Few current retirees take a new job in their golden years—but
more than half of future retirees expect to continue working during
retirement, driven by uncertainty about Social Security and their
own financial preparedness, a new study from PGIM Investments
reveals. PGIM Investments is the global manufacturer and fund
distributor of PGIM, Inc., the $1 trillion global investment
management business of Prudential Financial, Inc. (NYSE: PRU).
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Expected sources of income in retirement.
(Graphic: Business Wire)
The study, the 2018 Retirement Preparedness Study: A
Generational Challenge, commissioned by PGIM Investments and
conducted by The Harris Poll, found that while only 6 percent of
today’s retirees work, 52 percent of pre-retiree Baby Boomers,
58 percent of pre-retiree Gen Xers, and 43 percent of
pre-retiree Millennials expect to take on a full- or part-time job
during retirement. These expectations may be linked to
pre-retirees’ decreased reliance on Social Security—for example,
only 51 percent of Millennials expect to receive these benefits at
all.
“While changes in retirement expectations are often driven by
pure economics, these study results also suggest a mind shift in
how people are thinking about retirement. However, pre-retirees’
actions don’t always back up their goals,” said Stuart Parker,
president and CEO of PGIM Investments. “To help them bridge this
gap, the asset management industry will need to rethink the way
that it does business and bring products and services in line with
changing customer needs.”
According to PGIM Investments’ study:
The “dream retirement” is changing
- Pre-retirees are more likely to base
their decision about when to retire on their wealth rather than
their age with half of Gen Xers and 62 percent of Millennials
saying they will retire when they have saved enough money.
Current retirees decided when to retire largely based on their age
and eligibility for Social Security and pensions.
- Millennials are more likely to start
a business in retirement (20 percent) than Gen Xers
(9 percent) or Boomers (four percent). Nearly four in 10
pre-retirees (39 percent) say they want to volunteer after they
retire.
- More than half (51 percent) of
current retirees say they’re “living the dream.”
On average, these individuals started saving six years earlier
than other retirees. Compared with those who aren’t living their
dream retirement, these individuals are more likely to have
pensions and diversified sources of income. They also are more
likely to have been able to retire at their planned retirement
age.
Pre-retirees need to evolve their saving habits
Recently, trustees for Social Security announced that the
program is operating at a deficit and will need to pull money from
its reserves for the first time since 1982. Pre-retirees may not be
prepared to fill the gap, PGIM Investments’ study finds:
- Social Security benefits are the
most critical source of income for 61 percent of retirees.
By comparison, only 70 percent of Gen Xers and 51 percent of
Millennials expect Social Security benefits when they retire.
- Millennials are least likely to rely
on Social Security for retirement income and are more heavily
invested in cash and less invested in equities; nearly one in
three aren’t saving for retirement at all.
- More than half (53 percent) of
pre-retirees are unsure how much they need for retirement. Gen
Xers have the highest estimates of the savings they need, but
almost one in five aren’t saving for retirement at all.
- Pre-retirees need to expect the
unexpected—51 percent of retirees say they retired earlier than
expected. Of that group, half say they retired more than five
years earlier than planned. In many cases, the reasons were
involuntary, including health problems (29% of the early retirees),
layoffs or restructurings (14%), the need to care for a loved one
(13%), and the inability to find a new job (10%).
To address growing consumer need for retirement income planning,
Prudential Financial, along with 23 other leading financial
services organizations, established the Alliance for Lifetime
Income to help educate Americans about the value of having
protected income in retirement.
For more study results, download the report: 2018 Retirement
Preparedness Study: A Generational Challenge.
About the study
A total of 1,514 interviews were conducted online by The Harris
Poll from Jan. 18 through Feb. 1, 2018, among U.S. residents age 21
and over, employed full-time, part-time, self-employed, a
stay-at-home spouse or retired, and a primary or shared financial
decision maker for their household. Results were weighted
separately to bring them in line with their actual proportions in
the population.
About PGIM Investments
PGIM Investments offers more than 100 funds globally across a
broad spectrum of asset classes and investment styles. Clients can
also choose from a variety of investment vehicles including
closed-end funds and target date funds such as the Prudential Day
One Mutual Fund series. All products draw on PGIM’s globally
diversified investment platform that encompasses the expertise of
managers across fixed income, equities and real estate.
About PGIM and Prudential Financial Inc.
With 15 consecutive years of positive third-party institutional
net flows, PGIM is the global investment management business of
Prudential Financial, Inc. (NYSE: PRU)— a top-10 investment manager
globally according to Pensions & Investments’ 2018 Top Money
Managers List, with more than $1 trillion in assets under
management as of March 31, 2018. PGIM’s businesses offer a range of
investment solutions for retail and institutional investors around
the world across a broad range of asset classes, including
fundamental equity, quantitative equity, public fixed income,
private fixed income, real estate and commercial mortgages. Its
businesses have offices in 16 countries across four continents. For
more information, please visit pgim.com.
Prudential’s additional businesses offer a variety of products
and services, including life insurance, annuities and
retirement-related services. For more information about Prudential,
please visit news.prudential.com.
This material is being provided for informational or educational
purposes only and does not take into account the investment
objectives or financial situation of any client or prospective
clients. The information is not intended as investment advice and
is not a recommendation about managing or investing your retirement
savings. Clients seeking information regarding their particular
investment needs should contact a financial professional.
The target date is the approximate date when investors plan to
retire and may begin withdrawing their money. The asset allocation
of the target date funds will become more conservative until the
date which is ten years prior to the target date by lessening the
equity exposure and increasing the exposure in fixed income
investments. The principal value of an investment in a target date
fund is not guaranteed at any time, including the target date.
There is no guarantee that the fund will provide adequate
retirement income. A target date fund should not be selected solely
based on age or retirement date. Before investing, participants
should carefully consider the fund's investment objectives, risks,
charges and expenses, as well as their age, anticipated retirement
date, risk tolerance, other investments owned, and planned
withdrawals.
The Prudential Day One Funds may be offered as mutual funds.
You should consider the investment objectives, risks, charges and
expenses of each fund carefully before investing. The prospectus
and summary prospectus contain this and other information about the
fund. Contact your financial professional for a prospectus and
summary prospectus. Read them carefully before investing.
Shares of the registered mutual funds are offered through
Prudential Investment Management Services LLC (PIMS), Newark, NJ, a
Prudential Financial company.
Investing involves risks. Some investments have more risk than
others. The investment return and principal value will fluctuate
and the investment, when sold, may be worth more or less than the
original cost and it is possible to lose money.
© 2018 Prudential Financial, Inc. and its related entities.
Prudential, the Prudential logo, the Rock symbol, Prudential Day
One, PGIM and the PGIM logo are service marks of Prudential
Financial, Inc. and its related entities, registered in many
jurisdictions worldwide.
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version on businesswire.com: https://www.businesswire.com/news/home/20180710005020/en/
MEDIA:Kristin Meza,
973-367-4104kristin.meza@prudential.com
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