While most retirement plan participants find guaranteed income appealing, the farther the horizon to retirement, the greater the attraction, a new study from The Hartford shows.
“Our research shows that Americans, regardless of age, want the ability to create a guaranteed income for their retirement as traditional pension plans vanish from the scene,” says Patricia Harris, assistant vice president of product management for The Hartford’s retirement plans group. “Surprisingly, we also found that the farther retirement appears on the horizon, the greater the appeal of guaranteed income.”
The study finds that three out of five Americans (64%) say their employer’s 401(k) or other retirement plan does not allow them to turn their savings into guaranteed income in retirement or they are unsure if it does. Overwhelmingly, those respondents say they would welcome the opportunity:
• Overall, 87% of respondents of all ages say they find it “very” or “somewhat” appealing to be able to turn at least a portion of their retirement savings into a guaranteed income.
• 95% of workers younger than 30 say the same, the highest of any age group.
• The same sentiment was expressed by 90% of those ages 30-39, 89% ages 40-49, 88% ages 50-59, and 77% age 60 and older.
“Although the economy and the financial markets are on the mend, many younger employees are seeking sources of greater long-term financial security,” Harris says. “Few younger workers have access to traditional pension plans and many wonder whether Social Security will continue in its current form. They are clearly saying they want the ability to create a guaranteed income for themselves in retirement.”
However, the study did pinpoint some differences related to gender and income. For instance, women (89%) have a greater preference for guaranteed retirement income than men (84%).
Household income also impacts the level of appeal, although not in a linear fashion. The concept of guaranteed retirement income appeals most to those with a combined annual household income of $50,000 - $74,000. A total of 92% in that demographic would like their employer to offer a guaranteed income option compared to 87% of those earning $30,000 - $49,000, 86% earning less than $30,000, and 84% earning $75,000 or more.
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