Retirement Income Concerns Rise
Markets Will Always Move
American Century Investments' 11th annual survey highlights the growing concern among savers about retirement income, reflecting a shift beyond just saving for retirement. With about 11,200 Americans turning sixty-five daily, participants are increasingly focused on how to replace income once they retire. The survey reveals a gap in understanding, with only 10% of respondents correctly identifying that experts recommend replacing 70-80% of pre-retirement income to maintain their lifestyle.
Despite two-thirds of savers expressing confidence in their ability to manage withdrawals, 87% feel they need help creating a sustainable withdrawal strategy. This indicates that savers may be underestimating the complexities involved in generating retirement income.
The Role of Education
Many participants desire "protected" income options that guarantee payouts throughout retirement. The survey found 92% would be interested in using part of their workplace retirement plans to generate guaranteed lifetime income, with 25% showing strong interest. The ability to safeguard savings during market downturns was critical to 75% of respondents, even if they had to pay extra for this protection. However, participants also want control over their funds, including the option to adjust their plan or opt out if needed.
American Century’s vice president Glenn Dial emphasized that “a retirement plan without an income replacement goal is just a savings account.” He urges savers nearing retirement to create an income strategy, advising, "If you aren’t saving yet, start now—even small amounts can make a difference."
Proactive Communication Is Key
The survey also highlights employers' evolving role in retirement planning. Around 94% of plan sponsors feel responsible for helping employees save and spend down their retirement savings, and 80% prefer employees to retain their assets within company-sponsored plans. Many employers are also considering guaranteed income features as part of their offerings, with over half supporting it as a default option.
However, a disconnect remains. More than 60% of workers incorrectly believe target date funds provide income during retirement or guarantee no losses. Employees within five years of retirement, in particular, show heightened concern about balancing growth with safety, indicating a need for clearer communication.
Market Recap
Retirement savers of all ages continue to grapple with the uncertainty of replacing income, balancing risk with stability. As inflation and market volatility remain critical concerns, it is more important than ever for individuals to align their financial planning with realistic income goals to ensure long-term stability.
