How to Quit Working and Keep Getting Paid – Securing a Paycheck Throughout Retirement
July 31 2013 - 1:00PM
Business Wire
The next wave of expected retirees want help planning a secure
stream of income in retirement, according to a recent survey of US
retirement plan participants released today by State Street Global
Advisors (SSgA), the asset management business of State Street
Corporation (NYSE:STT). SSgA’s Biannual Defined Contribution
Investor Survey, “Young at Heart: What DC participants are thinking
about retirement income,” highlights the needs, behaviors and
concerns of plan participants and recent retirees about their
retirement income and weighs the tradeoffs they are willing to make
with their accumulated savings.
The study finds that a significant majority of participants
(80%) believe a guaranteed monthly payout benefit is a “must have,”
even if it means compromising some access to their retirement
savings. Other findings include:
- 55% see generating a stable income as a
top priority versus generating returns (27%), or preservation of
capital (25%);
- 69% believe that some sort of
guaranteed monthly income stream will be necessary in addition to
Social Security; and
- 64% of respondents plan to take monthly
withdrawals to cover their expenses while only 6 percent prefer a
lump sum payout from their plans;
- While a majority of plan participants
are satisfied with the quality of support they receive from their
plan, there remains an opportunity for plan sponsors to help
participants establish guaranteed income during retirement
“Participants are looking forward to life in retirement, and
they want to be able to enjoy their golden years without financial
stress,” said Fredrik Axsater, managing director and head of global
Defined Contribution for SSgA. “They need guidance on what do with
the savings they have accumulated - how to spend it and how to make
it last.”
Retirees’ lack of confidence as they approach retirement is
shaping their decisions about transitioning to decumulation. Only
24% are confident that they’ve saved enough to retire comfortably
and nearly half (46%) aren’t planning on retiring until after age
66, with 15 percent expecting to hold out until after age 70. In
the run-up to retirement, catching up on savings takes a back seat
to generating returns and preserving capital. As they near
retirement, however, most (55%) shift their focus to generating a
stable income in retirement. The opportunity is ripe for plan
sponsors to not only be retirement savings providers, but
retirement income partners.
The new issue of SSgA’s The Participant magazine that features
the survey is also supplemented by a series of interviews with
senior decision-makers at some of the largest defined contribution
(DC) plans in the industry. The interviews focus on the trade-offs
that plan sponsors make when seeking better income products and how
they might structure income solutions to match participants’ needs.
Both plan sponsors and participants agree that there is a need for
an in-plan DC retirement income product offering that features high
income replacement through a regular monthly payment. To make this
income stable enough to last a lifetime, participants and plan
sponsors affirm a willingness to sacrifice some liquidity.
“As workers shift from saving for retirement to spending in
retirement, they are evaluating their investment choices and
looking to plan sponsors to help them make that transition, Plan
sponsors should seize this opportunity to begin a dialogue with
participants about how to achieve retirement security,” said
Axsater.
To view the complete results from SSgA’s Biannual DC Investor
Survey or to subscribe to The Participant magazine, please visit:
www.ssga.com/dc/theparticipant.
* SSgA’s DC Investor Survey, conducted jointly with TRC Market
Research, surveyed nearly 1,500 employees, aged 40 to 70, who
participate in 401(k), 403(b), 457 and profit sharing plans.
About State Street Global Advisors
State Street Global Advisors (SSgA) is a global leader in asset
management. The firm is relied on by sophisticated investors
worldwide for its disciplined investment process, powerful global
investment platform and access to every major asset class,
capitalization range and style. SSgA is the asset management
business of State Street Corporation, one of the world’s leading
providers of financial services to institutional investors.
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