Data & Research February 4, 2013

Retirement Assets Could Hit $22T

Investible retirement assets of U.S. households aged 55+ will nearly double, to $22 trillion by 2020, LIMRA research predicted.
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Calling the pool “ a huge opportunity for the financial services industry,” Jafor Iqbal, associate managing director at LIMRA retirement research, said there will be a need to help Americans identify how much income they will need in retirement, develop a plan for investing their portfolio to generate income, while continuing to grow their assets.

In 2010, U.S. households age 55+ held $12 trillion, according to LIMRA analysis of the Survey of Consumers Finances, Federal Reserve Board. Based on U.S. Census projections, the assets held by this cohort will grow to $22 trillion that they will directly invest in products for generating retirement income.

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The number of Americans who receive income from an employment-based pension plan is dipping, and many more retirees will have most of their retirement assets invested in retirement plans. The study estimates that almost two-thirds of these assets will be directed toward products that will generate income for them in retirement.

“With such a large demand, advisers may have to provide income product solutions more efficiently,” Iqbal said. “We are witnessing financial services firms changing the structure and business model to accommodate more customer-centric information and process, promoting uniform tools and services across the institutional and retail businesses to capture rollovers, emphasizing smooth transition of assets from the savings in institutional plans to retail side of the business where most retirement income products and solution are typically available.”

These findings are from LIMRA’s Retirement Income Reference Book (RIRB), which was published in December. The RIRB provides a view of the latest LIMRA data, projections and research on retirement income market, and brings together highlights from the various studies that LIMRA has been doing to help companies achieve their strategic business goals in the retirement space.  

Data & Research February 4, 2013

A Digital Divide Among Plan Participants

Younger retirement plan participants are more likely to use online retirement calculators, interactive charts and mobile applications in preparing for retirement.
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More than 60% of retirement plan participants younger than age 40 said they found online retirement calculators most helpful, according to an American United Life Insurance Company (AUL) survey. This compares with 51% of participants ages 41 to 50 and 41% of those older than 50.    

Two-thirds (67%) of those older than 50 found articles most helpful, compared with 45% of respondents ages 20 to 30. (Respondents were able to select more than one choice from a list.) Twice as many 20- to 30-year-olds (24%) found mobile apps helpful, compared to only 12% of 40-to 50-year-olds. Only 7% of those older than 50 found mobile apps helpful.  

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The survey also found the digital divide extends to the sources where participants read about financial issues. Participants in the 20- to 30-year-old range are more than twice as likely to read about financial issues via blogs than 40- to 50-year-olds (20% versus 9%). Twenty-eight percent of the younger group of workers read about financial issues via social media, compared with 16% of 40- to 50-year-olds.  

The companies of OneAmerica recently surveyed visitors to its participant website to determine how they learned about finances and prepared for retirement, what resources are most effective and how confident they are with their retirement preparations; 6,360 participants responded.

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