|Targeted News Service|
A majority of Americans are saving 10 percent or less of their income during their working years, including many who are saving nothing, yet 37 percent plan to retire before age 65, according to a recent survey by TIAA-CREF, a leading financial services provider. In addition, few respondents have invested in lifetime income solutions that provide the security of monthly payments for the duration of their retirement.
The survey was conducted by an independent research firm and polled a random sample of more than 1,000 adults nationwide on their retirement plans.
One out of five respondents who haven't retired (21 percent) reported not saving anything for retirement, and 44 percent are saving 10 percent or less of their current annual income, a figure that includes their own savings and any employer contributions. For many survey respondents, this low rate of savings is out of sync with their stated retirement goals. (Most experts agree savings rates should be at least 10 to 15 percent of income annually.)
Additionally, half (53 percent) of survey respondents plan to use withdrawals from their retirement savings as one of their sources of monthly income. Only 21 percent plan to receive retirement income from annuities, which guarantee an income stream for the remainder of the person's life.
"Far too many people believe they will be able to live in retirement by just drawing down their savings," says
The impact can be severe: If retirees make withdrawals from their retirement savings that are equal to the income payments they would receive from a lifetime annuity (assuming the same interest rate), there is a greater than 50 percent chance that the retiree will outlive his or her savings — whereas the annuity payments continue for as long as the retiree lives.
Ensuring income for life
Survey respondents also underestimated how much money they will need in retirement. One-third (33 percent) of respondents who haven't retired believe they will need just 25 to 50 percent of pre-retirement income to maintain their current standard of living, and another third (33 percent) believe they will need 50 to 75 percent. This perception is at odds with industry experts' recommendation, which is that most people will need 70 percent to 90 percent of pre-retirement income to maintain the same standard of living during retirement. Only one-fifth (21 percent) of those surveyed who haven't retired believe they will need more than 75 percent of pre-retirement income to live comfortably in retirement.
"Retirement security is too important for wishful thinking and guesswork," Hassara explains. "A more reliable strategy is to guarantee a portion of savings as income you can't outlive to help cover essentials, like food and housing. Annuity payments create an income stream that lasts for life, even if your retirement stretches for 30 or 40 years."
By converting a portion of savings into a lifetime annuity, you can have a stream of income guaranteed to last as long as you do.
For more information about the survey, read the executive summary. For more information and tools for retirement planning, visit the TIAA-CREF Advice and
The survey was conducted by
 Guaranteed lifetime income is subject to the insurance company's claims-paying ability.
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