Where the Retirement Money Will Go

As 66 million Americans retire over the next decade, their assets will shift into income products, and rollovers, with some going toward professional financial planning.

According to analysis from LIMRA Secure Retirement Institute, in the next ten years 66 million Americans will retire. That means by 2025, the number of retirees in the U.S. will have increased 40%.

As this enormous group begins to shift their assets toward living in retirement, more than $25 trillion in financial assets will be designated for retirement income, double the amount available today.  

To better understand this market and its opportunities, the Secure Retirement Institute has compiled its research in “The Retirement Income Reference Book 2015.” This reference covers the varied facets of planning and managing retirement income.

Based on the research, Jafor Iqbal, assistant vice president for the institute and the book’s author, identified three opportunities for the industry and advisers in the retirement income market.

Guaranteed lifetime income solutions: More than 40% of pre-retirees are interested in converting some of their assets into a lifetime income stream. The market for converting pre-retiree assets into future guaranteed income is estimated at $575 billion. Current retirees who seek guaranteed income represent another $180 billion, for a total market potential of $750 billion.  

Rollover market: The rollover market is estimated to be $455 billion in 2015, and will grow to $550 billion by 2018. For one in four retirees, a discussion of retirement income with an adviser before they retire is a strong motivator to roll out money. Proposed Department of Labor (DOL) regulations, however, could have a significant impact on these rollover discussions and this market’s potential.

Retirement income planning: Retirement comes with risks. Secure Retirement Institute research consistently shows consumers are concerned about having enough money in their retirement. More than four in ten pre-retirees are uncertain about their retirement security. Worries about inflation, cuts to Social Security and health care costs are among their top concerns. Retirement income planning can effectively address these insecurities.

Pre-retirees who work with an adviser are almost twice as likely to have completed retirement planning activities such as estimating how long their assets will last, determining the health care coverage they’ll need, and setting a specific plan to generate income in retirement. Those who have a plan also feel more confident in their retirement security, trust their advisers more, and consolidate assets with their advisers.  

“The Retirement Income Reference Book 2015” provides industry executives and professionals with a comprehensive view of LIMRA Secure Retirement Institute’s latest data, market projections and research on the retirement income market. Information on ordering the book is on LIMRA’s website.