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Most Retirees Hoarding Their Savings: Pru

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NU Online News Service, March 1, 2004, 1:25 p.m. EST – Six out of 10 retired Americans say they are trying to live on their Social Security and pension benefits so they can leave their retirement savings untouched, a survey by Prudential Financial, Inc., Newark, N.J., finds. The remaining 4 out of 10 said they use part of their retirement savings to generate additional income.

But only 18% said their focus is to generate regular income from savings. This holds true even for retirees who have accumulated savings of $500,000 or more, Prudential found.

One in 3 retirees plans to spend down only some of their savings, while 24% plan to spend down most of their savings eventually, according to the study.

Among those who plan to keep most of their savings, 43% will do so out because they don’t want to outlive their money and become a burden to someone else.

Among those who currently use part of their savings to generate income, 65% agree that annuities’ ability to provide a death benefit at least equal to the amount invested is an “attractive” feature of annuities, and 70% said they were attracted to annuities’ guaranteed income payments for a fixed period or for life.

“Interestingly, retirees who are not generating income through their savings are just as likely to favor these attributes of an annuity,” Prudential says. “They may simply lack the understanding of how to make annuities work for them.”