More than one-third (34 percent) of Americans who participate in a retirement plan say the primary goal of their plan is to generate guaranteed monthly income, new research shows.
TIAA-CREF discloses this finding in a nationwide survey of 1,017 adults, age 18 years and older, on their retirement plans. The study was conducted by KRC Research, an independent research firm.
According to the report, an additional 40 percent of Americans want to ensure their savings are safe regardless of what happens in the financial markets. And 15 percent desire a competitive rate of return on their savings.
The research observes, however, that 72 percent of respondents either do not have or are unaware if their retirement plan has a lifetime income option.
The survey reveals a disconnect between the percentage of pre-retirement income that experts believe Americans will need to live comfortably in retirement (70 to 90 percent) and the proportion that survey respondents believe. Two-thirds (66 percent) peg the percentage at between 25 percent and 75 of pre-retirement income.
“In addition to unrealistic expectations about the amount they will need to live on, Americans are unclear about how much they need to save,” the report states. “Experts recommend that Americans save at least 10 percent of their annual income for retirement, including contributions from their employers.
“However, the TIAA-CREF survey found that 44 percent of those who haven’t retired are saving 10 percent or less of their annual income,” the report adds. “Even more alarming is that 21 percent aren’t saving for retirement at all.”
Forty-four percent of survey respondents are somewhat concerned (20 percent) or very concerned (24 percent) they may run out of money in retirement. But just 21 percent expect to receive income from annuities.
Fifty-three percent plan to use savings withdrawals as one of the sources of monthly retirement income, yet TIAA-CREF research shows that if retirees make withdrawals from their retirement savings that are equal to the income payments they would receive from a lifetime annuity (assuming the same interest rate), there is a greater than 50 percent chance that the retiree will outlive his or her savings — whereas the annuity payments continue for as long as the retiree lives.