If the latest TIAA survey is correct, many Americans will be surprised when they retire. Of course, many financial firms will not, as TIAA’s results coincide with much of the current research on workers’ misplaced confidence in sustaining a secure retirement.
TIAA points to several disconnects among the people who responded—1,000 Americans, ages 18 and up: Fifty-eight percent were confident they have enough saved to last through retirement, but less than half know the value of their retirement account. Just 35% know what they can expect in monthly income, the TIAA 2016 Lifetime Income Survey found.
Further, 41% save 10% or less for their post-employment years, where many experts now advise 10% to 15%, TIAA notes. Sixty-three percent think they’ll need 75%, at most, of their current earnings for a comfortable retirement life, where, again, many experts suggest more—75% to 100%.
The survey found that many (68%) would prefer receiving lifetime retirement paychecks to unlimited lifetime airline tickets or a brand new car every year—both 9%. But even adding the variable of maybe running out of money, “only 43% are willing to commit a portion of their retirement savings to a choice that would allow them to receive a monthly payment for life,” TIAA says.
“Saving is crucial, but it’s not enough,” says Roger Ferguson Jr., TIAA president and CEO, citing today’s longer lifespans. “Workers also need to take a realistic look at what their expenses will be, and make a plan to generate reliable monthly income to cover those expenses in retirement. Guaranteed income for life is critical to a long, comfortable retirement,” he says.
TIAA, which sells employer-sponsored plans, annuities and individual retirement accounts (IRAs) in the academic, nonprofit and government markets, sought out other attitudes toward annuities through the survey. Sixty-six percent said they were unfamiliar with the products, just 10% actually own one, and 68% said they have no plans to buy one. “Only 23% have a favorable opinion of them,” the survey report says.
NEXT: Familiarity seems to bring mixed reviews