The LIMRA Secure Retirement Institute recently surveyed retirees and pre-retirees to get a sense of their preferences in retirement products. The results provide some interesting insights into the respondents’ thinking and how advisors can better position the solutions they offer.
The survey found that investment growth, flexibility and guaranteed income have greater appeal than asset management control. According to LIMRA’s Industry Trends: “When asked to name the most important products or features they wanted in an income plan, 60 percent of retirees and pre-retirees said they would like an income that had the potential for investment growth. Flexibility in changing the amount of income was cited among 55 percent and just over half said income that is guaranteed for life was most important to them.”
The survey asked respondents why they chose particular features. The reasons clearly support the results: “On income growth, the top reason cited was the expectation of living a long time in retirement. The top reasons for choosing income flexibility were the uncertainty of future expenses and having money for emergencies. Retirees and pre-retirees who prefer a guaranteed lifetime income said they chose this feature for peace of mind.”
The findings offer lessons for product manufacturers, according to Matt Drinkwater, associate managing director with the organization. Retirees and pre-retirees are significantly concerned about restrictions on their spending and the long-term impact of inflation—they don’t like being locked into a flat income. That means inflation-adjusted products should be in demand but there’s a catch, he notes. Although consumers say they want inflation protection in products like annuities, their buying habits don’t always support that claim.