We’ve heard it before and now we’re hearing it again: Outliving their assets is the greatest fear of retirees and near-retirees.
According to the latest Cerulli Edge—U.S. Retirement Edition, 2Q 2023 Issue, retirement savers and retirees alike remain extremely concerned about longevity risk. The latest report finds 58% of retirement savers (including retirees) cite outliving their assets as their greatest retirement fear.
While the percentage is even higher for near-retiree and retiree generations (Generation X and Baby Boomers), longevity risk is the greatest concern across all generations. As a result, some individuals are working longer than anticipated—almost half (46%) of retirees who retired later than expected cite the need for income or savings to meet basic expenses as a reason for delaying retirement.
Indeed, Prudential’s latest survey, “Gen X: Retirement Revised,” found close to 30 million (or 46%) of Gen Xers do not believe they will have the proper savings to live comfortably throughout their retirement.
According to the Cerulli research, Social Security is the primary source of income for more than half (54%) of U.S. retirees. Of this share, 20% have no secondary source of retirement income. If action is not taken by legislators, the main Social Security trust fund would pay only 77% of its scheduled benefits by 2033.
While today’s workers are aided by a proliferation of retirement income products and new legislation such as SECURE 2.0, retirement plan participants are still in need of additional guidance as they prepare for retirement, the Cerulli brief states. Provisions in SECURE 2.0 including auto enrollment and auto escalation, as well as higher catch-up contribution limits for those ages 60-63, certainly will nudge the individual saver and near-retiree to address longevity risk early, but stepped-up education efforts are needed.
“Despite efforts toward workplace financial wellness, retirement savers are at a financial education deficit,” said Elizabeth Chiffer, associate analyst. “Solutions to address longevity risk in the defined contribution space include retirement income products that too often are sold as ‘one-size-fits-all’ solutions rather than presented as an array of options that should be matched to the needs of an individual retiree. Uncertainty and confusion must be met with education, and ‘personalization’ must transform from jargon into action.”
The for-purchase “Cerulli Edge—U.S. Retirement Edition, 2Q 2023 Issue” explores key trends affecting the U.S. retirement market, including the following segments: IRAs, corporate and NFP/governmental DC plans, and corporate and public DB plans.
SEE ALSO:
• Participants Could Exhaust Retirement Savings Without Lifetime Income Strategies
• Americans Score Low on Longevity Literacy
• Gen Xers Face Retirement Unreadiness
• Most Americans Not Counting on Social Security for Retirement Income
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
