Participants tend to approach retirement strategies differently based on their acumen and confidence levels toward investing. But retirees’ insights offer something for everyone. Many participants are already attuned to the urgency, considering that an extraordinary 42% sock away more than 10% of their annual pay in contributions to their plan. But too many participants still go it alone, often making decisions that could work against them down the road.
Despite broad contentment, many retirees also had a dose of anxiety. For example, we asked those taking plan withdrawals if they were comfortable doing so. Two-thirds said yes, but only half of all respondents were happy to be spending some of those balances they worked so long to build. When it comes to seeing their savings drawn down, 60% had mixed feelings about it—or worse.
Retirement Income: How Much and for How Long?
The source of retirees’ mixed feelings could be concerns over whether they’ll have enough income to last their lifetimes. To that point, 87% cited inflation—at peak levels during our survey—among their top three financial concerns. Also registering high: having enough saved to live comfortably (56%) and knowing how much to withdraw annually without outliving their money (52%).
These three concerns tell us one important thing: the search for guaranteed lifetime income continues even into retirement. And it’s an option many wished they had had access to before they left the workforce.
In fact, our final survey question posed that very scenario. Asked whether they’d have used an option that turns savings into a guaranteed monthly retirement check if their employer offered one, 65% said yes, while 30% weren’t sure. Only 5% said no.
We believe that retirees’ experiences lend helpful insights into what current participants want—especially guaranteed lifetime income solutions. We also found that flexibility and control over their retirement assets are highly desirable—for both participants and retirees.
In fact, an impressive 69% of retirees over 65 said they haven’t touched their DC assets. Some may be reluctant to draw down their savings, while others may have alternate income sources that allow them to wait. But many certainly want to choose the size and timing of their income stream, a choice not all systematic withdrawals or annuity-style options provide.
We think demand for a guaranteed lifetime income, as well as flexibility and control over it, will only mushroom from here. In turn, the spectrum of solutions will expand, but they won’t all work the same way or address all needs. For plan sponsors, selecting the one that’s best for their participants is important. Asking a few key questions up front can help narrow the field.
To sum things up, we should all learn from our experiences—and those of others. Most retirees in our survey say they’re comfortable, but still worry whether they’ve saved enough to see them through. Plan sponsors should take heed, because current participants will cross the work finish line soon enough. And based on our broader survey, many of them aren’t that confident they’re ready for it.