That was a key conclusion of a survey released Wednesday by Prudential Retirement, according to a Prudential news release. Prudential is an annuity provider.
Prudential Retirement’s fourth annual Workplace Report on Retirement Planning found that near-retirees do not know what to do with their retirement nest eggs once they stop working, the news release said. Only one in five said they are well informed on how to do so. When asked if they would choose an income annuity to create a retirement paycheck, fewer than half (44%) had even heard of the income annuity option and a scant 9% said they would use it.
Not only that, but 15% of those surveyed are focused on “generating retirement income,” while the remaining 85% are continuing to concentrate on “building their retirement nest egg.”
“Current industry data shows that American workers aren’t saving enough in their workplace-provided retirement programs, and our survey indicates that this lack of preparedness extends from the accumulation phase of retirement planning into the distribution phase,” said John Kim, president, Prudential Retirement, in the news release. “Even those who are conscientious savers and investors, including Baby Boomers now aged 55-58, aren’t prepared to convert their retirement savings into a predictable retirement paycheck that they can’t outlive.”
The latest poll also points to an unmet need among many Americans for assistance with retirement planning. Although near-retirees acknowledged they must take personal responsibility for their retirement security, a mere 7% have formal plans to help them manage such issues as generating income, identifying expenses, and utilizing savings.
In addition, more the one-third (34%) say they need help to understand products and concepts – such as income annuities and systematic withdrawal strategies – that can help generate the predictable retirement income they seek. More than a third (35%) have yet to calculate the savings they need for a comfortable retirement or what their projected monthly living expenses might be in retirement (36%).
Even more disturbing, when asked to give themselves a grade on their retirement preparedness, 53% awarded themselves a “C” or lower.
Prudential polled 1,023 Americans employed full-time aged 55-64 about their retirement knowledge, goals, actions, and plans. The online survey was administered between October and November, 2004.
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