According to a recent survey, most Americans would choose a monthly income of $2,700 a month for life over a lump sum retirement payment of $500,000, as reported in a Benefits Pro article. TIAA’s Lifetime Income Survey found that while 62% of Americans say they’d opt for a lifelong monthly check, only 32% of participants say their retirement plan offers that option. And of those who don’t have access, half would like the choice of a lifelong monthly check from their plan.
While these numbers would suggest that participants would be extremely interested in an annuity product, one that offers guaranteed money every month, only 13% have done so. This is surprising as annuities are the only financial instrument, other than Social Security, that can provide guaranteed monthly income throughout retirement.
The survey also found that most non-retired Americans want legislation to help them get more information about, and access to, lifetime income within their workplace retirement plans. In fact, a whopping 71% support legislation that would make it easier for employer-based retirement plans to include lifetime income products like annuities.
Concern over having enough money in retirement was a common theme in the survey. 61% of those who have not yet retired said they are worried about outliving their savings while 68% said they are concerned they won’t save enough. 69% reported being concerned about changes to Social Security leaving most planning to augment their retirement income with part-time (52%) or full-time (11%) work.
Of the participants who are not yet retired, 51% said they know nothing about annuities. Employers can help by making sure employees understand how much money they might need in retirement and by offering features in retirement plans, such as auto enrollment and auto escalation. Obviously, more education about obtaining lifelong income in retirement is needed.
Written by Rachel Summit
