November 2024

Key Findings:

• 44% say they currently have a plan for how they will take income in retirement
• 48% worry they will live too frugally and not enjoy retirement as much
• 45% worry about how to best take distributions from their retirement savings for

retirement income

Many Americans lack a plan for how they will draw from their retirement savings for income in retirement and worry about the funds lasting for their lifetime, according to the 2024 Annual Retirement Study done by a major life insurance company.

According to the study, “Without a solid strategy, the ongoing process of deciding how much money to withdraw from which account when can be daunting.” Less than half of all Americans nearing retirement (44%) say they currently have a plan for how they will take income in retirement. Boomers (67%) are more likely than Gen Xers (30%) or Millennials (33%) to say they have a retirement income plan.

“If you don’t know how you will draw from your retirement assets for income, then you aren’t ready to retire,” said Kelly Lavigne, VP of consumer insights at a major insurance company. “So much of retirement preparation focuses on accumulating assets – and that’s important – but it is critical to understand how those assets will be able to fund your life after you retire. To do that, you need to make important decisions like when to start claiming Social Security and examine what resources you have to fund your retirement.”

Nearly half (48%) worry about living too frugally and not enjoying retirement as much as they should. “Without a solid strategy, the ongoing process of deciding how much money to withdraw from which account when can be daunting,” Lavigne said. “A retirement income strategy will help reduce the number of ongoing decisions you need to make. One way to help reduce the number of decisions you need to make about retirement income is to incorporate an annuity into your portfolio that offers guaranteed lifetime income.”

What are the top risks to retirement income?

Americans identified the greatest risks to their retirement income. Ranked in the top three risks to retirement income were:

• Inflation – Everyday costs increasing (42%)
• Outliving money (35%)
• Health care costs (32%)
• Stock market dropping (31%)
• Unexpected expenses – Spending too much and running out of money (30%)

The question always comes up whether a financial professional can provide meaningful benefits to their client when evaluating retirement income strategies. What is the best way to take distributions? Studies show that 45% of Americans worry about how to best take distributions for retirement income. Is there a best way? In our opinion, the answer is a resounding yes. The Wealth Teams Retirement Solution can identify the best mix of fixed, equity, and alternatives to build a consistent, stable income that will last through retirement.

“When figuring out how to draw from your assets for retirement income, you want to include risk mitigation strategies that can help address worries about running out of money, the impact of inflation, how to reduce taxes, and managing the rising health care costs, especially long-term care,” Lavigne said. “That strategy may include incorporating an additional source of consistent, reliable, and possibly increasing income. A financial professional can help create a strategy for how to effectively turn your retirement assets into income that can last a lifetime.”

This 2024 Annual Retirement Study was conducted using an online survey in February and March 2024. The sample size was 1,000 individuals who were age 25+ in the U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered. Another criterion was investable assets of $150k+. The study included an oversampling of Black/African Americans (416 responses); Hispanic (398 responses); Asian/Asian American (366 responses).

Increasing income potential provided through annuities that offer a built-in or optional Income Benefit riders increase income with market growth. These riders have an additional annual rider fee.

Annuities can help meet retirement goals by providing tax-deferred growth, a death benefit during the accumulation phase, and a guaranteed income through retirement. Plus, many have a two-times multiplier for long-term care on the guaranteed income. If having a guaranteed income is important to the investor, then an annuity should be considered.