Many Americans don’t always understand how their retirement account balances will translate into income during their retirement years, LIMRA Secure Retirement Institute (LIMRA SRI) research finds.
More than half (52%) of all U.S. workers (ages 20 to 79) surveyed by LIMRA SRI say it is difficult to know how retirement savings will translate into monthly income. The study suggests offering workers retirement savings income estimates can help bridge this gap.
Fifty-two percent of respondents say they have seen an estimate of their retirement income. About four in 10 retirees wished they had seen more frequent estimates of how much monthly income their savings would generate in retirement before becoming retired.
When it comes to generations, Baby Boomers are more likely to have seen an estimate of their monthly income than Gen X or Millennials. LIMRA SRI says viewing their monthly income in actual dollar amounts, rather than as a percentage of pre-retirement income, is more meaningful to Baby Boomers. Since they will most likely be retiring sooner than younger generations, they may have a better sense about what their retirement expenses will be.
Retirement income estimates help improve the retirement decisions of workers. As a result of seeing their estimated income, almost half of all workers (48%) increased their retirement savings. This could have the greatest impact on the savings habits of younger workers as they have more time to accrue savings. LIMRA SRI finds 55% of Millennials increased their retirement savings after seeing their estimated retirement income.
Understanding how retirement savings translates into retirement income also boosts workers’ confidence in their retirement. Among workers who received an estimate of what their income would be in retirement, almost seven in 10 were confident they would live the retirement lifestyle they desired, and seven in 10 were confident they were saving enough to live comfortably in retirement. In contrast, only three in 10 workers who didn’t receive this kind of estimate were confident in their retirement security. Additionally just three in 10 who didn’t receive their estimate said they were confident they were saving enough to live comfortably in retirement.More results from the LIMRA SRI study may be found here.