A retirement income crisis looms over millions of people, some of whom are likely your clients. Ready for some sobering stats regarding working Americans?
Only 36% of non-retired U.S. adults surveyed thought their retirement savings were on track1
26% reported having no retirement savings1
Among those aged 60 and older, 87% have retirement savings—but only 48% say they’re on track for retirement1
43% said they were unable to put away any retirement savings in 2021, and 42% think they are too far behind on their retirement savings goals to catch up2
Every year for the past decade, about two million baby boomers have been retiring from the labor force. In 2020, that annual figure rose to more than three million.3 By 2030, it’s predicted that all baby boomers—an estimated 73 million people—will have reached retirement age in a demographic shift the U.S. Census Bureau describes as a “gray tsunami.” 4
Almost half (49%) of Americans surveyed said they’re just trying to get by and can’t even think about saving for retirement right now.2 And since the start of the COVID-19 crisis, more than a third of Americans experienced a change in their employment—including layoffs, furloughs, pay cuts and reduced hours—that could negatively impact their finances.5
Currently, just 21% of non-retirees have a defined benefit pension, and 26% have no retirement savings at all.1
And according to the Bureau of Labor Statistics, just 15% of private industry workers have access to defined benefit retirement plans provided by their employers, and 33% don’t have access to employer-provided retirement plans, whether defined benefit or defined contribution.6
How many of those people may be among your clients?
About 78% of Americans with a protected lifetime income say they are confident that their retirement savings and income sources will last throughout their lifetime. Among those without an annuity or pension, that confidence level falls to just 41%.7
of American households have protected lifetime income7
express value for protected lifetime income through their retirement7
Only 11% say they understand annuities very well7
Sixty-nine percent of retirees say that Social Security will be their primary source of income throughout their retirement years. Nine in 10 retirees are currently receiving Social Security benefits, and among them, the median age they report starting Social Security benefits was 62—even though, depending on their birth year, the minimum age for receiving full retirement benefits is between 65 and 67.8
That means many retirees are relying on reduced benefits as their primary source of income.
Social Security was not designed to be retirees’ only source of income. On average, Social Security retirement benefits replace about 42% of beneficiaries’ pre-retirement income.9
For very low earners, Social Security benefits replace a higher percentage of their income—as much as 78%—and for high earners, the percentage benefits replace is lower at around 28%.9
The Social Security Administration cites 70% of pre-retirement income as the percentage financial advisors recommend for a comfortable retirement.9
So for most Social Security beneficiaries, the difference between their benefit amount and the replacement income needed for a comfortable retirement has to come from other sources.
Although life expectancy had already been falling before the pandemic caused a more pronounced drop, an average 65-year-old man can expect to live to almost 83, and a woman at 65 can expect to survive to more than 85 years of age.10
Having a protected lifetime income that clients can’t outlive may provide long-term advantages and peace of mind. Financial advisors may want to consider a type of retirement income plan their clients may not fully understand: annuities.
Annuities may represent a strategy that can help provide protected income for life. Most retirees rely on their defined contribution savings to pay for their retirement expenses. An annuity to accompany their savings and/or investments could provide an additional source of guaranteed income with fixed payments over a period of time—or a guaranteed lifetime income option—that may help clients reduce their risk of outliving their money.
Your clients could find the number and types of annuities confusing, so they may look to you for help with understanding their options and the details about how different annuities and their features may work for their individual needs.
Learn more about how CUNA Mutual Group can help. Visit smartriskcontrol.com, contact your wholesaler, or call the CUNA Mutual Group Annuity Solutions Desk at 877.345.GROW (4769), option 1.
STATISTICAL SOURCES:
1Board of Governors of the Federal Reserve System, Economic Well-Being of U.S. Households in 2020, May 2021.
2Allianz Life, Putting the Pandemic in Perspective: Majority of Americans Agree Economic Impact Will Be More Significant Than Great Recession, February 24, 2021.
3Pew Research, The pace of Boomer retirements has accelerated in the past year, November 9, 2020.
4U.S. Census Bureau, By 2030, All Baby Boomers Will Be 65 or Older, December 10, 2019.
5National Institute on Retirement Security, Retirement Insecurity 2021: Americans’ Views of Retirement, February 2021.
6Bureau of Labor Statistics, 67 percent of private industry workers had access to retirement plans in 2020, March 1, 2021.
7Alliance for Lifetime Income, 2020 Protected Lifetime Income Study and Segmentation Report, October 26, 2020.
8Nonprofit Transamerica Center for Retirement Studies, Retirees and Retirement Amid COVID-19, September 2020.
9Social Security Administration, Retirement Benefits, January 2021.
10U.S. Department of Health and Human Services National Vital Statistics System, Provisional Life Expectancy Estimates for January through June, 2020, February 2021.
IMPORTANT DISCLOSURES
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Annuities are issued by CMFG Life Insurance Company (CMFG Life) and MEMBERS Life Insurance Company (MEMBERS Life) and distributed by their affiliate, CUNA Brokerage Services, Inc., member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, IA, 50677. CMFG Life and MEMBERS Life are stock insurance companies. MEMBERS® is a registered trademark of CMFG Life Insurance Company. Investment and insurance products are not federally insured, may involve investment risk, may lose value and are not obligations of or guaranteed by any depository or lending institution. All contracts and forms may vary by state, and may not be available in all states or through all broker/dealers. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any product or as a solicitation of investment advice from any financial advisor.
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