A new LIMRA study reveals that 45 percent of retirees still have their assets in their retirement savings plans with their employers, most frequently in their 401(k) plans, and almost a fifth of retirees own three or more IRAs in their households.
The online survey of retirees was conducted in October 2010. Qualified respondents were aged 55 to 79; had been retired for at least one year and had not worked for pay within the past year; and had household incomes of at least $35,000. Furthermore, qualified respondents were personally involved in making decisions about their household savings and investments.
“While many retirees may think retaining multiple retirement plans or IRAs is a good diversification plan, doing so can make it difficult to measure whether their investments are effectively aligned with their retirement goals,” said Jafor Iqbal, associate managing director of LIMRA Retirement Research. “Consolidating assets under one professional manager or institution gives retirees access to information and guidance, typically at a lower cost, to help make the most out of a retirement plan.”
Among the survey respondents, 23 percent said they have relationships with insurance companies. The mass affluent retirees with assets of $100,000 to $500,000 are more likely to have relationships with insurance companies than any other market segments. However, as a whole, retirees have only 9 to 10 percent of their assets invested in products and services offered by insurance companies.
With more than $400 billion in the annual IRA rollover market, it is important that insurers understand what motivates retirees and pre-retirees to rollover or consolidate their money with a financial firm.
Provide online resources. According to LIMRA consumer surveys, retirees start to think about the decision of what to do with their retirement plan balance well in advance of retirement. Providing online resources like retirement calculators and checklists can help insurance companies develop relationships with employees approaching retirement and build brand awareness.