New research shows that many Americans who have saved are worried and don’t feel financially prepared for retirement.
Americans are living longer than ever before, but few have protected monthly income to fill the potential funding gap between what they will need in retirement and the income they will receive from savings, investments and Social Security. With pensions disappearing and Social Security estimated to replace only about 40% of the average person’s income, this leaves millions of Americans vulnerable to outliving their hard-earned savings.
Yet most retirement planning conversations and tools continue to focus primarily on accumulating savings, overlooking an important component that could address this looming retirement problem — protecting part of that money to ensure monthly income for life.
To begin changing the retirement planning conversation and help solve the problem of too many American households lacking protected retirement income, 24 financial services organizations recently banded together to launch the “Alliance for Lifetime Income.” The Alliance’s mission is to educate Americans about the importance of protected lifetime income solutions by building a platform of new online and offline content, tools, thought leadership, events, and new terminology designed to simplify this often complex topic in ways that empower Americans to take action.
“The Alliance for Lifetime Income believes the possibility of outliving hard-earned savings is a real threat to the financial and emotional wellbeing of Americans currently in or approaching retirement,” said Colin Devine, Alliance for Lifetime Income Educational Advisor. “Our survey shows even people who spend their whole lives growing their savings worry they will be unable to maintain their desired lifestyle in retirement. Now is the time for the industry to help educate more Americans on the risk of outliving their money so they can enjoy their retirement lives.”
The Alliance’s multi-faceted, multi-year educational program is intended to raise awareness and empower consumers and financial advisors to discuss the need for including protected lifetime income from solutions such as annuities within a comprehensive retirement plan — income that is guaranteed monthly for life to help mitigate the impact of rising costs of living and healthcare, market volatility and longer lifespans.
“As a nation, we have vastly expanded 401(k)s and other retirement accumulation vehicles, but have not tackled the looming issue of securing retirement income,” said Jana Greer, president and CEO, Retirement at founding member AIG. “With a long history in the retirement industry, AIG is proud to join this powerful coalition, helping to address what is one of the most critical financial planning issues of our time — helping Americans fund today’s longer retirements with protected income that cannot be outlived,” Greer added. “Today’s longer lifespans are a game-changer — they make running out of money in retirement a serious concern for millions of Americans. That’s why raising national awareness and changing the conversation from saving to retirement income has never been more important.”
Alliance members are combining their energy and resources to educate more Americans and help make protected lifetime income solutions, such as annuities, an important part of the retirement planning dialogue.
“The mission of the Alliance goes beyond that of traditional trade organizations,” Greer said. “It is campaign-oriented and has significant resources that will allow for broad consumer and financial advisor messaging in a unified, educational approach that has not been done before.”
A new survey of Baby Boomer and Gen X households, along with other new research conducted by the Alliance, shows that substantial savings are not enough to alleviate financial anxiety about retirement. In fact, those households with protected monthly income from sources other than from Social Security — such as an annuity or pension — are far more confident in their retirement preparations. Other findings include:
- Nearly half (48%) of U.S. households ages 45-72 with investable assets of $75,000 to $1.99 million are approaching their retirement years “unprotected,” without protected monthly income other than Social Security.
- 88% of protected households say they are confident that their retirement money will help them achieve their lifestyle goals.
- 73% of protected households do not worry about their retirement.
- 80% of protected households are confident in their ability to withstand losses in the financial markets or unexpected expenses, issues that can be particularly problematic in retirement for those who are unprepared. Conversely, only 63% of unprotected households feel this confidence.
- Families in protected households are 1.5 times more likely to say they are very confident they are financially prepared to achieve their retirement lifestyle goals versus families with unprotected income.
To help empower consumers, the Alliance is bringing together some the nation’s leading financial services organizations within the retirement industry, third-party organizations and prominent experts to offer important resources, including thought leadership, research, third-party expert views and tools, and an educational website (www.RetireYourRisk.org) for both consumers and financial advisors.
Among other resources, the site will host a checklist for consumers to use to discuss protected monthly income with their financial advisors. The Alliance will also be focusing on new, simpler language that the retirement industry can use with consumers and financial advisors to break down the complexities and answer common questions about lifetime income solutions, including annuities.
The Alliance for Lifetime Income is comprised of the following member companies:
- AIG
- Allianz Life
- AXA Equitable Life
- Brighthouse Financial
- Capital Group
- Franklin Templeton
- Global Atlantic
- Goldman Sachs Asset Management
- Invesco
- Jackson National Life
- JP Morgan
- Lincoln Financial
- Macquarie
- MassMutual
- Milliman
- Nationwide
- Pacific Life
- Protective
- Prudential
- State Farm
- SSGA
- TIAA
- Transamerica
- T. Rowe Price
For news, updates and content from the Alliance for Lifetime Income, visit www.AllianceforLifetimeIncome.org and follow the Alliance on Twitter, LinkedIn and/or Facebook.
About the Alliance for Lifetime Income: The Alliance for Lifetime Income, based in Washington, D.C., is a nonprofit 501(c)(6) organization formed and supported by some of the nation’s leading financial services organizations, to create awareness and educate Americans about the importance of protected lifetime income. The Alliance is focused on helping to educate Americans on the risk of outliving their savings so they can enjoy their retirement lives. The Alliance provides consumers and financial advisors with the educational resources, tools and insights they can use to build plans for protected retirement income. For more information about the Alliance, visit www.AllianceForLifetimeIncome.org.
