A Look at Baby Boomer Women's Concerns on Generating Income for Retirement
With modern medicine and better nutrition, women are living longer today than ever before. As life spans increase, so does the cost of securing a comfortable retirement. Across the industrialized world, women still live 5 to 10 years longer than men. Among people over 100 years old, 85% are women, according to Tom Perls, founder of the New England Centenarian Study at Boston University and creator of the web site LivingTo100.com.1
A survey conducted by New York Life* showed that 78% of the pre-retiree women interviewed felt that they should know more about strategies for generating income in retirement. With traditional sources of guaranteed retirement income, such as pensions and Social Security, becoming less meaningful for future retirees, many women feel not only responsible for accumulating substantial retirement nest eggs but, increasingly, for turning those savings into income that lasts a lifetime.
If you are like many Americans, you may not be covered by a traditional pension plan. Even if you are among the lucky few vested in a traditional company pension, there's always a chance your pension benefits will be reduced. And if you have been a stay-at-home spouse or were self-employed, you may not have access to a company retirement plan of any kind.
To succeed, many women want to learn more about saving for and managing money in retirement. This same study found that only 10% of the men and women surveyed could name a safe annual retirement savings withdrawal rate - a rate at which you can spend your nest egg with reasonable certainty that you won't deplete your savings.
New York Life is committed to helping Americans establish a sustainable lifetime income stream. That's why we launched a research-based education initiative, Guarantees MatterSM, to assist Americans in identifying and addressing the unique income concerns and needs of retirement, both today and for the future.
We talked to more than 1,000 Americans to learn about their knowledge, attitudes, and behaviors regarding retirement income.* The research identified some key impediments to achieving a financially secure retirement - and points to solutions that can help Americans realize the retirement of their dreams. Below is a list of key findings of the survey:
Women are Particularly Concerned about Financial Security in Retirement
- 57% of the women surveyed are concerned about funding their retirement past age 85 (vs. 43% of men)
- Three-quarters (76%) of female survey respondents are concerned about major cutbacks in Social Security (vs. 62% of men)
- 78% of pre-retired women feel they should know more about strategies for generating income in retirement (vs. 67% of pre-retired men)
Americans Find Turning Retirement Savings into Sustainable Income Challenging
- Only one in 10 survey respondents can name a safe annual retirement savings withdrawal rate
- 88% of survey respondents didn't know or overestimated the percentage of their retirement savings they can safely withdraw each year without running out of money during their lifetime (experts generally agree on a safe annual withdrawal rate of 4% for the typical retiree)
- 70% of retirees say managing money in retirement is as hard as (59%) -- or harder than (11%) -- saving for it
- Nearly two in five pre-retirees (37%) do not have a formal plan that addresses how they will generate income throughout retirement
Income Guarantees in Retirement Highly Valued
- 69% of those surveyed are concerned about major cutbacks in Social Security
- Half (51%) of Americans without household defined benefit coverage wish they or their spouse had considered a career that offers a traditionally strong pension benefit
- 58% of pre-retirees believe it's important to supplement guaranteed income from sources such as Social Security or a pension plan by purchasing a guaranteed retirement income product
- Two in five pre-retirees (39%) say they would be interested in taking some of their retirement savings, such as money in a 401(k), and converting it into a guaranteed income stream
- After hearing a description of a guaranteed lifetime income annuity, 51% of pre-retirees said they would be very or somewhat interested in such a product
Americans' Retirement Expectations are Changing
- Only 3% of those surveyed believe future retirees will live comfortably in retirement
- Just 11% of pre-retirees say they expect their lifestyle to improve after their working years; by comparison, 27% of current retirees say their standard of living has improved in retirement
- While 71% of retirees had stopped working before age 65, only 39% of pre-retirees expect to retire before that age
Advisors Bring Value
Professional financial advice can play a critical role in achieving a comfortable retirement. A professional's experience and expertise can help you develop, implement and maintain an effective strategy to meet your income needs in retirement. Compared with individuals working without an advisor, individuals working with an advisor are:
- More likely to have a plan for generating income in retirement (70% vs. 50%)
- More likely to have made a realistic estimate of how long their money needs to last in retirement (51% of the advised estimated 25 years of more vs. 39% of the unadvised)
1Why Do Women Live Longer Than Men?, Time Magazine, by Laura Blue, Aug 6. 2008 http://www.time.com/time/health/article/0,8599,1827162,00.html#ixzz0d5pSW4PA
* The data featured here were gathered through a telephone poll survey conducted by premier research firm Mathew Greenwald & Associates, Inc. on behalf of New York Life. The telephone interviews were conducted between February 9 and March 9, 2006. Survey participants were all at least 41 years of age, solely or jointly responsible for financial and investment decisions in their households, and had at least $100,000 in investable assets. The sample was evenly split between retirees and pre-retirees and between men and women.
The material discussed is meant for general illustrative purposes only. Please note that individual situations can vary. You should seek the advice of a financial professional before making any decisions.
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