The Aegon Retirement Readiness Survey 2018 | 1
The New Social Contract: a blueprint for retirement in the 21st century
The Aegon Retirement Readiness Survey 2018
Brazil Country Report
2 | The Aegon Retirement Readiness Survey 2018
ContentsIntroduction 3
Key Findings 4
The 2018 Survey
Part 1: Megatrends and evidence of a crumbling social contract 5
Part 2: Improving individual retirement security – the role of financial literacy and auto-enrollment 10
Part 3: Potential health issues loom large as retirement concerns 14
Part 4: Living and aging in good health and with dignity 17
Part 5: Forging the new social contract 19
Appendix 20
Note: Percentages are shown to zero decimal places. Rounding percentages to the nearest
whole number may result in slight differences; for example, the percentages in some charts
summing to slightly under or slightly over 100 percent.
The Aegon Retirement Readiness Survey 2018 | 3
IntroductionThe Aegon Center for Longevity and Retirement is pleased to
present findings from its seventh annual Aegon Retirement
Readiness Survey, The New Social Contract: a blueprint for
retirement in the 21st century. This survey is the result of
collaboration with nonprofits Transamerica Center for Retirement
Studies (based in the U.S.) and Instituto de Longevidade Mongeral
Aegon (based in Brazil). This report, while specific to Brazil, is
based on research conducted in 15 countries spanning Europe, the
Americas, Asia and Australia.
Changes taking place in Brazil and around the world are giving rise
to new pressures on existing social contracts forged during the last
century. This is forcing all of us to look differently at our plans for
achieving good health and financial prosperity in later life.
The idea of a “social contract” has been central to the way in which
people in Brazil plan and prepare for retirement. This contract
was established between governments, employers and individual
workers, setting forth their respective responsibilities. For many
decades, Brazil has operated an enduring system of benefits and
entitlements that has helped millions of people in Brazil to achieve
a secure and fulfilling retirement.
The first official initiative regarding pension plans in the country
occurred in 1835, with the creation of the mutual company
Montepio Geral dos Servidores do Estado, that went on to become
Mongeral Aegon Seguros e Previdência. By the time Brazil’s
pension system was unified in the 1960s, life expectancy was just
over 54 years for most workers. Life expectancy has improved
dramatically in the intervening years and now stands at 75.5 for
the average person in Brazil1. The Brazilian Social Security System
allows people to become eligible to claim a benefit either based on
years of contribution (35 years for men and 30 years for women,
with no minimum age requirement) or on reaching a certain age
with a minimum of 180 months contribution (65 years old for men
and 60 years old for women). Despite reforms undertaken in recent
decades, the system in Brazil is coming under increasing financial
strain. As the findings throughout this report illustrate, it is time
for a new social contract.
This report focuses on the responses of 1,000 people in Brazil
including 900 workers and 100 retirees. It investigates the
stresses and pressures being put on the Brazilian retirement
system and the roles the government and employers are expected
to perform. The report evaluates the retirement readiness of
workers themselves and investigates improvements that can be
made to help workers achieve the aspirations they hold for their
retirement. It investigates the growing importance of health in
the realities of financial planning, and for the first time the report
examines the issue of aging with dignity. With more people in
Brazil reaching their 80s, 90s, and 100s, issues around healthy
aging and financial security are becoming ever more pertinent.
1 World Bank, Life expectancy at birth, total (years) – Brazil, 2018
4 | The Aegon Retirement Readiness Survey 2018
Key Findings:• The Aegon Retirement Readiness Index (ARRI) measures
how prepared workers around the world feel for their
retirement. With a score of 6.6, up from 6.4 in 2017, Brazil
places third in the 2018 Aegon Retirement Readiness
Index. India (7.3) leads, with China (6.7) moving up to second
in place, and Brazil overtaking the U.S. this year – highlighting
the positivity of the emerging market countries.
• People in Brazil are much more likely to cite reductions in
government benefits as a mega trend impacting on their
retirement plans (54 percent, compared to 38 percent
globally). People in Brazil are also far more likely to cite
changes in labor markets as a megatrend impacting on
their retirement plans (32 percent, compared to 21 percent
globally). Both of these mega trends have been top of the
political agenda in Brazil over the past year, particularly in
terms of divisive reforms.
• More than half (52 percent) of people in Brazil expect
future retirees to be worse off in retirement than current
retirees, slightly more than the average globally. Just 17
percent of people in Brazil think future retirees will be better
off than those currently retired.
• People in Brazil expect 48 percent of their retirement
income to come from the government. Just under a quarter
(23 percent) is expected to come from their employers, while
29 percent is expected to come from their own savings and
investments..
• More than a quarter (26 percent) of people in Brazil think
the government’s best solution for fixing the pension
deficit is to reduce the overall cost of social security by
reducing the value of payments over increasing taxes. The
same proportion (26 percent) of people in Brazil supports
a balanced approach with some reductions in individual
payments and some increases in tax. However, a substantial
14 percent feel the government should do nothing as today’s
system will be affordable – flying directly contrary to the
World Bank and OECD’s predictions of unaffordability within
a decade.
• Nearly two-in-five (39 percent) workers in Brazil are
habitually saving for retirement. Nearly a quarter (24
percent) are saving on an occasional basis, and just four
percent of workers in Brazil are not saving for retirement and
have no intention of doing so. .
• Three-in-ten (30 percent) people in Brazil were able to
correctly answer all of Annamaria Lusardi and Olivia
Mitchell’s “Big Three” Financial Literacy questions2.
People in Brazil performed better on the compound interest
question (79 percent), and the diversification risk question
(47 percent) but under-performed on the inflation question
(61 percent) compared to the global average. Workers in
Brazil who were more financially literate and managed to
correctly answer all 3 of the “Big Three” Financial Literacy
questions achieved higher ARRI scores (6.8, compared to 6.6
overall in Brazil).
• Almost three-in-five (58 percent) people in Brazil find the
idea of auto-enrollment appealing. However, appeal is lower
among Millennials (54 percent) and people in Brazil with a low
income (49 percent).
• Running out of money (52 percent) and declining physical
health (48 percent) are the two retirement concerns that
prey most on the minds of people in Brazil. People in Brazil
have particularly strong concerns about not being able to stay
active (45 percent), losing their independence (44 percent),
and not being able to do the things they enjoy (44 percent).
• A lack of confidence in the affordability of Brazil’s health
system is clearly evident. Just 12 percent of people in
Brazil are confident that their own healthcare will be
affordable in their retirement. This falls further among
women (8 percent), Baby Boomers (9 percent) and those in
fair health (8 percent).
2 Lusardi, Annamaria and Olivia S. Mitchell. ‘The Economic Importance of Financial Literacy: Theory and
Evidence’. Journal of Economic Literature. 2004, 52(1): 5-44
The Aegon Retirement Readiness Survey 2018 | 5
3 World Bank, Summary Note on Pension Reform in Brazil: Why is it needed and What Will be its Impact?. April 20174 PwC, Brazil: New labor law reform may provide opportunities to reduce mobility costs. November 20175 BBC News, “Brazil Senate passes controversial labour reform” BBC News. 12 July 2017
Globalization, innovation, advances in science and technology. Our world is changing rapidly amid these and other trends. Many of these
trends are so impactful that they can be considered megatrends. Changes brought about by megatrends are already shaping societal
constructs, how people lead their daily lives, plan for their future, and, ultimately, prepare for their retirement.
More than half of people in Brazil (54 percent) say that reductions in government retirement benefits are impacting on their plans for
retirement. No other trend, in no other country surveyed is deemed as more important– and understandably so, with proposed pension
reforms becoming ever more problematic for the Brazilian government. The World Bank expects the Brazilian state pension system (one
of the most generous systems in the world) to consume the entire federal budget by 2030.3 Political difficulties in Brazil, including the
first military takeover of security in 30 years in the State of Rio de Janeiro, made addressing pension reform impossible as constitutional
amendments cannot be made during such federal interventions – not to mention protests against the reform ending violently in recent
years.
After reductions in government retirement benefits, changes in labor markets is the second most common megatrend that people
in Brazil think will impact on their retirement plans (32 percent) – again, this is felt more strongly in Brazil than in any other country
surveyed. The past year has seen passage of the 2017 Labor Reform bill, with changes to the decades-old labor law granting firms
more freedom to negotiate contracts with employees, as well as increased flexibility for workers’ overtime and holidays among the new
proposed measures.4 The government claims that these reforms have the aim of boosting Brazil’s low labor productivity whilst freeing up
the job market, yet unions have called for a number of strikes in response to fears of reduced job security.5
Part 1: Megatrends and evidence of a crumbling social contract
Global
Brazil
Increased life expectancy 25%27%
Prolonged low interest rate environment 12%20%
Globalization 12%12%
Climate change 6%12%
None of the above 9%14%
Urbanization 6%8%
Don't know 5%10%
International political instability 22%19%
Reductions in government retirement benefits 38%54%
Volatility in financial markets 22%24%
Changes in labor markets 32%21%
New technologies and digital transformation 12%10%
Changing demographics 6%14%
Terrorism 6%11%
Cybersecurity issues 6%9%
Chart 1 – Reductions in government retirement benefits is the dominant megatrend expected to impact Brazilian retirement plans
6 | The Aegon Retirement Readiness Survey 2018
6 OECD, “Country Profiles – Brazil”, Pensions At A Glance 2017: OECD and G20 Indicators. 2018
Amid concerns about potential reductions in government benefits, increased longevity, and changes in employment trends, the current
social contract is crumbling. Brazil’s retirement system represents a social contract that currently operates on a three-pillar approach
that is commonly referred to as a “three-legged stool.” The three pillars – Social Security (Pillar 1), workplace retirement benefits (Pillar
2) and personal savings (Pillar 3) are provided by the partners of the social contract – the government, some big/mid Brazilian companies
and the workers, respectively. This contract was developed and proliferated throughout the twentieth century to help ensure that
individuals were provided for in their old age.
Brazil operates a pay-as-you go plan through the National Social Security Institute. Brazil has one of, if not the most generous
and expensive pension systems among the world’s developing countries. It provides generous social assistance with low eligibility
requirements.6 People in Brazil recognize this and expect nearly half (48 percent) of their retirement income to come from the
government. This rises to 61 percent among Brazil’s Baby Boomers but falls to 40 percent among Millennials. People in Brazil expect 23
percent of their retirement income to come from their employers, while the remaining 29 percent is expected to come from their own
savings and investments – rising to 34 percent among Millennials compared to just 20 percent among Baby Boomers. Baby Boomers
themselves will be nearing or at retirement age and have that relative certainty of knowing where their funding will come from once they
exit the workplace. Millennials on the other hand have entered the workplace as the uncertainty about the sustainability of the Pillar 1
pension continues to dominate headlines, as well as the introduction of a nascent Pillar 3 in the shape of retirement savings accounts
offered by insurance companies.
On entering retirement, workers in Brazil expect to earn on average 75 percent of their current income (second only to Poland where
residents expect to receive 77 percent). Almost half of workers in Brazil (47 percent) think that they are on course to achieve at least 75
percent their expected retirement income – higher than in any other country surveyed. The question is, given the pressures on the system,
how do people in Brazil expect the government to sustain this level of funding?
The world is changing. Over the past 50 years, global megatrends, such as increasing lifespans, changing demographics, and more
recently, the prolonged low interest rate environment, have impacted the way governments and corporations manage retirement systems
and how social contracts operate. Continued change is inevitable, reshaping the contours of the retirement landscape in Brazil for
decades to come and influencing how future generations save, invest, plan and prepare for retirement. People in Brazil are predominantly
pessimistic about the future of retirement. More than half (52 percent) believe that future generations of retirees will be worse off than
those currently in retirement (exceeding the global average, 49 percent).
Chart 2 – More than half of people in Brazil expect future generations to be worse off in retirement than current retirees
Chart 3 – People in Brazil expect nearly half of their retirement income to come from the government
Global 49% 24% 18% 9%
Brazil 52% 27% 17% 5%
Worse o
About the same
Better o
Don’t know
Global 30%46% 24%
Brazil 29%23%48%
Government
Employer
Own savings & investments
The Aegon Retirement Readiness Survey 2018 | 7
7 UN, “Brazil”, World Population Ageing 1950-2050. 20028 OECD, OECD Policy Memo: Pension Reform in Brazil. 2017
The role of the government under growing pressure For years, experts globally have expressed concerns about the sustainability of pay-as-you-go social security systems. These systems
are designed as such that today’s workers are contributing and paying for the benefits of today’s retirees. Due to increases in longevity
and lower fertility rates, populations are aging with retirees living longer than the system was initially designed for – compounded with
a smaller portion of current workers paying into the system. Brazil is a prime example. According to the U.N., in 1950, the median age
in Brazil was 19. This is expected to double to 38 by 2050. This average is likely to be inflated by the proportion of the population aged
60+ in Brazil: the U.N. projected an increase from five percent in 1950 to 24 percent by 2050.7 The OECD predicts that those aged 65 and
above will make up 38 percent of the Brazilian population by 2050 – a phenomenal rise from just 7.6 percent measured in 2010.8
Asked what action the government should undertake to address the growing cost of government pensions, just seven percent of people
globally think the government should do nothing, and that social security provision will remain perfectly affordable in the future. In
Brazil, the proportion is double at 14 percent, representing a not-insignificant group resistant to change. While globally, the most
commonly-held view is that the government should increase overall funding for social security through raising taxes without reducing
individual payments (34 percent), in Brazil this view is far less popular, with just 19 percent feeling this way. In Brazil, the most common
belief is that the government should instead reduce the cost of social security provision by reducing the value of individual pension
payments without having to increase taxes (26 percent) – far exceeding the global average holding this sentiment (16 percent). People
in Brazil show an appreciation for the scale of the issues facing their government, but there is some reluctance as to how to settle the
bill. However, a quarter of people in Brazil think the government should adopt a balanced approach with some reductions in individual
payments and some increase in tax (in line with the global average, both 26 percent).
Chart 4 – A quarter of people in Brazil think the government should increase Social Security funding without reducing the value of individual payments
Global
BrazilDon't know
16%
18%
The Government should not do anything. Social Securityprovision will remain perfectly a�ordable in the future
14%
7%
The Government should reduce the overall cost of Social Securityprovision by reducing the value of individual pension payments,
without having to increase tax
26%
16%
The Government should take a balanced approach with somereductions in individual payments and some increases in tax
26%
26%
The Government should increase overall funding available forSocial Security through raising taxes without having
to reduce the value of individual payments
19%
34%
8 | The Aegon Retirement Readiness Survey 2018
Changes in employment and the impact on employer benefits Clearly the Brazilian state pension system is nearing crisis point,
yet how this should be addressed is less certain. Many of the
megatrends discussed earlier in this section have also led to
changing employment arrangements, as well as changes in the
pension schemes offered by employers – particularly within Brazil’s
public sector, alongside the generous benefits of social security
payments disincentivizing Brazil’s informal workforce to participate
in the pension system. Individuals across the labor market in Brazil
face a further layer of uncertainty for their financial futures in
retirement as the role played by employers continues to evolve.
It is increasingly common for workers to change employers several
times over their careers and possibly become self-employed at one
time or another, and this is seemingly only set to increase as the
2017 Labor Reform is enacted in Brazil, which shines a light on
freelance working. Traditional defined benefit plans, which were
designed to fund the retirement of long-service workers with a
shorter life expectancy, are no longer an effective retention tool or
sustainable from a cost perspective. Instead, employers are shifting
to offering employee-funded defined contribution plans in which
the employer may or may not make a contribution. In doing so,
employers are not only expecting workers to self-fund a greater
portion of their future retirement income, but also to bear more risk
in managing the assets.
Mainly imposed by law or required by unions, a whole range of
benefits are offered to workers in Brazil.
However, provision of plans to aid workers entering retirement are
by no means ubiquitous: More than half (54 percent) of Brazil’s
workers say they are offered the ability to work past normal
retirement age, compared to 47 percent globally – perhaps
understandably, given the younger retirement age in Brazil. Brazil’s
workers are also more likely to have access to flexible working
hours (54 percent vs 49 percent globally). However just 43
percent of Brazil’s workers enjoy retirement plans with employer
contributions, while 28 percent have access to a phased retirement
program providing a transition into retirement. While Brazil’s
employers perform an important role there is still room for further
improvements.
The Aegon Retirement Readiness Index and the role of individuals The role the individual takes in retirement preparation is gradually increasing, but has further to go. The Aegon Retirement Readiness
Survey (now in its seventh year) measures the level of retirement planning workers undertake as responsibility gradually shifts towards the
individual. The ARRI provides an annual score based on responses to six separate questions: three broadly attitudinal (Questions 1,2, 3) and
three broadly behavioral (Questions 4,5,6). These questions are illustrated in the diagram below.
Chart 5 – More than half of workers in Brazil are offered the ability to work past the normal retirement age
Brazil Global
Basic salary 87% 79%
Vacation/ paid time off 87% 77%
Convenient location of workplace 71% 67%
Medical health insurance 64% 57%
Opportunities for career progression 58% 51%
Overtime and bonus pay 56% 54%
Ability to work past the normal retirement age 54% 47%
Flexible working hours 54% 49%
Life insurance 49% 40%
Access to good training provision 45% 47%
Retirement plan with employer contributions 43% 43%
Retirement plan without employer contributions 30% 27%
Phased retirement or other employer programs providing for a transition into retirement 28% 29%
Stock purchase plan 19% 21%
The Aegon Retirement Readiness Survey 2018 | 9
What factors shape the ARRI score?
The ARRI ranks retirement readiness on a scale from 0 to 10. A
high index score is between 8 and 10, a medium score between
6 and 7.9, and, a low score being less than 6. (For additional
information about the ARRI and its methodology, see appendix 1.)
With an ARRI score of 6.6 this year, Brazil remains in third place,
improving on last year’s ARRI score of 6.4. The U.S. switches
places with China and the emerging markets make-up the top 3
places this year, with India once again taking the top spot.
Twenty-nine percent of workers in Brazil achieve a high index score
(up from 27 percent in 2017). However, this is still exceeded by
the proportion of Brazil’s workers achieving a low index score (38
percent).
6
25
34
Personal responsibilityTo what extent do you feel personally
responsible for making sure that you will
have sufficient income in retirement?
Income replacementDo you think you will achieve the level of income
you think you will need in retirement?
Financial understandingHow able are you to understand financial matters
when it comes to planning for your retirement?
Retirement planningThinking about your own personal retirement planning
process, how well developed would you say that your
personal retirement plans currently are?
Level of awarenessHow would you rate your level of awareness
on the need to plan financially for your
retirement?
Financial preparednessThinking about how much you are putting
aside to fund your retirement, are you saving
enough?
1
Chart 6 – Brazil remains 3rd in retirement readiness
Indi
a
Chin
a
Bra
zil
Uni
tied
Sta
tes
Ger
man
y
Cana
da
Uni
ted
Kin
gdom
Aus
tral
ia
Net
herl
ands
Turk
ey
Pol
and
Fran
ce
Hun
gary
Spai
n
Japa
n
Tota
l
5.9
4.75.1
5.3 5.4 5.5 5.5 5.7 5.9 6.0 6.0 6.16.5 6.6 6.7
7.3
ARRI score (per country)
10 | The Aegon Retirement Readiness Survey 2018
Part 2 – Improving individual retirement security – the role of financial literacy and auto-enrollment People in Brazil hold a broadly positive outlook on retirement, 64 percent associate retirement with positive words like ‘freedom,’
‘opportunity,’ and ‘leisure’ compared to 68 percent globally. Forty-nine percent of people in Brazil associate retirement with negative
words, such as ‘poverty,’ ‘insecurity,’ ‘loneliness’, falling in line with the global average (50 percent).
This positive mindset can be seen in the retirement aspirations held by people in Brazil, the most common of which include 76 percent
wanting to spend their retirement traveling (the highest response among all countries surveyed), 61 percent spending more time with
friends and family, and 55 percent pursuing new hobbies. Leisure aside, almost a quarter of people in Brazil would like to start their own
business, which is second only to India (23 percent and 31 percent respectively).
Over the years, the survey consistently finds that saving on a regular basis is the best route to retirement readiness. In Brazil, two-in-five
(39 percent) workers are saving for retirement on a habitual basis (exactly in line with the global average). While this is great news, the
picture is by no means perfect. Twenty-four percent of Brazil’s workers save for retirement but only on an occasional basis; 12 percent
aren’t saving at all, although they had saved in the past; 21 percent aren’t saving but do intend to do so; and four percent are not saving
for retirement and have no intention to do so.
Chart 7 – Traveling tops retirement aspirations among people in Brazil
Spending more time with friends and family
Traveling
Don't know 3%0%
NET: Business/ paid work 25%36%
Studying 12%17%
Volunteer work 27%33%
Pursuing new hobbies 50%55%
57%61%
63%76%
Continue working, but in another field 11%17%
Living abroad 12%8%
None of the above 3%1% Global
Brazil
Starting a business 10%23%
Continue working in the same field 15%16%
The Aegon Retirement Readiness Survey 2018 | 11
A certain amount of planning is required to make sure that aspirations can be fulfilled in retirement. In Brazil, two-thirds (67 percent) of
workers already have a plan in place for retirement. Twenty-one percent have committed a plan to writing, compared to just 13 percent
globally. The act of considering one’s future finances and committing to a plan to writing formalizes the process thereby increasing the
likelihood of success.
Saving habitually and setting forth a written financial plan for
retirement can help Brazil’s workers achieve their retirement
aspirations. But do they have the knowledge to make what can be
very important and detailed financial decisions?
Equipping individuals with the tools to better plan for retirement Pressure on the social contract means that ever more responsibility
is falling into the hands of individuals, and away from the experts.
Making a plan for retirement means navigating through many
different financial concepts, many of which require a detailed level
of understanding.
With their permission, the survey uses a framework developed by
Drs. Annamaria Lusardi and Olivia S Mitchell dating back to 2004,
to measure financial literacy. Lusardi and Mitchell created the “Big
Three” questions that measure understanding of compounding
interest, inflation, and risk diversification. Their questions test
the respondents’ actual knowledge of these three topics rather
than their self-reported knowledge. The questions along with the
correct answers can be found in appendix 2.
Respondents in Brazil broadly performed in line with the global
average. Seventy-nine percent correctly answered the compound
interest question; 61 percent correctly answered the inflation
question; and 47 percent correctly answered the diversification risk
question. Overall, three-in-ten people in Brazil correctly answered
all three financial literacy questions, equal to the global average
(30 percent).
Chart 8 – Two-in-five workers in Brazil are habitual savers
Chart 9 – A fifth of workers in Brazil are retirement strategists
38% 4%44%13%Global
32% 1%21% 46%Brazil
I have a written plan I have a plan, but it isnot written down
I do not have a plan Don’t know
Global 39% 12%24% 19% 6%
Brazil 39% 24% 12% 21% 4%
Habitual savers - I always makesure that I am saving for retirement
Occasional savers - I only save forretirement occasionally from timeto time
Past savers - I am not saving forretirement now, although I havein the past
Aspiring savers - I am not savingfor retirement though I do intend to
Non-savers - I have never saved forretirement and don’t intend to
12 | The Aegon Retirement Readiness Survey 2018
Chart 10 – Three-in-ten people in Brazil correctly answer all “Big Three” financial literacy questions
Chart 11 – Women, Millennials and those on low personal incomes are least likely to get all “Big Three” financial literacy questions right
Brazil Global
FL1. The compound interest question – % answering correctly 79% 75%
FL2. The inflation question - % answering correctly 61% 63%
FL3. The risk diversification question - % answering correctly 47% 45%
FL1. + FL2. + FL3. - % answering all three ‘Big Three’ financial literacy questions correctly 30% 30%
Without the requisite level of financial knowledge, it is impossible for people to formulate good retirement plans, or even know what
questions to ask of advisors and retirement plan providers when seeking advice. Low financial literacy may also translate into failure to
engage in any kind of retirement planning.
Low levels of financial literacy are concentrated among certain groups. While 30 percent of people in Brazil correctly answer all three
financial literacy questions, this falls to 19 percent among women, 20 percent among Millennials, 23 percent among those educated
below degree-level and 21 percent among those with a low personal income (Up to 1,699 BRL).
Among those that correctly answer all “Big Three” financial literacy questions (thus having a higher degree of financial literacy) there
are improvements across all areas of their retirement planning. They score higher on the ARRI (6.8 compared to 6.6 overall) and they are
more likely to be saving habitually for retirement (43 percent compared to 39 percent overall). A higher proportion hold a retirement plan
(either written or otherwise). Workers in Brazil who correctly answer the “Big Three” questions are also more likely to feel that they are
able to understand financial matters when it comes to planning for retirement (83 percent compared to 77 percent overall) and are much
more likely to know the value of their retirement savings (77 percent vs 69 percent overall).
Brazil
30%
Men
42%
Women
19%
Millennials
20%
GenerationX
35%
BabyBoomers
43%
Less thandegree
educated
23%
Undergraduatedegree
or above
33%
Lowpersonalincome
21%
Mediumpersonalincome
32%
Highpersonalincome
34%
1966 - 1979
1979 - 2000
1947 - 1965
Correctly answer all ‘Big Three’ questions
The Aegon Retirement Readiness Survey 2018 | 13
Chart 12 – Financial literates are more likely to be habitual savers and say they understand financial planning
Chart 13 – Almost six-in-ten workers in Brazil find the idea of auto-enrollment appealing , but falls to half of low-income workers
Brazil Workers Brazil Financially Literate
Workers (Correctly
answering all “Big
Three” Financial Literacy
questions
ARRI score 6.6 6.8
Habitual savers 39% 43%
Have a retirement plan (either written or unwritten) 67% 72%
Able to understand financial matters when it comes to planning for retirement 77% 83%
“I have a very good idea of the total value of all my personal retirement savings
and investments.”69% 77%
In a world in which workers are expected to exercise more choice
over how much they put aside for retirement, and how those
retirement savings are invested, it is imperative to increase
financial literacy among adults and to provide more education
starting at an early age so that children can gain these vital skills
that will serve them throughout their lives. The lack of widespread
financial literacy is alarming. Addressing it should be a top priority
for policymakers, educators, retirement benefit providers, and
others.
Changing infrastructure to make it easier for individuals to save The strained social contract is necessitating people fund a
greater portion of their retirement. Automatic features in defined
contribution plans are showing great promise in countries where
they have been implemented.
Automatic enrollment is a retirement plan feature in which
employees are automatically enrolled to start saving a portion of
each paycheck, and they only need to take action if they choose
not to save. The survey finds that 58 percent of workers say
that they find the idea appealing. However, some demographic
segments within Brazil’s workforce are somewhat less likely to find
it appealing, particularly Millennials (54 percent) and those with
a low personal income (49 percent). These segments are typically
more vulnerable to not saving enough for retirement and may be
more likely to benefit from it.
Highpersonalincome
Mediumpersonalincome
Lowpersonalincome
Universitydegree
or above
Less thandegree
educated
BabyBoomers
GenerationX
MillennialsWomenMenBrazilGlobal
57%58% 59% 58%
54%
65%
62%
58% 59%
49%
61%
56%
1966 - 1979
1979 - 2000
1947 - 1965
Very or somewhat appealing
14 | The Aegon Retirement Readiness Survey 2018
Part 3 – Potential health issues loom large as retirement concerns The continuity of today’s social contract is in a precarious position. This naturally raises questions and concerns among individuals about
their own retirement. Globally, declining physical health (49 percent) is the primary retirement concern, followed closely by running out
of money (41 percent). The reverse is true among people in Brazil. Here, running out of money is the key concern (52 percent), followed
by declining physical health (48 percent).
On multiple counts, retirement concerns are far more acutely felt in Brazil – indeed, those exceeding the global average by 10 percentage
points or more include: running out of money, not being able to stay active, losing my independence, and not being able to do the things
I enjoy, and needing assistance with basic activities (e.g. bathing, dressing, meal preparation). Brazil’s women meanwhile tend to be more
concerned about facing mental health issues such as depression (41 percent, compared to 33 percent of men) and getting Alzheimer’s
or dementia (47 percent compared to 36 percent of men). Those with a low personal income are more concerned about running out of
money (58 percent) compared to 51 percent of those with a medium income and 44 percent among those with a higher personal income.
Those currently in fair health (50 percent) are more concerned about not being able to do the things they enjoy, than those in excellent
health (36 percent).
Chart 14 – Running out of money and declining physical health top the list of Brazil’s retirement concerns
None of the above 3%6%
Don't know 1%3%
Lacking social engagement 15%19%
Needing assistance with basic activities (e.g.,bathing, dressing, meal preparation etc.)
39%28%
Being alone and isolated 31%26%
Not being able to stay active 45%34%
Not being able to do the things I enjoy31%
44%
Needing to move to a nursing home24%
23%
Not having a daily routine 18%15%
Global
Brazil
Running out of money 52%41%
Declining physical health 48%49%
Losing my independence44%
28%
Getting Alzheimer's or dementia 41%33%
Facing mental health issues (e.g., depression) 37%22%
Losing sense of purpose after stopping work 20%18%
The Aegon Retirement Readiness Survey 2018 | 15
More than half (52 percent) of people in Brazil are concerned about running out of money in retirement. The retirement age in Brazil
remains low compared to other countries covered by the study. However, many workers are feeling the financial need to continue working
into retirement. Almost a fifth (19 percent) retired later than they had planned – exceeding the 12 percent who did so globally. On the
other hand, the fact that a third (32 percent) of Brazil’s fully-retired retired sooner than they had planned brings a different level of
concern, as they will be living longer in retirement than their funds had provided for. Unemployment and job loss (19 percent) along with
ill health (13 percent) are the top two single reasons for people retiring sooner than planned.
In terms of looking after themselves, fortunately Brazilians are a health-conscious group more likely to take out in all health-related
behaviors than the global average. At least half of people in Brazil carry out basic health-related behaviors including avoiding harmful
behaviors such as drinking too much alcohol or smoking (63 percent), eating healthily (60 percent), exercising regularly (54 percent) and
thinking about their long-term health when making lifestyle choices (52 percent).
Just as forming good financial habits early on in life can help individuals achieve a secure retirement, forming good health habits early
can help workers maintain good health into retirement. Employers can play an important role by offering workplace health and wellness
programs.
The vast majority (97 percent) of workers in Brazil would be interested in at least one health and wellness program offered by their
employer. Once again, the difference between the interest workers in Brazil and workers globally express in several of these workplace
health and wellness programs exceeds 10 percentage points, including: exercise programs – either on site or discounts for local gyms (52
percent), preventative screenings and vaccinations (52 percent), on-site health clinic available for routine visits (47 percent), and a health
risk assessment (44 percent).
Chart 15 – A third of retirees in Brazil retired sooner than planned
Chart 16 – At least half of people in Brazil take part in health-related behaviors
Global
BrazilDon't know / prefer not to answer
0%1%
I practice mindfulness regularly (e.g., meditation and relaxation exercises)22%
19%
I think about my long-term health when making lifestyle choices.For example, I try to avoid stress
52%
45%
I eat healthily (e.g., five-a-day portions of fruit and vegetables)60%
56%
I exercise regularly54%
51%
None of the above3%
6%
I avoid harmful behaviors (e.g., drinking too much alcohol or smoking tobacco)63%
58%
I take my health seriously (e.g., have routine medical check-upsand do regular self-checks)
50%
44%
Global 39% 48% 12% 1%
Brazil 32% 47% 19% 2%
I retired at the age I had planned to
I retired later than I had planned to
Don't know/ can't recallI retired sooner than I had planned to
16 | The Aegon Retirement Readiness Survey 2018
Chart 17 – Workers in Brazil are very receptive to workplace health programs
NoneGlobal
Brazil
Don't know1%
4%
Programs for substance or alcohol abuse 11%10%
An app that can help you set wellness goals, measure progressand access information
27%19%
Tools to monitor health goals/biometrics (e.g., BMI/weight loss,cholesterol levels, blood pressure)
36%28%
Ergonomic workstations (e.g., standing desks,adjustable workspace furniture)
36%29%
Health risk assessment 44%30%
Healthy food or snack options at the o�ce 50%41%
Exercise programs – either on-site or discounts for local gyms 52%40%
Programs to stop smoking 14%15%
2%9%
Preventative screenings and vaccinations52%
35%
On-site health clinic available for routine visits 47%31%
Financial incentives for focusing on your health and wellness 42%35%
A wellness coach to o�er guidance and encouragement to helpyou achieve your health-related goals
37%24%
Corporate-sponsored events (e.g., walks, runs, bicycle races) 35%27%
Programs, counseling or therapies to help with mental health issues 30%24%
Education on healthy behaviors (e.g., newsletters,e-mail communications, lunchtime lectures)
29%22 %
Contests and opportunities to win prizes for health-related activities28%
20%
The Aegon Retirement Readiness Survey 2018 | 17
9 Massuda, Hone, Gomes Leles, de Castro, Atun, “The Brazilian health system at a crossroads: progress, crisis and resilience”,
BMJ Global Health. July 2018; v.3(4) e00082910 OECD, “Health Care Resources: Physicians”, OECD Health Statistics 2018. 201811 OECD, “Health expenditure and financing”, OECD Health Statistics 2018. 201812 World Health Organization, “Life expectancy and Healthy life expectancy: Data by country”, World Health Statistics. 2018
With money and health topping the list of retirement-related concerns in Brazil, being able to afford healthcare in retirement may be
adding fuel to the uncertainty. Only 12 percent of people in Brazil are either very or extremely confident that their own healthcare will be
affordable in retirement.
Brazil’s Unified Health System, the Sistema Único de Saúde (SUS), was conceived in the late 1980s and implemented in 1990. Over the
past three decades, Brazil has been working towards Universal Health Coverage (UHC). Although SUS has been widely acknowledged as
an example of a successful public health system reform in Latin America, it is inefficient due to management issues, unequal resource
allocation nationally and budget constraints. In contrast however, some centers of excellence exist across the country, albeit accessing
these is not simple, and requires great effort and specific knowledge from the individual to be able to do so. Last year’s decline in
economic activity and the ongoing political turmoil add more complexity to this scenario.9 Some of the significant problems of Brazil’s
national health system can be cited as the risk of infectious disease – which is still high – and a low ratio of physicians to patients, for
example. In 2010 there were 1.8 physicians per 1,000 population;10 of our survey countries, only Turkey (1.7), China (1.5) and India (0.7)
had fewer – and this is issue is likely to worsen as the population ages further. Other topics that deserve attention are long queues and
waiting times at hospitals and medical clinics, along with outdated and malfunctioning equipment. In more rural areas, the population
suffers with the scarcity of doctors and medicine. In 2013, Brazil spent 6.2 percent of GDP on healthcare,11 the fourth-lowest and
ahead only of the other emerging market nations in our survey. Life expectancy at birth in Brazil stands at 75 years, with a healthy life
expectancy of 66 years. Among the survey countries, only India has a lower life expectancy (68 years).12
Among certain demographic segments, confidence in the affordability of healthcare in retirement is even lower than the countrywide
average of 12 percent. Women (8 percent) are much less confident then men (16 percent) which may be symptomatic of women typically
living longer than men and typically holding less in savings and retirement funds. Brazil’s Millennials are more confident than Baby
Boomers (14 percent vs 9 percent respectively). Young workers need to consider the fact that their health may be less manageable with
age than they expect when calculating their retirement and healthcare costs for retirement.
Part 4: Living and aging in good health and with dignity
Chart 18 – Just one-in-eight people in Brazil are confident that they will be able to afford their own healthcare in retirement
21%
12%
16%
8%
14%
10%9% 8%
9%
24%
Excellenthealth
Goodhealth
Fair healthBabyBoomers
GenerationX
MillennialsWomenMenBrazilGlobal
Extremely or very confident
1966 - 1979
1979 - 2000
1947 - 1965
18 | The Aegon Retirement Readiness Survey 2018
Chart 20 – Home security systems and age-friendly modifications top the list of features and devices people in Brazil envision having added to their homes as they get old
However, the typical Brazilian family home may not always be well-suited to individuals as they grow old and are less able to climb
stairs, or even keep on top of household chores. Through D.I.Y. adjustments and/or new technology, homes can be developed, or devices
installed to help individuals age in place. For people in Brazil, installing age-friendly furniture (50 percent) tops the list. Followed by a
home security system (47 percent) and bathroom modifications (both 47 percent). Ramps and/or grip bars (45 percent) and medical alert
systems (33 percent) are next on the list. Robots to help with chores (14 percent) and robots to provide company (seven percent) fall
towards the bottom of the list in the Brazil – however, these are still very much nascent technology targeted at “digital immigrants” who
lack the natural tech-savviness of younger generations. Perhaps in coming decades, popularity for these innovations may grow, although
cost may prove to be a prohibitive factor.
Robot to keep me company
Global
Brazil
Bathroom modifications 47%43%
Age-friendly furniture 50%37%
Panic buttons to call emergency services 31%37%
Medical alert system to warn about changes in health(e.g., blood pressure monitors etc.)
33%33%
Elevator / stair lift 14%21%
Robot to help with chores, medication management,communication, etc.
14%17%
7%9%
Don't know / prefer not to answer 9%8%
None of the above 9%9%
Wheelchair accessibility 21%18%
Video monitoring 24%20%
Ramps and/or grip bars45%
26%
Kitchen modifications 33%28%
Home security system 47%39%
Feeling confident about the affordability of retirement forms part of the desire to be able to age with a sense of certainty, autonomy and
comfort. It is of particular importance for individuals to remain in their home as they get older.
Aging in place is of at least some importance to 92 percent of people globally. While this proportion is the same among people in
Brazil, they are more fervent in their convictions. Remaining in their own home is extremely important to 43 percent of people in Brazil
compared to 36 percent globally.
Chart 19 – The majority of people in Brazil say it is important to remain in their own home as they get older
Global 22%5% 36%35%1%
2%
Brazil 18%5%2%
31% 43%
Extremely important
Very important
Somewhat important
Not very important
Not at all important
Don't Know
The Aegon Retirement Readiness Survey 2018 | 19
Why do we need a new social contract? The retirement landscape is changing. As megatrends continue,
affecting economies, political overtones and demographics,
the way people live, work, and retire is in a state of evolution.
The current Brazilian social contract, constructed during early
in the 20th century, is crumbling. With this agreement on who
shoulders the responsibility for funding retirement struggling
to stay in place, a new social contract must be formed. This
new social contract must address the need for a redistribution
of responsibility in how people fund and prepare for their
retirement, while ensuring that the necessary tools, resources,
and infrastructure are provided. It must honor the principles of
sustainability and solidarity, while providing adequate safety nets
that enable people to age with dignity, avoid poverty in old age,
and ensure that vulnerable people are not left behind. Achieving
success depends on building new collaborative relationships based
on common objectives, benefits, and trust. .
Who are the partners in the new social contract?Governments take center stage in orchestrating retirement
systems in their countries making sure that everyone, especially
at-risk segments of the population, is included. Employers help
by offering workplace retirement savings and other benefits to
employees. These benefits include skills training, healthcare
and wellness. Individuals must take on a more proactive role in
‘owning’ their retirement security. And new social partners like
academics, think tanks, industry, charities and NGOs will work
more closely in public-private collaborations to share expertise,
innovate, and implement solutions. Schools and financial
professionals have a role in preparing individuals to understand
financial matters and implement financial decisions that can
enhance their retirement security
Nine essential design features of the new social contract are:1. Sustainable social security benefits that serve as a
meaningful source of guaranteed retirement income and avoid
risk of poverty among retirees.
2. Universal access to retirement savings arrangements for
employed workers and alternative arrangements for the self-
employed and those who are not employed due to parenting,
caregiving, or other responsibilities.
3. Automatic savings and other applications of behavioral
economics that make it easier and more convenient for people
to save and invest.
4. Guaranteed lifetime income solutions in addition to social
security benefits. Education for individuals to strategically
plan how to manage their savings to avoid running out of
money, including a knowledge of the options to help them
do so. Governments, employers and others should increase
awareness of, and encourage individuals to take advantage
of, opportunities to have a portion of their retirement savings
distributed in the form of guaranteed income, such as an
annuity.
5. Financial education and literacy so individuals understand
basic concepts and retirement-related products and services.
Individuals must be able to ask good questions and make
informed decisions. Financial literacy must be integrated into
educational curriculums so that young people learn the basics
of budgeting, investing and managing their savings – skills
that can serve them well for the rest of their lives.
6. Lifelong learning, longer working lives and flexible retirement
to help people to stay economically active longer and
transition into retirement on their own terms -- with adequate
financial protections if they are no longer able to work.
7. Accessible and affordable healthcare to promote healthy
aging. Governments play a vital role in sponsoring and/or
overseeing healthcare systems. Employers should provide
healthy work environments and consider offering workplace
wellness programs.
8. A positive view of aging that celebrates the value of older
individuals and takes full advantage of the gift of longevity.
9. An age-friendly world in which people can “age in place” in
their own homes and live in vibrant communities designed for
people of all ages to promote vitality and economic growth.
Part 5: Forging the new social contract
20 | The Aegon Retirement Readiness Survey 2018
Appendix 1 – ARRI methodologyThe 2018 ARRI is based on the sample of 14,400 workers, and has
been developed to measure attitudes and behaviors surrounding
retirement planning. Six survey questions (known as ‘predictor
variables’) are used, three broadly attitudinal and three broadly
behavioral:
1. Personal responsibility for income in retirement
2. Level of awareness of need to plan for retirement
3. Financial capability/understanding of financial matters
regarding plans for retirement
4. Retirement planning – level of development of plans
5. Financial preparedness for retirement
6. Income replacement – level of projected income
replacement
As well as these questions, a dependent variable question is asked
which is concerned with approaches to saving, for which five broad
saver types have been identified: habitual, occasional, past, aspiring,
and non-savers.
In order to create the index score the predictor variables are
correlated with the dependent variable to obtain a measure of
influence (known as an ‘R’ value). The mean scores of the predictor
variables are computed and each mean score is multiplied by its ‘R’
value. The results are summed and then divided by the sum of all
correlations to arrive at the ARRI score.
Note on the effect of increasing the number of survey countries year-on-year The first Aegon Retirement Readiness Survey, published in 2012,
was based on research conducted in nine countries. A separate
survey in Japan was conducted and reported on later that year.
Therefore, 2012 is regarded as a 10-country study. In 2013, two
new countries (Canada and China) were added bringing the universe
to 12. In 2014, a further three countries (Brazil, India and Turkey)
were added increasing the universe to 15. In 2015, the overall
size of the survey was maintained at 15 countries although with
the introduction of Australia and removal of Sweden. In 2018, the
countries surveyed remained the same as 2017, 2016 and 2015.
Australia****
Brazil** Canada* China** ***
France
Germany Hungary
* Added 2013** Added 2014*** In China 2,000 surveyed in total
India Japan The Netherlands
Total survey respondents
Poland Spain Turkey** UK US
16,000 Workers900
per country***
Fully retired people100
1,000
**** Added 2015
Australia****
Brazil** Canada* China** ***
France
Germany Hungary
* Added 2013** Added 2014*** In China 2,000 surveyed in total
India Japan The Netherlands
Total survey respondents
Poland Spain Turkey** UK US
16,000 Workers900
per country***
Fully retired people100
1,000
**** Added 2015
The Aegon Retirement Readiness Survey 2018 | 21
Appendix 2 – Answers to the ‘Big Three’ financial literacy questionsCorrect answers to the ‘Big Three’ financial literacy questions are highlighted in green below.
Question 1 – Suppose you had $100 in a savings account and the
interest rate was 2 percent per year. After 5 years, how much do
you think you would have in the account if you left the money to
grow?
• More than $102
• Exactly $102
• Less than $102
• Do not know
• Refuse to answer
Question 2 – Imagine that the interest rate on your savings
account was 1 percent per year and inflation was 2 percent per
year. After 1 year, how much would you be able to buy with the
money in this account?
• More than today
• Exactly the same as today
• Less than today
• Do not know
• Refuse to answer
Question 3 – Do you think that the following statement is true
or false? “Buying a single company stock usually provides a safer
return than a stock mutual fund.”
• True
• False
• Do not know
• Refuse to answer
22 | The Aegon Retirement Readiness Survey 2018
Contact informationHeadquarters Aegon N.V.Strategy & Sustainability
Mike Mansfield
Program Director – Aegon Center for Longevity and Retirement
Telephone: +31 70 344 8264
Email: [email protected]
aegon.com/thecenter
Media relationsTelephone: +31 70 344 8344
Email: [email protected]
DisclaimerThis report contains general information only and does not constitute a solicitation or offer.
No rights can be derived from this report. Aegon, its partners and any of their affiliates or
employees do not guarantee, warrant or represent the accuracy or completeness of the
information contained in the report.
The Aegon Retirement Readiness Survey 2018 | 23