Research

New Research to Help You Better Plan and Prepare for Retirement

Poster for Income Savvy

To find out what investors are thinking and feeling today with respect to investing for retirement and generating retirement income, we recently partnered with retirement income experts Dr. Michael Finke and Dr. Wade D. Pfau, both of The American College of Financial Services. Here’s what we discovered:

Investors are worried about a market decline

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  • 79% of investors surveyed are concerned about the possibility of a significant future market decline. Older investors, who may be nearing retirement (age 56-74), have an even greater concern about a potential market decline compared to those who are age 55 or younger.
  • 49% of investors surveyed identified a market decline as their greatest fear when they think about their retirement investments.

Investors may be looking to “lock in” investment gains for guaranteed retirement income—Now!

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  • 55% of investors surveyed indicated that recent gains make it more likely they will “lock in” a portion of their gains for guaranteed retirement income.

  • Nearly half (49%) of those surveyed would prefer to trade a portion of their retirement savings NOW for future guaranteed retirement income vs. waiting until LATER to make the trade.

Additional guaranteed income may help investors feel more comfortable investing in stocks

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  • 80% of investors surveyed believe recent retirees should hold less than 50% in stocks, which would be lower than the 50/50 and 60/40 stock and bond allocations often used in retirement income planning simulations.
  • 58% of investors surveyed would feel more comfortable investing in stocks if they had more guaranteed income.
  • 56% of investors surveyed would feel more comfortable spending money on vacations or other lifestyle expenses if they had more guaranteed income.

An Income Floor approach may help address investors’ retirement concerns

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  • 61% of those surveyed indicated that their greatest concern when it comes to transitioning from full-time employment into retirement is outliving retirement savings.
  • 51% of those surveyed have no formal withdrawal strategy for retirement when it comes to generating income from their retirement savings.
  • 39% of those surveyed indicated that their greatest source of dissatisfaction with their retirement investment options was that they don’t know how much they will be able to spend in retirement.
  • 89% of those surveyed think that today’s retirees may need to be more careful about their spending because they may need to plan for retirement income using IRA, 401(k) and 403(b) types of retirement accounts versus having the advantage of a traditional pension.

Guaranteed income may enhance an investor’s sense of security around retirement

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  • 60% of those surveyed indicated that knowing that they will have income to cover their basic expenses appeals to them the most with respect to the idea of converting a portion of their retirement savings into guaranteed income for retirement.

Closing thoughts

These latest survey findings underscore the important role that annuities can play in helping investors enhance their retirement security with guaranteed lifetime income. Annuities can be a powerful tool for addressing investor concerns around market volatility, longevity and retirement spending.

You can help give yourself a better quality of life if you have a higher level of confidence that you’re not going to run out of money in retirement. That’s the danger of an investment only approach—you’re keeping that longevity risk and market risk on yourself.

To learn more about designing a guaranteed lifetime income strategy for your retirement with annuities from AIG, please contact your financial professional today.

—Dr. Wade D. Pfau and Dr. Michael Finke