More Americans Seek Guaranteed Income in Retirement

To address inflation risks, many Americans want financial products that provide guaranteed income in retirement as well as opportunity for increasing income, according to a study by Allianz Life. Eighty percent are interested in a product that offers income for life, and 86% are interested in a product that offers guaranteed income for life plus the opportunity for income to increase over time.

Seventy-seven percent prefer a guaranteed income option that has a lower income rate, but offers the possibility of increases, over one that has a higher starting income rate with no opportunity to increase. Fifty percent say that it’s very or extremely important for a product to offer the possibility of income increases. Allianz Life vice president of Consumer Insights Katie Libbe said, “Many people depend on an annual pay raise to cover various increasing expenses, and build long-term savings. Consumers facing retirement will need to explore options that create a similar income strategy by using a portion of their portfolio to get guaranteed income for life with the chance for increases.” Annual pay increases are an important part of maintaining financial security for many Americans. In fact, 67% say they got a pay raise at least half of the time during their working years. Yet, if faced with a frozen income that offered no chance for an increase in annual salary, 53% say they would be very worried or even panicked as to how they would pay for everyday expenses.

Twenty-eight percent of those surveyed (41% of people earning less than $50,000) worry that they won’t be able to pay for basic needs, such as housing, food, and medical care. Considering the critical role of pay raises in managing rising costs, this scenario provides a glimpse into the situation of retirees who are on a fixed income. Libbe said, “Clearly, there is strong consumer appetite for guaranteed income and increasing income solutions in retirement. It’s important that these benefits are available so Americans can have more confidence in their ability to manage rising costs when pay increases are no longer an option.”

Recent research on Allianz Life annuities reveals that income benefits – built-in or through an optional rider at an additional cost – have delivered income increases to many customers. Income from Allianz Life fixed index annuities has helped address inflation. Purchasing power actually increased over time. Ninety-three percent of clients who are receiving income from these fixed index annuities got an increase. Sixty-seven percent of these clients got a payment increase every year

How Far Are Adult Kids Willing to Go to Help Aging Parents?


A study by Fidelity Investments reveals that adult children have their parents’ backs and far more than parents may think, although 93% of parents say it would be unacceptable to become financially dependent on their children; only 30% of children feel the same. Nearly four in 10 families disagree as to roles and responsibilities as parents get older. Among the other communication gaps:

  • 92% of parents expect one of their children to assume the role of executor of the estate, but 27% of the kids who are expected to be the executor don’t know that they are expected to do so. Fifty-five percent of parents expect the oldest child to be executor.
  • While 72% of parents expect one of their children will assume long-term caregiver responsibilities in retirement if need be, 40% of the kids identified as filling this role didn’t know this. Of those that do, 58% are women. One surprising trend is that a growing number of Millennials are providing care giving support for a parent.
  • While 69% of parents expect one of their children to help manage their investments and retirement finances, 36% of the kids identified as filling this role didn’t know this.

John Sweeney, executive vice president of Retirement and Investing Strategies at Fidelity said, “Many families need to do a better job of being on the same page when it comes to financial planning, as there are real emotional and financial consequences when family conversations don’t happen or lack sufficient depth. At some point every family will face issues related to aging, which is why it’s important to take the time to sort through the details related to care giving responsibilities and estate planning, before declining health forces the issue. Doing so can lead to far better emotional and financial outcomes for everyone.”

Why aren’t these conversations taking place? Part of it seems to be a matter of timing, since only 33% of parents and their children agree when it’s appropriate to initiate these conversations; that is, whether to have them well before retirement, upon entering retirement or closer to when health and finances become an issue. Part of it may be that families don’t realize the importance of talking these topics through: a significant portion of those surveyed have yet to discuss retirement plans (38% of parents, 43% of adult children) say it’s because the subject never comes up! Even if conversations are taking place, the depth and extent of the conversations is often inadequate, as the study uncovered significant gaps in the following areas:

  • Long-term care: 43% of parents say they have not had detailed conversations with family members about long-term care and elder care. An additional 23% have not had any conversations at all. While 72% of children think their parents should be tackling the issue of long-term care/elder care, only 41% of their parents say they actually are. As healthcare costs have risen in the past few years, this has become an increasingly important topic. According to the latest Fidelity Investments Retirement Health Care Cost Estimate, the average couple can expect to spend an estimated $245,000 on health care throughout retirement.
  • Will and estate planning: Sixty-nine percent of parents say they’ve had detailed conversations with their children on this subject, 52% of children say they haven’t.
  • Living expenses in retirement: Thirty-four percent of parents say they have not had detailed conversations with family members about covering their living expenses in retirement. An additional 16% have not had any conversations on the topic at all.
  • Shelter from the Storm: With conversation comes greater peace-of-mind.

One thing is certainly clear: having detailed conversations around finances can help families avoid panic when it matters most. In fact, 93% of children who say they have had any detailed conversation with their parents are significantly more likely to have greater peace-of-mind around these issues. Likewise, 95% of parents reported feeling greater peace of mind as a result of estate planning conversations.

One-third of parents and their children say frank conversations should occur after retirement and when health and finances have become an issue—at which point, it may be too late. These conversations should begin taking place before retirement, and certainly well before any challenges arise. “It’s actually a good idea for conversations about finances to be taking place among families no matter what your age, whether you are in your twenties and looking to build a strong financial foundation or in your sixties and transitioning into retirement,” added Sweeney.

Ask as many detailed questions as you can. Don’t be afraid to ask even the most seemingly obvious questions. Three out of 10 families surveyed disagreed as to whether or not the children knew where to find important family documents such as wills, power of attorney and health care proxies. (For those looking for a safe, electronic storage location, Fidelity recently introduced FidSafe®, a secure digital place to store, access and share all of a families’ most important documents.)

When having discussions, follow the “voice not vote” rule. While family members should have a role in the planning process, make sure the ultimate decisions made are consistent with the wishes of the parents, who are charting the course of the rest of their lives. If a financial advisor is already involved in planning, having these discussions with the advisor can be a good place to start.

Define family roles. Advanced planning can help define roles and choose when and how different people will be involved. For example, who will have power of attorney or be the executor of your estate? It’s important to consider the personalities of each child, as well as their proximity, relationship with parents and other nuances that play into long-term decision making.

Commit to follow-up conversations to keep the dialogue going. These conversations are not “one and done.” Keep the momentum going and schedule as many get-togethers as needed—and revisit those plans at least annually, to make sure they still make sense.

Digital Advice Could Fill a Need for Small Portfolios

Digital advice could offer a solution for consumers with portfolios that are too small to attract the attention of financial advisors, according a report by Cerulli Associates. Tom O’Shea, associate director at Cerulli said, “The mass market and the lower end of the middle market are under-served by financial advisors. A vast majority of consumers do not possess the assets necessary to merit attention from financial advisors.” O’Shea adds that combining human and digital advice can strengthen the fiduciary foundation of the client recommendations. This combination also allows an advisor to scale their practice to profitably manage the smaller accounts of mass-market consumers. Almost 90 million U.S. households have investable assets of less than $100,000. Yet, only 8% of financial advisors treat this segment as their core market. The overwhelming majority of advisors target clients with higher levels of investable assets. He adds, “It is not that advisors are unwilling to help small investors. Rather, they cannot figure out how to make money when working with them, leaving investors to go it alone or rely on guidance provided by direct-to-consumer firms.”

Consumers Resist Robo Advisors

Financial services firms may be banking on automated robo advisors, but consumers are not buying into the idea. In a new GfK Global survey, only 9% of consumers said they would be likely to use an investment advisory service that offered just digital (text or online chat) contact with human advisors. The 25 to 34 age group is most open to the idea (15%) while less than 5% of those 50 and above would embrace an all-digital service approach from their investment firms.

Tom Neri, managing director of GfK’s Financial Services team in North America said, “Financial service companies need to be cautious in deploying robo-advisor technology, making sure to provide their high-value customers with the service they need. A one-size-fits-all seems certain to alienate even young investors. Financial firms are betting on an increasingly automated customer service approach to help them stay lean in an unforgiving consumer marketplace. But even digitally native Millennials are only lukewarm to this vision when it comes to the difficult area of investments.”

Consumers are least open to completely automated customer service for investments and mortgages. They are slightly more willing to accept an all-digital service plan for checking and savings accounts. Not surprisingly, just 10% of those surveyed would trust a computer algorithm over a human to give financial advice. Trust in robo-advisors is highest among the 25-to-34 group (17%) and lowest among those age 65 and over (6%).

Thirty percent would pay more for access to a person for help with financial services, and 45% would not be willing to forgo live customer service in return for paying less. Consumers’ hesitation to embrace automated investment services may stem from disappointing experiences. Only 27% agree that it is easy to get the information they need from the websites of financial service firms

The Benefit Gap for Small Businesses

Health insurance is offered to 96% of employees at large and small companies and 89% of employees at small-businesses, in particular. But the study by Lincoln Financial reveals a much larger gap when it comes to other benefits:

Benefits offered Small Business Employees Employees of businesses of all sizes
Dental Insurance 74% 91%
A retirement plan 72% 89%
Vision insurance 66% 84%
Life insurance 62% 81%
Disability insurance 52% 74%

Employees at small businesses say that it’s important for their employers to offer these benefits:

  • 90% a retirement plan.
  • 87% dental coverage.
  • 83% vision insurance.
  • 76% life insurance.

Almost 70% of employees at small businesses say that benefits have influenced their employment decisions. Business-continuation strategies are critical since more than 50% of small-business owners are 50 to 85. Life insurance can help ensure that the business continues in the event of the death of an owner, co-owner, or key employee.

Many Lose Sleep Over Healthcare/Insurance Bills

Healthcare or insurance bills are making 29% of Americans lose sleep, according to a report. That’s down 6% from 2009. Paying for healthcare or insurance is the second-biggest financial fear among women. Healthcare or insurance bills keep 33% of women and 24% of men awake at night, at least occasionally. Sixty-eight percent of women and 56% of men lose sleep over at least one money problem. The survey reveals the following:

  • Saving for retirement keeps 39% of Americans awake at least occasionally (44% of women and 35% of men). Saving for retirement is the most common worry among people 30 and older, college graduates, and those with annual household incomes of a least $75,000.
  • Thirty percent of Americans lose sleep over educational expenses for themselves or a family member. Affording educational expenses is the number one concern among Millennials and non-whites. Worries over educational expenses ranks second among men.
  • 22% lose sleep over paying the mortgage or rent.
  • 22% lose sleep over credit-card debt. The fact that credit card debt is the least of people’s worries seems to indicate that most Americans have their card debt well under control.
  • Money anxiety peaks from 50 to 64 and drops sharply after 65.
  • Households making $50,000 to $74,999 a year are 14% less likely to lose sleep over financial matters than they were in 2015.

Consumers Are Not Preparing for Retirement

Consumers are more confident that they will have a comfortable retirement than they were during the recession, but they have not done much to plan for retirement, according to a survey by the Employee Benefit Research Institute (EBRI) and Greenwald & Associates. The survey reveals the following about workers in 2016:

  • 21% are very confident about having enough money for a comfortable retirement compared to 22% in 2015 and 13% in 2013.
  • 42% are somewhat confident compared to 36% in 2015.
  • 19% are not confident compared to 24% in 2015.
  • 11% with a plan are not confident about their financial security in retirement compared to 38% of workers without a plan.
  • 83% without a plan have less than $10,000 in their household’s savings and investments, excluding the value of their primary home and any defined benefit plans. In contrast, 35% of workers with a retirement plan have $100,000 or more in savings and investments.

Retirement plans key to millennial saving, poll indicates

Only 43% of millennials without access to a retirement plan via work say they are consistent in saving for retirement, compared with about three-fourths of millennials who have access to such a plan, a poll by Young Invincibles found. MarketWatch (2/17)

CEO offers tips on creating a financial wellness program

SUM180 CEO Carla Dearing says companies developing a financial wellness program should address financial concerns using emotional cues, such as security, stability and protection. Financial wellness programs should have a holistic approach and make it easy for employees to participate regardless of their financial situation, Dearing says. Employee Benefit News (2/16)

Financial Stress Affects a Majority of Employees

Financial stress affects 75% of employees, according to a study by GuideSpark. Employees surveyed said that the following areas give them the most financial stress:

  • 69% Saving enough to meet retirement goal.
  • 68% Having enough cash savings to cover the employee and their family if one loses their job.
  • 63% Being financially prepared for expected life changing events (i.e. marriage, new child, job change.

The study also reveals the following:

  • 81% employees are less likely to leave a company that helps them improve their financial standing.
  • 87% of Millennials expect employers to help them prepare for their financial future.
  • 78% of employees would chose to join a company that offers financial health benefits over one that doesn’t.
  • 81% of employees are less likely to leave a company helps them improve their financial standing.

Employees say these are the top benefits of a financial wellness program:

  • 81% Reduce financial stress
  • 76% Appreciate their company more
  • 65% Lower their healthcare costs
  • 62% Improve their physical health
  • 56% Enable them to focus more on their jobs

Last Updated 05/25/2022

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