According to MetLife, an underwriter for the RCS, when asked if their employer’s retirement savings plan offers the option to allow participants to put their money into an insurance product that pays income each month for the rest of the participant’s life, 58% of workers polled for the RCS say their employer’s plan does not (to the best of their knowledge). However, when workers who have this option available to them were asked if they think they will/would use this option when they retire, six in ten workers (61%) said they would select the annuity.
The RCS, released by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald & Associates (see “Saving for Retirement Easier Said than Done”), found nearly half of workers (46%) favor partial annuitization—allowing a portion of a worker’s balance in an employer-sponsored retirement savings account to be automatically converted at retirement to an insurance product that pays guaranteed income each month for the rest of the account owner’s life.
Eight in ten workers (82%) are somewhat or very confident that they will do a good job of converting their savings and investments to income for their retirement. MetLife noted they are more confident than the 72% of retirees who said they are confident that they have done a good job in that regard.
According to MetLife, the difference between retirees and workers in their confidence regarding converting their savings and investments to income is all the more notable because of the variations from where that income is expected to come. More than nine in ten (93%) retirees identify Social Security as an income source, and 75% say it is a significant source. Among workers, 78% say that Social Security will be a source of income in retirement, but only 43% expect it to be significant.
Sixty percent of retirees identify a defined benefit (DB) pension plan as a source of income, and 59% say it is a significant source. In contrast, 72% of workers say they will need to rely on defined contribution (DC) plans. Retirees rely far less on defined contribution (DC) plans, with 20% saying DC plans are a significant source of retirement income.
“As workers’ interest in retirement income continues to grow, there are now a number of different retirement income approaches available in the qualified plan marketplace,” said Roberta Rafaloff, vice president, Institutional Income Annuities, MetLife. “This year’s RCS findings echo other studies, which found that workers are asking for retirement income options from their plan sponsors.”