As nearly half of Americans worry about living too frugally in retirement, many also say they don’t have a plan to draw from their savings in their later years.
The 2024 Annual Retirement Study from Allianz Life found that 44% of Americans currently have a plan for how they will take income in retirement. As they reach retirement in the next years, 67% of Baby Boomers said they are more likely than Gen Xers (30%) or Millennials (33%) to say they have a retirement income plan.
Kelly LaVigne, vice president of Consumer Insights at Allianz Life, adds that while a bulk of retirement preparation emphasizes on accumulation, understanding how those assets will fund a participant’s retirement lifestyle is just as critical.
“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.”
Top risks to retirement income
Respondents to Allianz Life’s survey also identified several concerns regarding their retirement income. Among the top risks include everyday costs increasing (42%), outliving money (35%), healthcare costs (32%), stock market dropping (31%), and spending too much and running out of money (30%).
Financial professionals are best suited to help participants know how they can take retirement savings distributions. According to the survey, 45% worry about how to best take distributions from their retirement savings to retirement income.
“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, inflation, taxes, and rising health care costs,” 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.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
