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Retirement assets to grow to $22 trillion by 2020

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Investible retirement assets of U.S. households aged 55-plus will nearly double to $22 trillion by 2020, new research shows.

LIMRA, Windsor, Conn., disclosed this finding in its new Retirement Income Reference Book, which was published in December 2012. The RIRB provides LIMRA data, projections and research on retirement income market.

The report shows that investable assets for individuals age 65 and older will reach $11.4 trillion by 2020, up from $5.9 trillion in 2010, a 93 percent rise. Among pre-retirees (ages 55-64), investable assets will attain $10.2 trillion, up from $6.1 trillion in 2010, a 67 percent increase.

“There is a huge opportunity for the financial services industry to help Americans identify how much income they will need in retirement, develop a plan for investing their portfolio to generate income, while continuing to grow their assets,” says Jafor Iqbal, associate  managing director of LIMRA Retirement Research.  

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In 2010, U.S. households age 55-plus held $12 trillion, according to a LIMRA analysis of the Survey of Consumers Finances, published by the Federal Reserve Board.

The number of Americans who receive income from an employment-based pension plan is on decline, and there will be many more retirees who will have most of their retirement assets invested in retirement plans.  The study estimates that almost two-thirds of these assets will be directed towards products that will generate income for them in retirement.

“With such a large demand, advisors may have to provide income product solutions more efficiently,” says Iqbal.  “We are witnessing financial services firms changing the structure and business model to accommodate more customer-centric information and process, promoting uniform tools and services across the institutional and retail businesses to capture rollovers, emphasizing smooth transition of assets from the savings in institutional plans to retail side of the business where most retirement income products and solution are typically available.”