The vast majority of America’s future retirees participating in DC plans believe that a guaranteed monthly income is absolutely essential, but many fear they haven’t saved enough for their golden years.
As many as 80% of workers with DC pensions believe that having a guaranteed monthly payout benefit is a must-have, even if it means limiting some access to their retirement savings. This is according to a survey by State Street Global Advisors (SSgA), the asset management business of State Street Corp., which polled employees between the ages of 40 and 70.
Almost 70% of DC plan members in the United States believe that they will need some sort of guaranteed monthly income in addition to government benefits, the survey finds.
More than half of DC participants see generating a stable income as more important than generating returns (27%) or preserving capital (25%).
The figures also show that 64% of respondents plan to cover their expenses through monthly withdrawals. Only 6% prefer a lump sum payout from their plans.
Additionally, the poll shows that few employees (24%) feel confident that they have put aside enough money for their golden years.
Almost half of respondents don’t intend to retire until after age 66, and 15% expect to hold out until after 70.
“As workers shift from saving for retirement to spending in retirement, they are evaluating their investment choices and looking to plan sponsors to help them make that transition,” says Fredrik Axsater, managing director and head of global defined contribution with SSgA.
Many plan sponsors recognize this. Along with plan members, they agree that “there is a need for an in-plan DC retirement income product offering that features high-income replacement through a regular monthly payment,” according to SSgA.
The company says that DC decision-makers it has interviewed for The Participant, a magazine it owns, have expressed willingness to sacrifice some liquidity in order to make the income of their members stable enough to last a lifetime.
The survey polled 1,500 employees between the ages of 40 and 70 who participate in DC plans.
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