Participants Seeking Retirement Income Guarantee

January 29, 2014 ( – Plan participants are seeking a financially secure retirement, with more than one-third (34%) seeing the generation of guaranteed monthly income as the main goal of their retirement plan.

By Kevin McGuinness | January 29, 2014
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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 these options.”

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.