A survey from TIAA-CREF reveals another 40% of
participants want to ensure their savings are safe regardless of what happens
in the financial markets. Yet 72% either do not have a retirement income option in their defined contribution retirement plan or are unaware if their
retirement plan has one.
In terms of potentially running out of money in retirement,
20% of participants are somewhat concerned and 24% are very concerned. But, just
21% expect to receive income from annuities.
Fifty-three percent of participants plan to use savings
withdrawals as one of their sources of monthly retirement income. Yet TIAA-CREF
research shows if retirees make withdrawals from their retirement savings
that are equal to the income payments they would receive from a lifetime
annuity (assuming the same interest rate), there is a greater than 50% chance they will outlive their savings. Annuity payments, however, would
continue for as long as the retiree lives.
“All workers deserve a secure retirement, but many need help
in setting realistic plans to achieve that goal,” explains Teresa Hassara,
executive vice president of TIAA-CREF’s Institutional Business. “With life
expectancies increasing rapidly, lifetime income options are essential to
sustaining financial well-being over a retirement that could last for 30 or 40
years. Plan sponsors play a key role in educating employees on the value of
Most experts agree Americans will need 70%
to 90% of their pre-retirement income to maintain their standard of living in
retirement, according to the New York-based Hassara. Yet one-third (33%) of surveyed
participants who have not yet retired believe they will need only 25% to 50% of
pre-retirement income, and another 33% believe they will need 50% to 75%.
Only one-fifth (21%) of those surveyed believe they will need more than 75% of
pre-retirement income to live comfortably in retirement.