Some of the biggest needs and concerns that Americans have about retirement can easily be addressed with annuities. Many Americans just don’t realize that simple fact. In Financial Advisor’s “Americans Lacking Guaranteed Income Options, Survey Says,” the magazine summarized the results from a recent TIAA-CREF survey. The survey occurred over a few days in early January and was given by an independent research firm to just over 1,000 people. Out of those surveyed, 72% of them don’t have a lifetime income option for retirement or don’t even know if their company offers some type of lifetime income option. In this particular group of survey respondents, 21% of them already plan to receive monthly income from annuities. That isn’t to say that more than 1/5 of them actually will end up buying annuities, however. Hopefully a greater number of those people will realize that annuities are one of the best ways to create a lifetime income stream in retirement.
One issue that came up in this retirement survey is the discrepancy between how much income people will need in retirement and how much income they think that they will need in retirement. Experts says that you will need somewhere between 70-90% of your current income to finance your retirement years. This is if you want to live comfortably and maintain your current lifestyle. One-third of those people surveyed actually think that they will only need 25-50% of their current income level during their retirement years. One-third estimate that they will need 50-75% of their current income level. That’s closer to reality, but still pretty far off when you consider the low end of that spectrum. It’s important for financial advisors, employers, and insurance companies to educate the public on this important income necessity during retirement. Annuities are a good way to guarantee a certain income level during retirement. Your annuity won’t necessarily account for the entire 70-90% of your income level, but will supplement other forms of retirement income like Social Security or pensions.
In order to have money to purchase an annuity during retirement, you have to have retirement savings. Some people transfer some of their 401k money into purchasing an annuity, while others use savings they have created on their own. Americans aren’t quite sure how much money they need to save for retirement, according to this TIAA-CREF survey. Taking into account the contributions made by your employer to any retirement savings plan, experts say that you should save 10-15% of your annual income for retirement. Those people in the survey who have not yet retired aren’t saving anywhere near that much. Forty-four percent are saving somewhere less than 10% for their retirement. Believe it or not, 21% of people in this survey aren’t saving any money towards a retirement fund. This is a scary fact that will put a lot of Americans far behind in the retirement savings game. If one of your biggest concerns facing retirement is having guaranteed income, annuities might just be the right solution to ease your mind.
Written by Rachel Summit