Retirees Reluctant to Spend Savings

Retirees are least satisfied with advice on how to draw down their savings without draining it, a Nationwide survey said.

The Retirement Income Confidence Survey reveals that two-thirds of retirees who work with an investment professional are looking for help on how to grow and protect their investments and take income out safely. Yet, of the counsel they receive from their investment professionals, retirees are least satisfied with advice about determining how much income can be safely withdrawn in retirement, according to a press release from Nationwide.

“While the majority of retirees and pre-retirees overall believe their investment professionals are doing a good job, the research indicates there’s opportunity for better client service around growing, protecting and maximizing retirement income,’ said John Carter, president of Nationwide Financial Distributors, Inc., in the release.

Hiding It Under the Mattress

The survey found that 57% of retirees are only spending their pension distributions and Social Security benefits without dipping into the rest of their retirement savings, the release said.

The research indicated that among those only drawing down their pensions and Social Security, nearly 25% admitted they were afraid to spend income from their retirement investments. Some 47% of retirees and pre-retirees said they are not sure their expected retirement income will be enough for a comfortable standard of living.

That fear could be warranted, as a recent survey from Thrivent Financial Lutheran found that more than a quarter of retirees (28%) are spending more in retirement than anticipated (see Retirees “Staying Alive’ But Lack Confidence).

Meanwhile, the Nationwide survey found that 37% of respondents believe the income from their retirement investments is very predictable, while less than half said they are “very sure” they have relied on the right mix of retirement investments to begin with. Generally, pre-retirees are less likely than retirees to say they have the “right mix” of investments.

“It’s natural for consumers to have a tendency to “play it safe’ when it comes to their nest eggs,” Carter said. “But an overly conservative approach can also mean they’re not fully utilizing the resources available to them, leaving themselves potentially vulnerable to market, inflation, or longevity risk.’

Nationwide commissioned Yankelovich to conduct an opinion survey among American adults aged 55 to 77 who have at least $100,000 in investable assets. Survey results were obtained through telephone interviews among a representative, randomized sample of 1,000 adults.