No, they just don’t get it. While Americans do pay attention to the balance in their retirement accounts, more than half of them — 52% — don’t understand how that balance translates into retirement income.
So says a new column from the LIMRA Secure Retirement Institute, which finds that among American workers age 20 to 79, 52% say it’s tough to figure out how much income that retirement account balance means they’ll have when the big day comes.
Annuity groups have been lobbying lawmakers for lifetime income estimates for workers. One bill currently in front of Congress, the Retirement Enhancement and Savings Act, would require retirement plans to show participants how their savings would look as an monthly income stream.
Retirement income estimates can help workers make better decisions, the LIMRA report says, with 48% increasing their savings level once they’ve seen an estimate of what they’ll have as income in retirement. It seems to hit millennials particularly hard, since LIMRA SRI finds that 55% of them boost their retirement savings level once they’ve seen an income estimate.
Women are less likely to have seen an income estimate than men, at 43% compared with 60%. And 40% of retirees say they wish they had seen more of those estimates along the way — with women, like millennials, saying so in greater numbers; 52% of women, compared with just 33% of men, would have found such estimates helpful before they retired.
Boomers are more likely to have seen such estimates than younger workers, and are also more likely to get more insight from the experience — since they’re closer to retirement, they may know better what post-retirement expenses are likely to be.
In addition, 60% of workers who were shown an income estimate by a financial professional upped their savings rate, keeping them on the right track to have enough when they retire.
Seeing that estimate makes workers more confident that they’re on the right track for retirement, with 70% saying they could live the lifestyle they want in retirement. Among those who haven’t gotten a retirement income estimate, just 30% say they’re confident that they’re saving enough to see them through.