New study findings from Allianz Life indicate SECURE Act driving strong interest in lifetime income options in retirement, particularly among nervous Gen Xers
Key findings snapshot:
71% of employer-sponsored participants would like an option that offers guaranteed income for life in their plan
75% of Gen Xers expressed interest in protection options as part of their employer-sponsored plan
55% of participants are worried that money in their employer-sponsored plan will run out during retirement, with 69% of Gen Xers expressing the same concern
Americans with employer-sponsored retirement plans continue to express high levels of interest in guaranteed lifetime income options according to a recent study* from Allianz Life Insurance Company of North America (Allianz Life). The findings indicate that 71% of participants in an employer-sponsored plan would like an option that offers guaranteed income for life in their plan, while 58% said they would like an annuity as part of their plan. Additionally, 68% wish there were options in their plan to protect it from market downturns. From a generational standpoint, protection is top of mind with Gen X as 75% of those respondents indicated an interest in lifetime income options, with 67% of their Millennial counterparts expressing the same desire.
Making the Money Last?
Taking a closer look at the findings, almost two-thirds of overall respondents (65%) expect that most of their retirement income will come from money they have from employer-sponsored plans. However, there is distinct lack of confidence, as over half (55%) of respondents are worried that money in their employer-sponsored plan will run out during retirement. Gen X angst is clear as 69% are concerned that they will run out of funds, followed by a slightly less nervous Millennial cohort at 56%. Forty-five percent of Baby Boomers expressed the same concern over running out of employer-sponsored plan retirement funds.
“While it should not come as a complete surprise that Gen X is clearly starting to think more about retirement, it is surprising to see such an intense focus on protection,” said Matt Gray, assistant vice president of Worksite Solutions, Allianz Life. “Getting some protection against risks within retirement and guaranteeing an ongoing stream of income is a critical, yet often overlooked, component of a solid retirement financial plan. In many respects, it is actually good to see that this is clearly on the radar of Gen X as they head closer to their golden years.”
Hand-on or Hands-Off?
The study clearly indicated that managing allocations within the retirement portfolio is something that most people want their plan sponsors to handle for them. In fact, two-thirds (68%) of respondents currently let their plan make the decisions about how to allocate contributions based on age and expected retirement date. However, the study also indicated some plan owners are still getting hands-on with the management of their assets. Sixty-one percent say they regularly review their allocations and make changes as needed.
Taking a look at those interested in a guaranteed lifetime income option, the desire for plan management grows as most want some help deciding how to make allocations, either through a self-service online tool (31%), the plan automatically doing so (28%), or a fee-based professional service (24%). Having the plan manage allocations automatically is also the most appealing to Gen Xers, with 40% looking for plan management. Only 28% of Millennials and 19% of Boomers expressed the same interest.
“There is a clear indication that plan participants are very interested in learning more about lifetime income options within their respective plans,” added Gray. “The SECURE Act has presented a significant opportunity for investment consultants and plan advisors to provide much needed information, education and guidance to the plans and participants they serve. Doing so will increase the value they bring to their clients and help them achieve the best possible outcomes.”
About Allianz Life Insurance Company of North America
Allianz Life Insurance Company of North America, one of the FORTUNE 100 Best Companies to Work For® and one of the Ethisphere 2020 World’s Most Ethical Companies®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2019, Allianz Life provided additional value to its policyholders via distributions of more than $10.4 billion. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with over 147,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field in St. Paul, Minnesota, home of Major League Soccer’s Minnesota United.
*Allianz Life conducted an online survey in August 2020 with a nationally representative sample of 619 respondents 18 + who currently have an employer-sponsored retirement plan. Guarantees are backed by the financial strength and claims-paying ability of the issuing company.
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Brett J. Weinberg