Two-thirds of pre-retirees say having enough money to last their lifetime is one of their top three goals of retirement
LIMRA Secure Retirement Institute (LIMRA SRI) has found 53 percent of Americans ages 50 to 79 with at least $100,000 in assets would choose guaranteed lifetime income of $660 monthly over a lump sum of $120,000 when offered in a hypothetical situation. When asked why they would take the guaranteed lifetime income rather than the lump sum, 57 percent said it was because they expected to live long in retirement and 46 percent said it was because it would provide them with peace of mind.
Those who favor lifetime-guaranteed payments over a lump sum are generally not willing to change their preference when the value of the lump-sum offered is increased. When asked to select the minimum value the lump sum would need to be in order for them to choose it over the guaranteed lifetime income, nearly half (46 percent) say that they would never switch to the lump sum.
For those who chose to receive the lump sum, almost two-thirds say it was to maintain control over the funds and almost 3 in 10 say it is because they already have enough guaranteed lifetime income from other sources. LIMRA SRI finds that 36 percent of pre-retiree and retiree investors plan to use guaranteed lifetime income to cover their basic living expenses while using non-guaranteed income sources to cover the rest of their expenses in retirement.
LIMRA SRI finds more than three quarters of consumers surveyed agreed that having guaranteed lifetime income gives them peace of mind. Comparatively, only 13 percent feel Social Security alone provides sufficient guaranteed lifetime income in retirement, which implies other sources of income must be leveraged for this purpose.
In honor of National Retirement Security Week, we want to help raise awareness about the importance of saving and preparing for retirement. This is a great time to work with your clients to review their personal retirement goals and determine if products such as guaranteed lifetime income would help them achieve their desired retirement lifestyle.