Data & Research May 7, 2014

Economy Affected Retirement Security for Women

Many women are still facing financial challenges due to the economy, which are impairing their retirement readiness and outlook.
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According to a survey by the Insured Retirement Institute, the economy has had a detrimental effect on Generation X women: 35% have experienced difficulties paying their rent or mortgage, 19% stopped contributing to a retirement account, and 13% prematurely withdrew funds from a retirement account. Baby Boomer women also have been affected, although to a lesser extent: 21% experienced difficulties paying their rent or mortgage, 17% stopped contributing a retirement account, and 9% prematurely withdrew retirement savings. Furthermore, one-quarter of Boomer women and 16% of Gen X women postponed their plans to retire as a result of the economy.

Overall, only 30% of Boomer women and 13% of Gen X women have high levels of confidence in accumulating sufficient savings to live comfortably throughout their retirement years.

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Nearly one in five Boomer women and 35% of Gen X women do not have any savings for retirement. Of Gen X women with retirement savings, 44% have savings of $50,000 or less. One-quarter of Gen X women and nearly 40% of Boomer women report they have not contributed to their retirement savings in the past year.

One in five Boomer women and more than one-quarter of Gen X women are unsure of when they will retire. About half of Boomer women plan to retire after age 65, including 29% who plan to retire at age 70 or later. Forty-three percent of Gen X women plan to retire at or before age 65.

More than half of Boomer women and three in four Gen X women have not consulted a financial professional about retirement planning.

The survey found slightly more than half (56%) of Boomer women expect to receive some retirement income from a traditional defined benefit pension, and 37% expect a pension will be a major source of their retirement income. Gen X women are much less likely to expect any sort of traditional pension, just 38%, with 23% anticipating it will provide a major portion of their retirement income.

More than half of Boomer women (60%) and 70% of Gen X women expect some of their retirement income will come from an employer-sponsored retirement savings plan, such as a 401(k). Gen X women are more likely to say that they do not know whether they will rely on either a traditional pension or employer-plan savings as a source for their retirement income.

Significant numbers of both Boomer and Gen X women—35% and 21%, respectively—do not think that an employer plan will be a source of retirement income. The Institute says there may still be time for many of these women—if they have access to an employer plan—to either enroll or increase their contributions, and to more actively engage in this savings opportunity.

The full survey report, “Baby Boomer and Gen X Women,” is here.

Data & Research May 7, 2014

In-Plan Guarantees on the Rise

Survey results from the LIMRA Secure Retirement Institute (SRI) indicate that in-plan guaranty features are growing in number and in assets.
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In-plan annuity guarantees allow participants in retirement plans to convert some of their savings into guaranteed lifetime income while they are still working, the survey authors explain.

The survey of covered in-plan guarantee availability and election, and finds that in 2013, the total assets covered by an in-plan guarantees increased 31% since 2012 to reach $2.9 billion. The number of plans offering in-plan guarantees increased to 23,500 in 2013, a 10% increase compared with 2012.

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In addition, the survey finds that eight out of 10 employees believe that employers should provide ways to convert savings into sustained retirement income. Younger employees are particularly interested in this option, results show. Ninety percent of employees between ages 18 and 34 say they somewhat or strongly agree that employers should provide avenues to convert savings into income at retirement.

The number of employees who have access to in-plan guarantees as part of their retirement plans increased to nearly 2.3 million, up 28% compared with 2012. The total number of employees who elected an in-plan guarantee is much smaller, at 49,900, an increase of 5% for 2013.

The survey authors note that guaranteed lifetime withdrawal benefit and deferred income annuities are the two types of in-plan guarantees that are currently sold in retirement plans.

LIMRA SRI researchers also asked employees about various financial topics and found that four in 10 want to learn more about how to generate retirement income. Because no one knows how many years they will live in retirement, the researchers note that in-plan guarantees can be an effective way to create an income stream and mitigate financial issues that can affect a long retirement.

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