able reductions in income; whereas the two retirees in the higher income group who reported increases experienced either a slight reduction, no reduction, or a slight increase in gross retirement income. 139 In the past it was assumed that with increasing age older individ- uals would be less inclined to purchase consumer goods. Data from this survey do not support this assumption. Findings tend to support Jaffe's contention (1972, p. 41) that older people will continue to spend money on consumer goods if they have the income. The support emanates from two observations. First, there was little difference between the preretirement and retirement levels of consumption of the single females for specific activities such as seeing a doctor, going to a beauty parlor, purchase of gifts, making long distance phone calls, and con- sumption of heat or electricity. It is possible that larger differences could have occurred if the participants in the survey had been retired for a longer period of time and then been asked to compare their current consumption with their preretirement consumption. Second, the retirees have been and are planning on purchasing expensive consumer products. Since they retired five retirees have purchased new cars. Within the next three or four years, five retirees are planning on buying new cars while eleven retirees are contemplating on buying some new furniture and/or redecorating their homes or apart- ments. The remainder of the section on changes in consumption patterns will be confined to the discussion of findings from each of the expendi- ture category. The findings will be discussed in the following order: food, health, personal care and clothing, recreation and education, gifts and contributions, housing, transportation, and miscellaneous activities. 140 'Fggd The consumption activities in the food expenditure category were chosen to examine if single females, when they shifted to a retirement income, had to curtail certain food expenditures (type of food purchased at grocery store, and eating out in restaurants), to substitute time and energy for money (can and freeze food), or to participate in any of the government food subsidy programs. Findings indicated that when the single females shifted to a re- tirement income it had little or no impact on the four consumption activities in the food expenditure category. One explanation for why the retirees did not have to change their level of activity in this expenditure category was that their annual incomes were adequate enough to meet their retirement needs. Since retirement, several retirees reported changes both in the type of food being purchased at the grocery store and in the frequency of eating out in restaurants; however, in all cases, except one, the factors behind these changes were personal or social factors rather than financial ones. The findings that single female retirees are not interested in canning or freezing food, do not have adequate space to store canned or frozen foods, and no longer have the equipment necessary to canfood are useful facts for professionals. These facts tend to suggest to professionals that before they develop programs for single female retirees which encourage them to can or freeze food as an economizing measure or as a special retirement activity they should examine whether the idea is a feasible one for the target audience. 141 The finding that none of the retirees became an active participant in a major government food program for older citizens was anticipated. It was anticipated since the annual incomes of all fourteen retirees could disqualify them from participating in these programs. It is con- jectured that there are state retirees who are eligible to participate in these programs but they would be the retirees who are receiving a low state pension such as the state employees who retired in the 1950's and early 1960's. These retirees, however, would not have been eligible to participate in this study. Health The health consumption activities were limited to seeing doctor, buying prescription medicines, and getting medical treatment. An analy- sis of the data indicated that when the single females shifted to a retirement income, it did not have any effect on the three health con- sumption activities. This finding was anticipated for two reasons. First, the retirees who volunteered for the study were healthy individ— uals. Their health status was based on responses that retirees made to three health questions. See Table 18, on page 74, for the responses of each retiree to the three questions. Second, all fourteen retirees had an insurance policy that would reimburse them for a major portion of the cost of medical expenses and medicines once the amount of the deductibles was exceeded. In addition, when they retired, seven of the retirees were covered by medicare while the remaining seven would be eligible for medicare coverage within one to three years after they retired. 142 Responses to a question on whether their health insurance ade- quately covers the cost of medical treatment tended to suggest that approximately one-third of the retirees may not fully understand the financial provisions of their health insurance policies. This conclu- sion was precipitated by comments four retirees made: "I haven't had. to use it," "Don't know for sure," "I guess it would," and "I think so." Personal Care and Clothing The two consumption activities under the personal care and cloth- ing expenditure category were going to beauty parlor and buying ready- made clothes. An examination of the data indicated that the shift to a retirement income had little or no affect on the level of consumption of the retirees in this category. The finding that there was little difference between the prere- tirement and retirement visits to a beauty parlor can be regarded as being an indicator that the retirees were maintaining their preretire- ment level of living. Murray (1975) commented about the significance of this activity: It is assumed, however, that changes in the level of use of barber shops/beauty salons . . . may serve as an indicator of possible changes in style of living . . . when retirement takes place. (p. 17). Findings tend to suggest that the clothing needs of thirteen retirees were being met. This statement is based on responses that retirees made to a question on whether they would buy more clothes if they had additional income. The retirees responded that they would not buy more clothes because they either "had all the clothes they needed," "didn't need any more," "had too many,’ or "buy all they need now." 143 Recreation and Education The three activities in the recreation and education expenditure category were selected so an examination could be made on whether the shift to a retirement income had any effect on a personal interest (number of hobbies), recreational travel (taking vacation trips), and outside interests (subscriptions to magazines and newspapers). The shift to a retirement income appeared to have little or no effect on the three activities. This statement is based on three find— ings: fourteen retirees reported that they did not have to give up any of their hobbies, thirteen retirees claimed they did not have to forego taking vacation trips, and fourteen retirees stated that they did not have to cancel any magazine or newspaper subscriptions. Even if the single females are retired, they continue to be active. Several retirees indicated that they have increased the number of their hobbies, the time they spend on their hobbies, the number of vacation trips they take, the length of their vacation trips, and/or the number of magazines they take. Retirees attributed these increases to having more time for hobbies, traveling, and reading. Gifts and Contributions The gifts and contributions expenditure category was included in the study as it can provide information on whether retirees have been able to maintain activities which are important to their being satisfied with their level of living. Murray (1975) called attention to the value that this expenditure category has for individuals when she wrote: 144 Contributions . . . , gifts are not considered necessities. . . . Nevertheless the ability to spend something for these items may be important to the general satisfaction of the individual with their style of living. (p. 17) When the retirees were asked whether the shift to a retirement income affected the number of gifts they buy, the amount of money they donate to their church, the amount of money they donate to charitable organizations, and the amount of financial help they give to relatives, a total of nine changes in level of consumption were reported-~four decreases and five increases. The changes in level of consumption appeared to be related to the income level of the retiree. The four decreases were reported by two retirees in the lower income group; whereas the five increases were reported by two retirees in the income group. The amount of money retirees estimated that they donated to charit- able organizations in 1977 was partially related to income level. Four of the retirees who estimated they donated more than $100 were from the higher income group; whereas seven of the retirees who esti- mated they donated less than $100 were from the lower income group. Income level of retiree did not completely explain the amount of money that retirees estimated they spent on gifts in 1977. The income group which spent the largest average amount was identified as being the retirees whose annual incomes ranged from $8,000 to $9,999. Cross— tabulating number of children by amount Spent on gifts tends to suggest that the number of children may be an important factor. The contents of Table 42 indicate that the average amount of money spent on gifts progressively increases up to two children and then declines. 145 Table 42. 1977 Estimated Money Spent on Gifts by Financial Amount and by Number of Children Financial Amount Approx. Less $50 $100 $200 Total Average/ Number of than to to to Over Number of Number of Children $50 $100 $200 $300 $300 Retirees Children None 1 l 2 l l 6 $158+ One 0 0 2 1 1 4 $212+ Two 0 0 0 l l 2 $275+ Three 0 0 l l 0 2 $200 Total Retirees by Gift Level 1 l 5 4 3 l4 Although twelve of the retirees were not currently helping any relatives financially, many of the retirees were willing to help them. This willingness was evidenced by the responses that three retirees made to a hypothetical question on what they would do if they were given a small amount of money--say like $500: Retiree I.D. Number Retiree Comment 4014W3-67/7l Help my children if they would let me. 5074Wl—65/73 Divide it between two of my grandchildren-- savings accounts for the grandchildren. 7l4-SO-65/76 Help my niece buy a car. and the responses four retirees made to a hypothetical question on what they would do if they were given a large amount of money: Retiree I.D. Number 4014W3-67/7l 505-80-69/74 506-W2-69/72 5074W1-65/73 Housing 146 Retiree Comment Spend money on the kids. Would give it to relatives where it is needed. Give it away to my family. Pay up a house for them. Trust fund for my two grandchildren. The consumption activities in the housing expenditure category were selected for the purpose of determining what affect a shift to a retirement income had on the following two things: Consumption of Three Selected Utilities Use of telephone. Consumption of heat and electricity. Amount of Money Spent on.Maintaining and Decorating Home/Mobile Home/Apartment Keeping exterior of house or mobile home and yard in good condition. Redecorating inside of house or mobile home. Buying new piece of equipment. Redecorating apartment. Analysis of the data indicated that when the single females shifted to a retirement income, it had little or no impact on their use of the telephone, consumption of heat, and consumption of electricity. In addition, the shift did not have much impact on the amount of money that could be spent on maintaining or redecorating their home/mobile home/apartment. This conclusion is based on the observation that only four changes in level of consumption were reported by the retirees. Findings tend to suggest that for this particular group of retirees, nonfinancial factors are more likely to influence expenditures in the housing area than financial circumstances. 147 The majority of retirees indicated that since they retired they have not reduced the number of long distance telephone calls they make, the amount of heat they use, or the amount of electricity they use. The major factors that influenced several retirees to reduce their consumption of heat and increase their consumption of electricity were not financial ones. The main factor that influenced several retirees to reduce their consumption of heat was concern over the energy crisis, while the main factor that influenced retirees to increase their con- sumption of electricity was "being home more." Single female retirees are potential consumers of home furnishings items and home maintenance products. Eleven retirees (seven homeowners and four apartment dwellers) indicated that they were planning on buying a new piece of furniture, on buying a new piece of equipment, and/or on redecorating their apartments or homes. The amount of redecorating that a retiree who rents an apartment planned on doing appeared to depend upon three things: whether the apartment was completely furnished, how long it had been since the apartment had been redecorated, and the agreement between the tenent and the apartment owner. Transportation The impact of a shift to a retirement income on expenditures in the transportation area was ascertained by asking retirees who were car owners whether the shift had any effect on their buying a new car, hav- ing their cars serviced, and how much they drove their cars; and by asking retirees who did not own a car whether the shift had any effect on their use of public transportation. 148 An analysis of the data indicated that the shift to a retirement income did not have much effect on the consumption activities in the transportation expenditure category. This conclusion is based on the following findings: ten of the eleven car owners reported that the shift in income did not have any effect on their purchase of a new car, all eleven car owners were having their cars serviced regularly, all eleven car owners claimed they did not have to curtail how much they drove their cars, and all three retirees who were not car owners did not have to reduce their use of public transportation. Level of income of retiree appeared to be a factor on how much retirees drove their cars in 1977. Four of the five retirees (80 per- cent) in the lower income group estimated that they drove their cars less than 6,000 miles; whereas three of the six retirees (50 percent) in the higher income group estimated they drove their cars approximately 12,000 miles. The difference in mileage between the retirees in the two income groups was related to the fact that the retirees in the higher income group undertook.more extensive vacation trips. Miscellaneous Activities The two activities in the miscellaneous activities category were selected so an examination could be made on whether the retirees had used either one of the financial practices during their adjustment to a retirement income and whether the retirees would be interested in receiv- ing information about each activity. The two activities were: hunting for bargains, and looking for tips on how to manage their retirement income. 149 Three findings emerged from the analysis of the data. First, when they retired, the majority of single females did not increase the amount of time they were spending on hunting for bargains or looking for tips on how to manage their income. Two reasons why retirees were not spending more time on either activity appeared to be that the re- tirees preferred to use their time doing other things, and their retire- ment income was adequate enough to meet their retirement living expenses. Second, the single female retirees are not bargain hunters. Although they are not avid bargain hunters, many of them do spend time hunting for a bargain if they need a special item. The majority of retirees indicated that they will not buy an item unless they really need it. Third, single female retirees do not want more information on how to manage their retirement income. The majority of the single female retirees implied that they were capable of handling their own financial affairs. This attitude is understandable when one recalls that these individuals have been managing their financial affairs for forty-five years or more and have managed their finances during several adverse financial periods. The finding that single female retirees are not interested in getting more information on how to manage their retirement income is an important one for professionals. This fact tends to suggest to profes- sionals that it may not be advisable for them to concentrate their efforts on helping single female retirees adjust to their retirement income. It may suggest that professional efforts should be concentrated on helping these retirees maximize their earnings from investments. 150 Meetigngonsumption Needs The findings from the five questions which served as tentative measures of whether the consumption needs of single female retirees were being met suggest that their consumption needs were being satisfied. This conclusion is based on the following four observations: 1. Only four retirees noted that there were things they could not buy or do with their present income. Most of the items that retirees mentioned were not retirement living expenses. 2. Not one retiree reported that she had to forego or change 3. any of her retirement plans. One retiree mentioned that she had to miss some opportunities. The majority of retirees indicated that they were main- taining their preretirement level of consumption. 4. When retirees were offered hypothetical amounts of money, only 15 percent of the responses that the retirees made on what they would do with the money were living expense items. The remaining responses (85 percent) were that the retiree would buy a discretionary item, give the money to a relative, or save it. The four retirees who responded that there were things they would like to buy or to do but could not with their present income had three attributes in common: they were in the lower income group of the sample, they lived in older homes in older neighborhoods, and they had either two or three living children. The remainder of the section will be a discussion of the findings from the three hypothetical questions on what a retiree would do if she were given $500, a $65 to $75 month increase in retirement income, and a large financial gift. A total of fifty-two responses were made to the three hypothetical questions. Of these, only eight (15 percent) involved living expenses; 151 whereas the remaining forty-four (85 percent) were nonliving expenses. The distribution of responses in descending order of frequency was: save or invest it (21); travel or spend it for a special item (12); help or give it to a relative or a college (9); use it for a retirement living expense such as repairing the house, buying a new outfit, or buy- ing new furniture (8); move to a new location (3), and do not know (1). A possible explanation of why a large number of retirees responded ' that they would save any additional money they receive is that it takes time for most individuals to change their consumption patterns. Thus any additional income or money that is received is saved until new con- sumption patterns are adopted or become habitual. There appeared to be little difference between the responses that the retirees in the two income groups made to the hypothetical question on what they would do with a financial gift of $500. A comparable num- ber of retirees in both income groups stated that they would save or invest it, help relatives, and travel. There were notable differences in the responses that retirees in the two income groups made to the remaining two hypothetical questions: an increase in retirement income and being given a large financial gift. The differences between the responses of the retirees to an increase in retirement income could be attributed to two things. First, the retirees in the higher income group are in a better financial position to purchase the goods and services they need and they could have reached the point where an additional increase in income would not influence their expendi- ture pattern. Second, there is a relative difference between the impact that a set monetary increase in income would have on the two groups of 152 retirees. The relative percent increase for the lower income group, if the increase were $75 a month, would range between nine to fifteen per- cent compared to an estimated three to nine percent for the retirees in the higher income group. Additional information could have been ob- tained if a definite percent increase had been used rather than a specific amount of money. The differences in responses of the retirees as to what they would do if they were recipients of a large financial gift could be attributed to three factors. The first factor, which was income, was evidenced by the fact that five retirees in the higher income group speculated that they would save or invest the money compared to one retiree in the lower income group. The second factor, housing status, was related to the income status of retiree. Retirees in the lower income group were more likely to state that they would use the money from a large financial gift to improve their housing status as a larger percent of them owned or were buying their homes. All seven retirees (100 percent) in the lower income group either owned or were buying their homes, compared to two retirees (28 percent) in the higher income group. The remaining five retirees (79 percent) in the higher income group lived in apart- ments, several of which were relatively new structures. The third factor was identified as being presence of living chil- dren. The influence of this factor was evidenced when a larger number of the retirees in the lower income group responded that they would use the money to help relatives. A comparison of how many retirees in each income group had at least one living child showed that five retirees 153 (71 percent) in the lower income group were parents compared to two retirees (29 percent) in the higher income group. Money Matter Contacts with Professionals Two open questions were used to obtain information on whether the single females had discussed money matters related to their retirement with professional people either before they retired or after they retired. Analysis of the responses of the retirees to the questions indicated that before retirement as well as after retirement the major— ity of single females were not utilizing the services of professionals. The finding that the majority of single female retirees have not been utilizing the services of professional people could be attributed to three things. First, retirees may not be aware of how the various professional people could help them in planning or managing their r et ir ement f inanc es . Second, single female retirees may not need any assistance in managing their retirement finances. The comments of the retirees tended to suggest that retirees are confident about their ability to handle their financial matters and perceive no need for them to consult a pro- fessional person. This finding lends support to results from the Cornell studies. Thompson (1958) noted that: Evidence from the Cornell studies seemed to show that the present generation of oldsters are more widely capable of managing their own lives than would be indicated by the proliferation of counseling programs, aids to self-help, advice to "age-lorn," and organized activity programs for older people. (p. 44) 154 Furthermore, the single female retirees who were participants in the study have been managing their finances for at least forty-five years or more and they have had to manage them during several difficult financial periods such as the depression, death of a spouse, or separa- tion from a spouse. Third, professional people may have neglected to alert preretirees and/or retirees on the various ways they could help them with their retirement finances. And lastly, the instrument may not have been sen- sitive enough to identify the discussions that retirees had with profes- sionals. It is possible that if two closed questions had been used rather than the two open ones, retirees would have been better able to recall their professional contacts. The assistance that single female retirees sought from profes- sional people before they retired and after they retired are potential ideas for programs. The potential ideas that were identified in this survey were wills, investments, living trusts, and estate planning. Money Matter Contacts with Nonprofessionals Two open questions were used to ascertain whether the single females had discussed money matters related to their retirement income with a nonprofessional person before they retired and after they retired. Nonprofessionals were regarded as being relatives, co-workers, friends, and/or retirees. An examination of the data indicated that some of the single females did discuss, and have discussed, money matters related to their 155 retirement finances with nonprofessionals. The nonprofessional person that a single female discussed financial matters with depended upon whether the retiree had any living children and/or other relatives, and whether the contact was made before or after retirement. Before they retired, single females who had living children tended to discuss money matters related to their retirement with their children. After retirement there appeared to be a tendency for the single females to increase their discussions about money matters with nonrelatives. CHAPTER VI CONCLUSIONS AND IMPLICATIONS This chapter includes the conclusions from the research questions, limitations of the study, implications, and concluding remarks. Conclusions Within the confines of this study, which utilized a purposive sample of fourteen single white females who were receiving both a social security benefit and a state or private pension, the following conclusions were drawn. Conclusions are organized by research question. Several general conclusions are listed at the end. Preretirement Financial Strategies 1. 2. Prior to their retirement, the single females appeared to have their financial affairs under control. When they retired, most of the single female retirees did not have an outstanding debt. The retirees who did have an outstanding debt were confident that they could pay off the debt. The majority of retirees who had an outstanding debt were using the debt for income tax purposes. The majority of single female retirees in the survey did not perceive or utilize financial pamphlets and/or books as a preretirement source of information. The single female retirees did not have to cut back on their living expenses because their financial resources were adequate, and earlier in their working careers they had established a conservative life style. 156 157 Postretirement Financial Strategies 5. Most single female retirees in the study did not have to use their savings and/or investments, shift their savings and/or investments, accept financial help from relatives and/or nonrelatives, find a job, or sell any of their possession in order to pay for some of their retirement living expenses. The single female retirees were reluctant to use their savings and/or investments to pay for some of their retire— ment living expenses. Changes in Consumption Patterns 7. 10. 11. When the single females shifted to a retirement income, it had little or no affect on the twenty-eight consumption activities examined in the study. . The expenditure category where the largest number of changes in level of consumption occurred was gifts and contributions. The single female retirees did not increase their use of the following three financial management practices: canning or freezing of food, hunting for bargains, and looking for tips on how to manage their retirement income. The single female retirees were reluctant to purchase a large consumer product unless they really needed it. The factors which influenced the consumption patterns of single female retirees tend to be personal and social factors rather than financial ones. Meeting Consumption Needs 12. 13. Retirees in the higher income group were more likely to speculate they would save or invest the money they would receive from an increase in income or from a financial gift than retirees in the lower income group. For at least the next five years, the single female retirees anticipate that their retirement income will continue to meet their retirement expenses. Money Matter Contacts with Professionals 14. The single female retirees did not perceive or utilize the services of professional individuals either before they retired or after they retired. 158 15. The single female retirees were reluctant to utilize professional help. Retirees indicated they are confident about their ability to handle their financial affairs. l6. Single-neverdmarrieds and widows were more likely to utilize the services of a professional person than divorcees. Money Matter Contacts with Nonprofessionals 17. Single female preretirees were not utilizing retirees as a source of information in either planning or managing their retirement finances. General 18. The single female retirees appeared to be maintaining their preretirement level of consumption on their retirement income. 19. The retirement take-home pay of single female retirees may be equivalent to or may exceed their preretirement take- home pay. 20. The single female retirees in the lower income group were more likely to be using a financial plan. 21. The most common type of financial plan being used by single female retirees was a mental plan. 22. During the past two years, the asset holdings of the single female retirees either remained the same or increased slightly. A comparison of the responses of the retirees from the two income groups showed that there were very few differences between the financial strategies that retirees in either group used when they shifted to a retirement income. There was a slight, but not significant, tendency for retirees in the lower income group to implement some of the prere- tirement and postretirement strategies than retirees in the lower income group. The similarity between the responses of retirees from both income groups is conjectured to be that the retirees in the two groups had 159 already adjusted their consumption activities to either a low income or a high income. In addition, many of the retirees were receiving retire- ment incomes that were comparable to their preretirement incomes. Consequently, the financial pressure for the retirees to modify their consumption patterns was minimal. The findings tend to suggest that there are at least two inter- vening demographic variables that help explain some of the differences that were observed between the two income groups of single white female retirees. They are housing status, which is related to level of income, and the number of living children. Limitations of the Study The limitations of the study were inherent in its design. The two underlying factors were: the study was an exploratory one, and volunteers were used as subjects since the investigator did not have access to a list of names and addresses of state retirees in the Lansing area. Three limitations were identified: results are not generalizable beyond the sample survey, responses given to open questions are influ- enced by the respondent's frame of reference, and dependence on recall could have biased the results. Each limitation will be briefly dis- cussed. GeneralizinggResults At least three factors limited the generalizability of the results beyond the survey sample. The first factor was that volunteers were 160 used as subjects. This could have biased the results if the single female retirees who volunteered for the study used different financial strategies to adjust to a shift to a retirement income than single female retirees who did not volunteer for the study. Since data were not collected on the nonvolunteer segment of the population, the investi- gator speculates that it is possible that differences could exist. An analysis of the data showed that all the volunteers were members of the white race, many of the participants had held supervisory positions, the majority had been active during their preretirement years, and a large portion of the retirees were engaged in volunteer work. The second factor is that the number of individuals who volun- teered for the study totaled fourteen. It is believed, however, that the trend in the data may be representative of single female retirees who are receiving an income from.tgree sources (social security benefits, a second pension, and earnings from investments). The third factor is that the target population--the single females who retired from employment with the State of Michigan--is not a typical group of retirees. According to a Census Bureau (l975e) survey of newly entitled social security beneficiaries, only three percent of the non- married women who retired between January 1970 and June 1970 had three sources of income (p. 287). Forty-nine percent of the nonmarried women had two sources of income, while the remaining 48 percent had only one source of income. Use of Open Questions Two main drawbacks of using open questions are: questions are answered in terms of an interviewee's frame of reference rather than the 161 investigator's frame of reference, and open questions may not provide the quality of data desired by an investigator. The open questions which were used in this study to identify the kind of professional help single female preretirees and retirees have used, and could use, did not provide sufficient information so that definite statements could be made. It is conjectured that more specific information could have been secured if some of the open questions had been converted to closed ones. Open questions which could be converted to closed ones are those which solicited information about the follow- ing areas: professional help needed by single female preretirees and single female retirees, professional contacts before and after retire— ment, and nonprofessional contacts before and after retirement. Dependence on Recall Since it was impractical to conduct a time series or a longitudi- nal study, the investigator had to depend upon the ability of retirees to recall preretirement consumption activities, preretirement financial practices, and the initial adjustment to their retirement income. The use of recall data could have biased the results. Bias could have occurred if the retirees recalled only the pleasant things, were reluc— tant to mention unpleasant memories, or had changed their perceptions on how they adjusted to the shift to a retirement income. A change in perception on financial adjustment to retirement was documented in the Cornell studies. Thompson and Streib (1958, p. 26) observed that in the initial adjustment to a reduced income, retirees experienced a feel- ing of economic deprivation; but the feeling became less pronounced after the first impact of retirement was over. 162 Implications The section on implications will be separated into two parts: implications for research and implications for professionals. Implications for Research The ideas generated for research are: refine and validate the interview schedule, examine and compare other groups of retirees, and conduct a time series study. Each idea will be discussed briefly. Refine and Validate the Instrument Currently there is not an instrument available that examines the financial strategies retirees executed before they retired, whether retirees have had to supplement their retirement income to help pay for their retirement living expenses, and whether the shift to a retirement income has had any effect on their consumption activities. If further research work is to be done in this area, then it is imperative that a valid instrument for comparing findings be developed. The instrument used in this study could be improved and validated. Some of the refinements that would improve the instrument are: 1. Change the responses of the eleven questions on preretirement financial strategies from "yes-and-no" to fixed responses that will distinguish between retireees who did not execute a strategy from retirees who did not have to execute a strategy because they did not need to. 2. Change the open questions on preretirement and retirement money matter discussions with professionals and nonprofes- sionals to closed questions which will give specific information. 3. Convert the open questions on preretirement and retirement professional help to questions requiring retirees to respond to a variety of financial topics. 163 4. Add extra categories to the upper range of asset holdings, and separate asset holdings into two groups: value of real estate and value of monetary assets. 5. Change the question "Since you retired, what do you feel has been your most serious financial problem?" to "Since you retired, have you had a serious financial problem?" 6. Change the question "What kind of a guide or plan do you use for spending your income . . . is it a written plan, a mental plan, or what?" to "Which of the following best describes the guide or plan you use for spending your income . . . ?" It is speculated that the interview schedule could be modified and used as an instrument to collect information on how retirees have adjusted to the impact of inflation on their retirement incomes. Consumption questions could be reworded to ask whether the increase in the cost-of- living since retirement had any affect on the type of food purchased at grocery store, taking vacation trips, going to a beauty parlor, and money donated to church. Examine and Compare Other Groups of Single Retirees To obtain a complete picture of how single retirees have adjusted to their retirement income, other sub-groups of single retirees should be examined. Five possible studies have been identified. 1. Examine whether there are differences between the financial adjustment patterns of single white female retirees and single nonwhite female retirees. 2. Investigate whether there are financial adjustment differences between single female retirees who receive only a social ‘security benefit and single female retirees who receive both a social security benefit and a pension. 3. Investigate whether single female retirees use different financial management practices when they adjust to a retire- ment income than do single male retirees. 164 4. Compare the financial adjustment differences of three groups of single retirees: single-never~married females/widows] divorced females or single-neverdmarried males/widowers/ divorced males. 5. Examine whether there are differences between the financial adjustment patterns of single retirees from various occupa- tional groups (i.e., professionals, clerical and sales, unskilled wage earners, and semi-skilled wage earners). Conduct a Time Series Study The change in level of consumption as single females shift to a retirement income can be more effectively examined from data collected during a time series study. If data were collected on the same single female retirees on several different occasions, an investigator could record the actual financial adjustment to retirement rather than having to rely exclusively on retrospective accounts. The minimum time series study suggested is a fourdwave one. A.wave could be conducted two months before retirement, two months after retirement, six months after retirement, and one year after retirement. Three records which would be important to the study are: an expenditure record of selected goods and/or services, an activity record of selected activities, and an income record. Implications for Professionals The implications for professionals will be presented in two parts: before retirement and after retirement. Before Retirement The findings tend to suggest three areas where professionals such as family ecologists/home economists, lawyers, investors, or attorneys could assist single female preretirees. 165 1. Professional people could assist single female preretirees to prepare their wills and plan their estates. 2. Professionals could assist single female preretirees to maximize their earnings from investments. 3. Professionals could prepare single female preretirees for the eroding impact that inflation can have on their retire- ment income. Three responses that the professional area of home economics could make are: instructors at the university level could include more informa- tion on wills and estate planning in their courses; family ecologists/ home economists could plan and coordinate a series of meetings for preretirees on issues related to their retirement finances; and family ecologists/home economists could help create an awareness and an inter- est in financial topics by using newsletters, by writing short articles for popular magazines, and by making spot announcements on mass media broadcasting networks. Before a more conclusive statement can be made about the exact assistance that professional people could provide for single female preretirees, the issue needs to be investigated more thoroughly. This study was an exploratory one involving a small number of single white female retirees who receive an income from three sources. After Retirement An analysis of the data indicated that there are at least four ways that professionals could help single female retirees during their retirement years. 1. Professionals could help single female retirees to continue maximizing their income from.earnings. 2. Professional people could continue to assist single female retirees in transferring their estates to their beneficiaries. 166 3. Professionals could advise single female retirees on how to take advantage of tax savings measures. 4. Professional people could give suggestions to single female retirees on how to adjust to their retirement income or how to cope with the eroding impact that inflation can continue to have on their retirement income. Of these suggestions, the first three would be fruitful ones for the group of retirees investigated in this study. The last suggestion would not be a fruitful one for the following four reasons: the retirement incomes of the participants in the study were meeting their retirement needs, earlier in their working careers most of the retirees had estab- lished a conservative life style, the retirees were not expecting to make any major changes in their life styles, and all the retirees had had considerable experience in managing their financial affairs. If this group of retirees were looking for ways to economize, the findings from this study indicate that this group may not be receptive to the idea of canning or freezing of food, would not be interested in spending more time hunting for bargains, and would not be interested in spending more time looking for tips on how to manage their retirement finances. Before a more definite statement can be made about how profes— sionals can help single female retirees, the issue needs to be investi- gated more thoroughly. It has been suggested that this could be done by assembling a collection of financial topics which single female retirees might be interested in and then having a sample of retirees respond to each of the topics. 167 ConcludinggRemarks The paradigm for the study was a financial systems model. The model was used to examine the financial adjustment of a group of single female retirees to their retirement income. An analysis of the data showed that when most of the single females retired they did not experience a drastic reduction in gross retirement income or in net (take-home) retirement income. Consequently, the retirees were able to maintain many of their preretirement consump- tion activities, maintain or increase their asset holdings, and meet their basic retirement needs. The study did provide some insight into the financial adjustment that a subgroup of retirees--the single female retirees--is making to their retirement income. Furthermore, it provided several suggestions on how family ecologists/home economists could assist single female preretirees and single female retirees. SELECTED BIBLIOGRAPHY SELECTED BIBLIOGRAPHY ‘ Alfred Politz Research, Inc. "Live Study of Consumer Expenditures: A Background for Marketing Decisions." New York, 1957. Atchley, Robert C. "Adjustment to Loss of Job at Retirement." International Journal of Aging and Human Development 6 (1975): 17-27 0 . 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"Homeownership and Financial Assets: Findings from the 1968 Survey of the Aged." Social Security Bulletin, August 1972, pp. 3-23. National Industrial Conference Board. "Expenditure Patterns of the American Family." New York, 1965. 172 "Needs of Veterans and Widows: 72 Years of Age or Older." Washington D.C.: Veterans Administration, 1975. Oppenheimer, A. N. Questionnaire Design and Attitude Measurement. New York: Basic Books, Inc., Publishers, 1966. Orbach, Harold L., and Tibbitts, Clark. ‘eging and the Economy. Ann Arbor: University of Michigan Press, 1963. Palmore, Erdman. "Retirement Patterns among Aged Men: Findings of the 1963 Survey of the Aged." Social Security Bulletin, August 1964, pp. 3-l9. . "Why Do People Retire?" Aging_end Humau Development 2 (1971): 5-6. Parnes, Herbert S., and Nestel, Gilbert. The Preretirement Years. Vol. 4. A Loegitudinal Study of the Labor Market Experience of Meg, Manpower Research & Development. Monograph No. 15. 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"Compulsory Retirement among Newly Entitled Workers: Survey of New Beneficiaries." Social Security Bulletin, March 1972, pp. 3-150 . "Why Men Stop Working at or before Age 65: Findings from the Survey of New Beneficiaries." Social Security Bulletin, 173 Riley, Matilda.White, and Foner, Anne. Aging and Society. Vol. I. An Inventory of Research Finding_, New York: Russell Sage Foundations, 1968. Ross, Jane L. "Maintenance of Preretirement Standard of Living after Retirement." Technical Analysis Paper No. 10. Washington D.C.: Office of Income Security Policy, Department of Health, Education, and Welfare, 1976. Schulz, James H. The Economics of Aging. Belmont: Wadsworth Publish- ing Co., 1976a. . "Income Distribution of the Aging." In Handbook of Aging and the Social Sciences. Edited by Robert H. Binstock and Ethel Shanas. New York: Van Nostrand Reinhold Co., 1976b. . "Retirement." Background. 1971 White House Conference on Aging. Washington D.C., 1971. 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"Situational Determinants: Health and Economic Deprivation in Retirement." Journal of Social Issues 14 (1958): 18-34. United States Bureau of the Census. "Estimates of the Population of the United States, by Single Years of Age, Color, and Sex: 1900 to 1959." Current Population Reports, Series P-25, No. 311. Washington D.C.: Government Printing Office, 1965. 174 United States Bureau of the Census. "Income in 1970 of Families and Persons in the United States.” Current Population Reports, Series P-60, No. 80. Washington D.C.: Government Printing Office, 1971. . "Projections of the Population of the United States: 1975 to 2050." Current Population Reports, Series P-25, No. 601. Washington D.C.: Government Printing Office, l975a. . "Estimates of Population in the United States by Age, Sex, and Race: 1970 to 1975." Current Population Reports, Series P-25, No. 614. Washington D.C.: Government Printing Office, l975b. "Social and Economic Characteristics of the Older Population 1974." 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APPENDICES APPENDIX A NEWSLETTER ANNOUNCEMENTS OF STUDY 176 177 SERA NADE The Official Newsletter of the State Retirees Association of the Lansing Area Volume VI March 1978 Number 3 EELE Our Association has been asked for assistance in providing data for a graduate student at MSU who needs it for her thesis to obtain her doctorate. Betty Jeanne Sundling, a student in the College of Human Ecology, needs volunteers in her study of how single female retirees have adjusted financially to retirement. She needs to interview single females who meet the following requirements: 1. Those who were single at least 2 years before they retired. 2. Who have been retired at least 2 years but not more than 8. 3. Who retired at age of 60 years or older. 4. Who live in the Tri-County Area: Ingham, Eaton or Clinton. If you are interested in being a participant in her study, would you please contact her at the following address: We238 Owen Graduate Center, Michigan State University, East Lansing, Michigan 48824--or phone 353-3569. Page 3 Note: The requirements were slightly changed to attract more volunteers. See contents of issue April 1978 on the following page. 178 SERA NADE The Official Newsletter of the State Retirees Association of the Lansing Area Volume VI April 1978 Number 4 Miss Betty Jeanne Sundling, the graduate student from.Michigan State University who is studying the financial practices of single female retirees, needs a few more of our retirees to volunteer for her study. She needs female retirees who can answer "yes" to the following four questions: 1. Are you a single female retiree . . . that is a female retiree who has never been married or a female retiree who was single at least two years before she retired and never remarried? 2. Have you been retired at least one year (by December 31, 1976) but not more than ten or eleven years? 3. Did you retire at the age of 60 years of age or older? 4. Do you live in the Tri-County Area . . . that is in Ingham, Eaton, or Clinton Counties? She says that she will accept volunteers who are just receiving a state retirement pension as well as those who are receiving both a social security pension and a state retirement pension. If you are interested in being a participant in her study, would you please contact her at the following address: W-238 Owen Hall, Michigan State University, East Lansing, Michigan 48824. She can also be contacted evenings and during the weekends at the following phone number: 353—3569. Page 3 Note: The above requirements did not attract additional volunteers. For the final criteria, see page 63. APPENDIX B INTERVIEW SCHEDULE 179 180 Interviewer Information about family or individual: Name Address Phone No. Information about interview: Date of Interview Length of Interview: Time: Started A.M. Ended A.M. Length of Interview (in minutes) If interview was not completed, why not? .[::] (l) Retiree was not at home I I (2) Retiree refused. Why? [::] (3) Other: Specify Contacts: Date No. 1 Time No. 2 No. 3 Appointments: Date No. 1 Time No. 2 No. 3 181 Pre-Information Retiree I.D. Number 1. Which one of the following categories best describes your current marital status? C::] (1) Single, never married. [::] (2) Single, widowed. Prdbe: ‘How long have you been widowed? years. Probe: How many children do you have? . [::J (3) Single, divorced. Probe: How long have you been divorced? years. Probe: How many children do you have? . 2. What was your occupation before you retired? 3. When did you retire? (month) (year) 4. What was your age at retirement? years. 5. Why did you retire? 6. Which one of the following two income groups best describes the amount of income you received last year? [:1 (1) Under $10,000. [:3 (2) Over $10,000. 7. During the last two months, how many days did you have to stay in bed for all, or most of the day, because you were ill . . . would you say none, 1 to 5 days, 6 to 10 days, or more than 10 days? [::J (1) None. D (2) 1 to 5 days. [::] (3) 6 to 10 days. [::] (4) More than 10 days. 182 Pre—Information 8. Which one of the following best describes how your doctor would rate the status of your health. (1) Good. (2) Fair. (3) Poor. (4) Gravely ill. SUEDE (5) Don't know. 9. Which one of the following best describes how yep would rate the status of your health. (1) Good. (2) Fair. (3) Poor. (4) Gravely ill. SUEDE (5) Don't know. _ 183 INTERVIEW SCHEDULE 1. Before we begin I would like to know something about how you feel about retirement. Would you describe for me how you feel about your retirement? PART I - PRERETIREMENT The first section is about things that happened before you retired. 2. Before you retired 'were you living in a house, an apartment, a mobile home, or what? [:I (1) A house. [:3 (2) An apartment. [:3 (3) A mobile home. E] (5) Other: Specify Probe: Were you renting it, did you own it, were you buying it, or what? [:3 (l) Renting it. Probe: Was it furnished, partially furnished, or unfurnished? [:1 (1) Furnished. [j (2) Partially furnished. [:3 (3) Unfurnished. 1:] (2) Owned it. E] (3) Was buying it. [:I (,5) Other: Specify 3. 184 Before you retired were you receiving any income from the following sources? Yes No (1) (3) (l) Wages. (2) Pension (such as veteran, union, industry, govern- ment, or military). (3) Earnings from interest, dividends, investments, securities, or insurance policies. (4) Profits from a business. (5) Rental property. (6) Social Security. (7) Are there any other sources of income that you had which I did not mention such as disability income, public assistance, land contract, etc.? DDDDEJDD DDUUEJDD Probe: (If yes) . . . what were they? Probe: Which one of the sources was your main source of income? Would you please look at this card and tell me which income group best describes the amount of gross income you received the year before you retired? (1) Under $4,000. (2) $4,000 to $5,999. (3) $6,000 to $7,999. (4) $8,000 to $9,999. (5) $10,000 to $14,999. (6) $15,000 to $24,999. (7) Over $25,000. Probe: Which one of the following statements describes the gross income that you received during the last five years before you retired. DDDDDDD (1) My income was fairly stable. (2)_My income fluctuated widely from one year to the next. Probe: Why did it fluctuate? (3) Neither of the above statements. Probe: How would you describe it? .DDD 185 Probe: Before you retired, did you receive a large amount of money from an insurance policy, an inheritance, a lottery, etc.? [:1 (1) Yes. [::] (3) No. 5. Next we will talk about things you did before you retired. 5.1 5.2 Before you retired, did you find out what your gross retire- ment income would be? [:Z] (1) Yes. Probe: Was the estimate of your gross retire- ment income more than, less than, or about the same as the amount you actually received when you retired? [::] (1) More than. Prdbe: What made the differ- ence? [::] (2) Less than. Probe: What made the differ- ence? E::] (3) About the same. [::J (3) No. Probe: ‘Was there any reason why you didn't? [::] (5) Other: Specify Before you retired, did you try to estimate what your living expenses would be once you were retired? [::] (1) Yes. Probe: Was your estimate more than, less than, or about the same as the amount you actually spent once you were retired? [::] (1) More than. Prdbe: What made the differ- ence? [::] (2) Less than. Probe: What made the differ- ence? [::] (3) About the same. E::] (3) No. Probe: Was there any reason why you didn't? [:Z] (5) Other: Specify 186 5.3 Before you retired, did you start to "cut back" on any of your living expenses? [::] (1) Yes. Probe: Which ones were you cutting back on? [:Z] (3) No. Probe: ‘Was there any reason why you didn't? [::] (5) Other: Specify 5.4 Before you retired, did you buy any major household items ... such as a refrigerator, a washer, a davenport, a television set, etc.? [::3 (1) Yes. Probe: Which ones did you buy? [::] (3) No. Probe: Was there any reason why you didn't? [::] (5) Other: Specify 5.5 Before you retired, did you buy a car? [::J (1) Yes. Probe: ‘Was it a new car, a used car in good condition, or what? [::J (3) No. Probe: ‘Was there any reason why you didn't? CI (5) Other: Specify 5.6 Before you retired, did you make a special effort to "pay off" your outstanding bills? I i (1) Yes. Probe: Which ones did you pay off? I:] (3) [:1 (5) Probe: Did you carry any outstanding bills over into retirement? Probe: (If yes) ... which ones? No. Probe: Was there any reason why you didn't "pay off" some of your outstanding bills? Probe: What outstanding bills did you carry over into retirement? Other: Specify 187 5.7 Before you retired, did you make changes in your life insur- 5.8 5.9 ance policies? [::] (1) Yes. ** Probes: What changes did you make? Why? [:Z] (3) No. Probe: Was there any reason why you didn't? Probe: What life insurance policies were you carry- ing at the time of your retirement? [::] (5) Other: Specify Before you retired, did you make changes in your health insurance policies? [::] (1) Yes. **Probes: What changes did you make? Why? [:Z] (3) No. Probe: 'Was there any reason why you didn't? Probe: What health insurance did you anticipate on having at the time of your retirement? [::J (5) Other: Specify Before you retired, did you give any thought as to whether you would continue living where you were ... by this I mean whether you would continue to live in the same house or apartment, in the same city, or in the State of Michigan. [:Z] (1) Yes. Probe: What did you decide to do? Probe: What factors influenced your decision? [::] (3) No. Probe: Was there any reason why you didn't? E] (5) Other: Specify 188 5.10 Before you retired, did you attend any preretirement meet- 5.11 5.12 ings and/or classes? C] (1) Yes. Probe: Who sponsored the meetings or classes? Probe: Why did you attend the meetings or classes? Probe: What were some of the things that were dis- cussed at these meetings or classes? Probe: Were there things that you wished had been discussed but were not? Probe: (If yes) . . . what things? i I (3) No. Probe: Was there any reason why you didn't? E] (5) Other: Specify Before you retired, did you read any books or pamphlets that discussed financial preparation for retirement or how to manage your money after retirement? El (1) Yes. Probe: Would you tell me something about the books or pamphlets you read? E] (3) No. Probe: Was there any reason why you didn't? [:I (5) Other: Specify Were there any other things that you did before you retired which I did not mention? D (1) Yes. Probe: What were they? E] (3) No. 6. 189 Before you retired, did you discuss any money matters related to your retirement with a professional person . . . such as an inves- tor, an insurance representative, a civil service representative, a social security representative, a teacher, etc.? [:3 (1) Yes. Probes: E] (3) I: (5) Whom did you talk to ... What kind of things did a teacher, an investor, you discuss with this a representative, etc.? professional person? No. Probe: Was there any reason why you didn't? Other: Specify Before you retired, did you discuss any money matters related to your retirement with a relative, a co~worker, a retiree, or a friend? I:] (l) [:1 (3) [:1 (5) Yes. Probes: Whom did you talk to ... What kind of things did a relative, a coeworker, you discuss with this a retiree, or a friend? person? No. Probe: Was there any reason why you didn't? Other: Specify 8. 190 Before you retired, did you anticipate having any financial problems when you retired? [::J (1) 'Yes. Probes: Did you have any idea on how What kind of financial you were going to handle the problems did you problem. anticipate on having? Probe: (If yes) ... what were you going to do? Yes No Going to do what? [:Z] (3) No. Probe: Why do you say that? [::J (5) Other: Specify NOW we havegfinished talking about what you did.before you retired and we will go on to the next section of the interview. PART II--POSTRETIREMENT In the second section we are going to talk about things that happened after you retired. 9. When you first retired, what kind of a plan or guide did you use for spending your income ... did you use a written plan, a mental plan, or what? [::] (1) Written plan. [:3 (2) Mental plan. [:1 (3) Other: Specify Probe: What time period did your spending plan cover ... a week, a month, a year,.or what? PrObe: Did you have to revise your plan? Probe: (If yes) ... what changes did you make? j— 10. ll. 12. 191 When you first retired, did you keep any record of your expenses? [::J (1) Yes. Prdbe: ‘What kind of record, or records, did you keep? I I (3) No. Probe: Was there any reason why you didn't keep any record of your expenses? I I (5) Other: Specify Do you rent, do you own, or are you buying this (house, apartment, mObile home, etc.), or what? [::] (1) Rent. Probe: Is it a furnished, partially furnished, or unfurnished (house, apartment, mObile home, etc.)? I: (l) Furnished . [::] (2) Partially furnished. [:Z] (3) Unfurnished. Own C3 (2) [::J (3) Buying. Probe: How many more mortgage payments do you have left to make? [::I (5) Other: Specify Prdbe: How long have you lived at this address? (years). Are you currently receiving any income from the following sources? Yes No (1) (3) (l) Wages. (2) Pension (such as veteran, union, industry, govern- ment, or military). (3) Earnings from interest, dividends, investments, securities, or insurance policies. (4) Profits from a business. (5) Rental property. (6) Social Security. DUDE [1 DD DUDE] [1 [JD (7) Are there any other sources of income that you have which I have not mentioned such as disability income, public assistance, Supplemental Security Income, land contract, etc.? Prdbe: (If yes) ... what are they? 13. 192 Probe: Which one of the sources is your main source of income? Note: Occasionally an individual retires from a company or an agency before she receives social security. If participant replies "no" to social security as an‘income source, ask the following: ‘ PrObe: Are you eligible to receive social security sometime in the future? Probe: (If yes) ... when? Approximately how much income will you receive per month from social security? Would you please look at this card and tell me which income group best describes the amount of gross income you received last year? (1) Under $2,500. (2) $2,500 to $3,999. (3) $4,000 to $5,999. (4) $6,000 to $7,999. (5) $8,000 to $9,999. (6) $10,000 to $14,999. (7) Over $15,000. Probe: Was your gross income last year somewhat more than, some— what less than, or about the same as it was the year before last? [::I (1) Somewhat more than. PrObe: What made the difference? DDDDDDD [::] (2) Somewhat less than. Probe: What made the difference? [:3 (3) About the same. Since you retired, have you received a large amount of money from an insurance policy, an inheritance, a lottery, etc.? [:3 (1) Yes. [::J (3) No. Probe: Are you a potential heir to receive any money? To receive any real estate? 14. 15. 16. 193 Since you retired, what do you feel has been your most serious financial problem? Prdbe: Were you able to solve it? Probe: (If yes) ... what did you do? Since you retired, have you discussed any money matters related to your retirement with a professional person ... such as an investor, an insurance representative, a civil service representative, a social security representative, a teacher, etc.? [:Z] (1) 'Yes. Probes: Whom did you talk to ... What kind of things did you a teacher, an investor, discuss with this profes- a representative, etc.? sional person? [:Z] (3) No. Probe: Is there any reason why you haven't? [::J (5) Other: Specify Since you retired, have you discussed any money matters related to your retirement with a relative, a former co-worker, another retiree, or a friend? E] (1) Yes. Probes: Whom did you talk to ... a relative, a former co- What kind of things did worker, another retiree, you discuss with this or a friend? person? [::] (3) No. Probe: Is there any reason why you haven't? [::J (5) Other: Specify 194 17. The next question is about things that you may have done to help pay for your living expenses. 17.1 17.2 17.3 17.4 Since you retired, have you used any of your savings or investments to pay for some of your living expenses? [::I (1) Yes. PrObe: Had you planned on using your savings or investments to pay for some of your living expenses? Probe: What did you use your savings or investments for? [:Z] (3) No. [:3 (5) Other: Specify Since you retired, have you shifted any of your savings or investments? [::I (1) Yes. Probe: What changes did you make in your savings or investments? [:1 (3) No. [:Z] (5) Other: Specify Since you retired, have you received financial help from a relative? I I (1) Yes. Probe: From whom ... a brother, a sister, an uncle, a daughter, etc.? [::J (3) No. [::3 (5) Other: Specify Since you retired, have you received financial help froma non-relative ... by this I mean a community agency, a friend, a neighbor, etc. ? [::I (1) Yes. Probe: From whom? [:1 (3) No. D (5) Other: Specify II III? 195 17.5 Since you retired, have you tried to find a job? 17.6 17.7 [::J (1) Yes. Probe: Did you find a job? I::] (1) 'Yes. Probe: Was finances the main reason why you wanted a job? Probe: (If no) ... what was your main reason? Probe: Was it a full-time or a part- time job? Probe: What kind of jOb did you get? [::I (3) No. PrObe: Would you like to have a job? Why? [::] (3) No. Probe: Would like to have a job? Why? D (5) Other: Specify Since you retired have you had to sell anything? [::J (1) ‘Yes. Probes: What did you sell? Why? [:I (3) No. I I (5) Other: Specify Since you retired, are there other things that you have done to help pay for your living expenses? [::I (1) Yes. PrObe: What other things have you done? [:I (3) No. Note to interviewer: Some examples are taking in a boarder or roomer, making and selling things, and buying and selling houses. 18. 196 Next we are going to talk about what impact the shift from a pre- retirement income to a retirement income had on a number of your activities and purchases. GENERAL QUESTIONS 18.1 18.2 18.3 Has the shift to a retirement income affected the type of food that you buy at the grocery store? I::] (1) Yes. Probe: What affect has it had? [::I (3) No. Probe: Are you currently buying the same type of food that you did before you retired? Probe: (If no) ... why have you changed? [::J (5) Other: Specify Has the shift to a retirement income affected how often you eat out in restaurants? [::3 (1) Yes. Probe: ** What affect has it had? I I (3) No. Probe: How often do you eat out in the restaurants? Probe: Are you eating out more often now than you did before you retired? Probe: (If yes) ... why? Probe: On the average, how much do you spend on a meal? [::J (5) Other: Specify Has the shift to a retirement income affected the amount of canning or freezing of food that you do? [::] (1) Yes. ** Probe: What affect has it had? [::I (3) No. PrObe: Do you do epy_canning of food? How about freezing? PrObe: Are you interested in canning food? Any particu- lar reason? Probe: Are you interested in freezing food? Any particular reason? [::I (5) Other: Specify 18.4 18.5 18.6 18.7 197 Has the shift to a retirement income affected your participa: tion in government food programs such as food stamps, Meals on Wheels, etc.? [::J (1) Yes. Probe: What affect has it had? [:Z] (3) No. Probe: Have you ever participated in any of these programs? [::] (5) Other: Specify Has the shift to a retirement income affected how often you see a doctor? [::j (1) Yes. **Probe: What affect has it had? I I (3) No. Probe: How often do you see your doctor? PrObe: Are you seeing a doctor more often now than you did before you retired? Probe: (If yes) ... why? [:I (5) Other: Specify Has the shift to a retirement income affected your buying prescription medicines-~by this I mean.medicines that your doctor has prescribed for you to take? I::j (l) WYes. **Probe: What affect has it had? [::I (3) No. Probe: Are you currently taking any medica- tion? ,7 Probe: Does your health insur— ance adequately cover the cost of the medication that you may need to take? I:I (5) Other: Specify Has the shift to a retirement income affected your getting medical treatment--by this I mean having a necessary operation when you need it or getting special treatment for an illness? [::] (1) Yes. **Probe: What affect has it had? I::] (3) No. Probe: Does your health insurance adequately cover the cost of any medical treatment that you may need? [::] (5) Other: Specify 18.8 18.9 18.10 198 Has the shift to a retirement income affected how often you go to the beauty parlor? ‘ [:I (1) Yes. **Probe: What affect has it had? [::] (3) No. Probe: How often do you go to a beauty parlor? Probe: Are you going to the beauty parlor more often peg than you did before you retired? Probe: (If yes) ... why? [::I (5) Other: Specify Has the shift to a retirement income affected your buying of readydmade clothes? [:3 (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do you buy your clothes at the same stores as you did before your retired? Probe: (If no) ... is there any reason for your changing stores? Probe: If you had additional income would you buy more clothes? Probe: (If no) ... why do you say that? I I (5) Other: Specify Has the shift to a retirement income affected the number of hobbies you have? [::I (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do yOu have more hobbies now than you did before you retired? Probe: What are some of the hobbies that you have? Probe: Since you retired, have you given up any of your hobbies? Probe: (If yes) ... Which ones have you Why did you give up given up? this hobby? [::] (5) Other: Specify 199 18.11 Has the shift to a retirement income affected your taking vacation trips ... by this I mean whether the shift has influenced where you go as well as how often you go, how much it costs, and how long you are gone? [::] (1) Yes. **Probe: What affect has it had? 18.12 [:1 (3) [:1 (5) No. Probe: How often do you take a vacation trip? Probe: Do you take more vacation trips now than you did before you retired? Probe: (If more than or less than) ... Why? Probe: What are some of the vacation trips that you have taken since you retired? Probe: If you had additional income, would you take more vacation trips? Probe: (If yes) ... where would you like to go? Other: Specify Has the shift to a retirement income affected the number of magazines or newspapers that you subscribe to? [:I (1) [:1 (3) [:1 (5) Yes. **Probe: What affect has it had? No. Probe: Are you currently subscribing to any magazines? Probe: (If yes) ... how many are you taking ... one or two, three or four, five or six, seven or more, or what? Probe: Are you taking more magazines now than you did before you retired? Probe: (If more) ... why? Probe: Are you currently taking or regularly buying a newspaper? Other: Specify 200 18.13 Has the shift to a retirement income affected the number 18.14 18.15 18.16 of gifts you buy? [::I (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Are you buying more gifts now than you did before you retired? Probe: (If yes) ... why? Probe: Which one of the following categories best estimates the amount of money you spent on gifts last year ... less than $50, $50 to $100, $100 to $200, $200 to $300, or more than $300? [::I (5) Other: Specify Has the shift to a retirement income affected the amount of money you donate to your church? [::I (1) Yes. **Probe: What affect has it had? [::] (3) No. Probe: Are you a contributing member of a church?_# Probe: (If yes) ... did you contribute more to your church last year than you did before you retired? Probe: (If yes) ... why? ‘— E] (5) Other: Specify Has the shift to a retirement income affected the amount of money you donate to charitable organizations? [::] (1) Yes. **Probe: ‘What affect has it had? [::] (3) No. Probe: Which of the following best esti- mates the amount of money you donated last year to charitable organizations: none, less than $50, $50 to $100, or more than $100? [:I (5) Other: Specify Has the shift to a retirement income affected the amount of financial help you give to your relatives? [:1 (1) Yes. **Probe: What affect has it had? 201 [::J (3) No. Probe: Are you currently helping a rela- tive financially? Probes: (If yes) ... Who are you help- What is the money ing? being used for? Probe: Where is the money coming from.... your savings, your retirement income, or what? [::I (5) Other: Specify 18.17 Has the shift to a retirement income affected your use of the telephone ... by this I mean the number of parties on your line as well as the number of long distance phone calls you make? [:1 (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: How many parties are on your tele- phone line? Probe: About how many long distance phone calls do you estimate you make in a month ... would you say you make one to three, four to six, or seven or more? Probe: Do you make more long distance phone calls pp! than you did before you retired? Probe: (If yes) ... any reason why you make more long distance phone calls now? Probe: Are the majority of your calls personal calls to relatives, personal calls to friends, or business calls? [::I (5) Other: Specify 18.18 Has the shift to a retirement income affected how much heat or electricity you use? [::I (1) Yes. **Probe: What affect has it had? 202 [::I (3) No. Probe: Do you use more than, less than, or about the same amount of heat as you did before you retired? Probe: (If more than or less than) ... what made the difference? Probe: Do you use more than, less than, or about the same amount of electricity as you did before you retired? Probe: (If more than or less than) ... what made the difference? [::] (5) Other: Specify 18.19 Has the shift to a retirement income influenced the amount of time that you spend hunting for bargains? [::I (1) Yes. **Probe: What influence has it had? [::I (3) No. Probe: Do you do much hunting for bargains? [::I (1) Yes. Probe: Is the main reason you hunt for bargains a financial one? Probe: (If no) ... what is the main reason? [::J (3) No. Probe: Is there any reason why you do not hunt for bargains? I:] (5) Other: Specify 18.20 Has the shift to a retirement income influenced the amount of time you spend looking for tips on how to manage your income? [::I (1) Yes. **Probe: What influence has it had? 4* [::I (3) No. Probe: Do you want more information on how to manage your income? PrObe: (If yes) ... what kind of information would you like to have? 203 Probe: (If no) ... Why do you say that? [::I (5) Other: Specify THE FOLLOWING QUESTIONS ARE If retiree does not have FOR RETIREES WHO OWN A CAR. a car go on to question 18.24. 18.21 Has the shift to a retirement income affected your buying a new car? [:Z] (1) 'Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do you plan on buying a car within the next three or four years? [::I (1) Yes. PrObe: Are you planning on buy- ing a new car, a used car in good condition, or what? PrObe: How will you finance it ... will you take out a loan, pay cash, or what? [::I (3) No. Probe: If you had additional income, would you buy a new car? [::J (5) Other: Specify 18.22 Has the shift to a retirement income affected how often 18.23 you have your car serviced ... such as getting oil changes, lube jobs, checkups, etc.? [::I (1) Yes. **PrObe: What affect has it had? [:Z] (3) No. Probe: How often do you have your car serviced? [:Z] (5) Other: Specify Has the shift to a retirement income affected how much you drive your car? I: (1) Yes. **Probe: What affect has it had? 204 [::I (3) No. Probe: Approximately how many miles did you "put on" your car last year? Probe: Is this amount more than, less than, or about the same as the number of miles you drove the year before you retired? [:I (1) More than. Probe: What made the difference? [::I (2) Less than. PrObe: What made the difference? [:I (3) About the same. Probe: Which do you use more often for travel- ing ... public transportation or your car? For visiting? For running errands? [::] (5) Other: Specify THE FOLLOWING QUESTION IS FOR RETIREES WHO DO NOT OWN A CAR 18.24 Has the shift to a retirement income affected how frequent- ly you use public transportation? [::I (1) Yes. Probe: What affect has it had? [::I (3) No. PrObe: In a week's time, how often do you use a taxi? A local bus? Probe: Which do you rely on most often for "getting around" ... public transportation or a ride from a relative, a friend, or a neighbor? Probe: Have you ever had a driver's license? [::] (1) ‘Yes. Probe: Do you currently have a driver's license? PrObe: (If no) ... when did you give it up? [::I (3) No. [::I (5) Other: Specify 205 THE FOLLOWING QUESTIONS ARE FOR If retiree does not own RETIREES wan OWN OR ARE BUYING or is not buying a home or THEIR HOMES OR MOBILE HOMES mobile home so to question a 18.28. 18.25 Has the shift to a retirement income affected the amount 18.26 of money you spend on keeping the (house or mObile home) and yard in good condition? [:3 (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do you do all the upkeep work yourr self, or do you hire someone to do it, or what? E (5) Other: Specify Has the shift to a retirement income affected the amount of money you spend on redecorating and repairing the inside of your (house or mdbile home)? [::I (1) Yes. **Probe: What affect has it had? I::] (3) No. Probe: Do you plan on doing any redecorat- ing within the next three or four years? [::I (1) Yes. PrObe: What do you plan on doing? I I (3) No. Probe: Why not? Probe: Do you plan on buying any new furniture within the next three or four years? I:I (1) Yes. Probe: What do you plan on buying? [::I (3) No. Probe: Why not? [::I (5) Other: Specify 206 18.27 Has the shift to a retirement income affected your buying a new piece of equipment for your (home or mObile home) ... equipment such as a dryer, washer, refrigerator, stove, air conditioner, freezer, etc.? I::] (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do you plan on buying any new equipment within the next three or four years? [::] (1) Yes. Probe: What do you plan on buying? [::I (3) No. Probe: Why not? I::] (5) Other: Specify THE FOLLOWING QUESTION IS FOR RETIREES WHO ARE RENTERS 18.28 Has the shift to a retirement income affected the amount of money you spend on redecorating your (house, apartment, mobile home, etc.)? [::I (1) Yes. **Probe: What affect has it had? [::I (3) No. Probe: Do you plan on doing any redecorat- ing within the next three or four years? [::I (1) Yes. PrObe: What do you plan on doing? [::I (3) No. Probe: Why not? Probe: Do you plan on buying any new furniture within the next three or four years? [::] (1) Yes. PrObe: What do you plan on buy- ing? [:Z] (3) No. Probe: Why not? [j (5) Other: Specify 207 Now I will change to a new series of questions. 19. 20. At the present time, what kind of a guide or plan are you using for spending your income ... is it a written plan, a mental plan, or what? [j (1) Written plan. [:I (3) Mental plan. I:] (5) Other: Specify Probe: What time period does your spending plan cover ... a week, a month, a year, or what? Probe: When was the last time you revised your plan? Probe: How do you manage bills which are payable once or twice a year ... such as car insurance, house taxes, etc.... Do you set something aside in a special account each month, or just pay the bills when they are due, or what? At the present time, are you keeping any record of your expenses? [::I (1) Yes. Probe: What kind of record, or records, are you keeping? I I (3) No. Probe: Is there any reason why you are not keeping a record? I I (5) Other: Specify Probe: What would you do if you found that your expenses for a particular month were accidentally exceeding your monthly income? Probe: Do you share the cost of any of your expenses with another individual ... expenses such as rent, utilities, ownership of a car, operation of a car, etc.? [:Z] (1) Yes. Probe: What expenses do you share with another person? [:3 (3) No. 21. 22. 23. 24. 25. I 208 Since you retired, have you had to forego or change any of your plans due to financial circumstances? [::I (1) Yes. Probe: What plans have you had to forego or change? I: (3) No. [::I (5) Other: Specify Suppose you were given some extra money ... say about $500.00. What would you do with the extra money? Now suppose you were given a large amount of money and you could buy or do anything you wanted with the money. What would you‘buy or what would you do? About how“much money are you talking about? Suppose that prices are stable and your retirement income is increased $65.00 to $75.00 a month? What would you do if you had this additional income to look forward to each month? Are there things that you would like to buy or to do but can't with your present income? [::I (1) Yes. Probe: What things would you like to buy but can't with your present income? Probe: What things would you like to do but can't with your present income? [:1 (3) No. [::J (5) Other: Specify 26. 27. 28. 29. 209 As you look ahead, say about five years, do you anticipate on having any financial problems? [::] (1) Yes. Probes: Do you have any idea on how What kind of financial you might handle the problem. problems do you antici- Probe: (If yes) ... what do pate on having? you think you might do? Yes No Might do? [::I (3) No. Probe: Is there any reason why you are not antici- pating any financial problems? [::] (5) Other: Specify What financial advice would you give to a female preretiree ... say a female preretiree who would be retiring within five years? ()1. ( ) 2. ( ) 3. ( ) 4. What things would you have done differently financially if you had a chance to redo your preretirement experience? (w ) l. ( ) 2. ( ) 3. ( ) 4. As you look.back over your preretirement experience, can you sug- gest any kind of professional help that you could have used to help you plan your retirement finances? 30. 210 As you look back over what has happened to you since you retired, can you suggest any kind of professional help that you could have used to help you in adjusting to your retirement income or in managing your retirement income? To complete this interview, we would like to have a little more informa- tion about you... 31. 32. Would you please look at this card and tell me which category best describes the number of years of schooling you have completed. (1) 0 to 4 years. (2) 5 to 8 years. (3) 9 to 12 years. (4) l to 4 years of college. (5) Course work.beyond bachelor degree. DDDDDU (6) Graduate work. Would you please look at this card and tell me which category best represents the value of your assets ... by this I mean just the value of your house, investments, and other property you might own. Note: This does not include the value of a car or furniture. (1) None. (2) Less than $1,000. (3) $1,000 to $5,000. (4) $5,000 to $10,000. (5) $10,000 to $20,000. (6) $20,000 to $30,000. (7) Over $30,000. Probe: Is this amount substantially more thee, substantiallyeless than, or about the same as the value of your assets two years ago? DDDDDDD D (1) substantially more than. PrObe: What made the differ- ence? 33. 34. 211 I: (2) Substantially less than. Probe: What made the differ- ence? [:Z] (3) About the same. Would you please look at this card and tell me which category best represents the amount of debt you currently have? (1) None. (2) Under $250. (3) $250 to $500. (4) $500 to $1,000. (5) $1,000 to $1,500. (6) $1,500 to $2,500. (7) Over $2,500. UDUDDDU PrObe: Is this amount substantially more than, substantially less than, or about the same as the amount of debt you had two years ago? [::I (l) Substantially more than. Probe: What made the differ- ence? [::] (2) Substantially less than. PrObe: What made the differ- ence? [::J (3) About the same. What would you say is the thing that you enjoy the most about being retired? **Where appropriate, ask retirees to respond to some of the probe questions under the "no" response. Note: Responses were precoded, i.e., Yes (1), No (3), Other (5). "IIIIIIIIIIIIIII