Findings show boomers who have worked with a
financial advisor are more confident they will have enough money to
last throughout retirement
For most people, the decision to retire comes with many
considerations, primary among them, “How will I pay for my living
expenses after I stop receiving a paycheck?” New research from
Ameriprise Financial (NYSE: AMP) posed this question to baby
boomers and found surprising differences between those who have
already retired and those who are still in the workforce.
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Pay Yourself In Retirement (Graphic:
Ameriprise Financial, Inc.)
The Pay Yourself in Retirement study found that the overwhelming
majority of retirees (85%) say they have a plan in place to pay
themselves in retirement, which may include calculating expenses,
identifying investments that generate income, and determining which
assets to draw down first. Having taken steps to prepare, these
retirees report being more at ease with their finances. Compared to
pre-retirees – only about half of whom (52%) say they’ve developed
a retirement income plan – retirees are nearly twice as likely to
say they feel completely confident they’ve saved enough money to
last their lifetime.
The Pay Yourself in Retirement study surveyed more than 1,300
baby boomers between the ages of 55-75 with at least $100,000 in
investable assets. While the study uncovered differences between
retirees and pre-retirees, both groups say they define paying
themselves in retirement as having enough cash flow to maintain
their independence and lifestyles in retirement. The two groups do
have similar worries. Nearly two-thirds of all respondents cite
healthcare expenses (63%) and protection from market volatility
(64%) as concerns.
“Figuring out how to recreate a “paycheck” in retirement can be
one of the most daunting challenges investors face,” said Marcy
Keckler, vice president of financial advice strategy at Ameriprise.
“Add to it recent market volatility and it’s easy to see why
pre-retirees who have not developed a retirement income plan feel
less confident that they’ll have the money they need to cover their
expenses. The good news is that they still have time to take
action. By putting a plan in place now, while they’re still earning
a traditional paycheck, they may be able to achieve similar levels
of confidence as their older peers.”
Retirees: Setting the Stage for SuccessRetirees have
started off this new chapter of life feeling optimistic about their
ability to pay themselves in retirement. One reason may be their
reliance on guaranteed sources of income like company pensions. The
overwhelming majority of retired boomers (71%) are relying on
pension plans to help fund their retirement and have focused on
making investments expected to generate additional income (41%). In
addition, nearly two-thirds (65%) have identified the assets they
plan to draw down first in retirement.
Among this group of boomers, (77%) named tax treatment of
investments as one of the most important considerations when
deciding how or when to draw income. As boomers reach their 70½
birthdays, Required Minimum Distributions will kick in and dictate
how much money they must withdraw from their retirement accounts
annually. If not taken or calculated incorrectly, retirees could be
facing penalties because of RMD requirements. Therefore, it is very
important for boomers to consider these tax rules when formulating
their retirement income plans so that they aren’t surprised.
Overall, it appears that retired boomers’ retirement income
plans are working well. Only 10 percent report they have needed to
make significant adjustments like reining in their spending
habits.
Top Three Takeaways From
Retirees:
1. Start planning your retirement income
early
2. Decide which assets you will need to draw
down first
3. Consider tax implications that could
affect your income down the road
Pre-retirees: Beginning to Design a Retirement “Paycheck”;
Still Have Time on Their SideWhile more than half of
pre-retirees (53%) have not thought about their retirement income
plan or feel it will be difficult to map out, the majority (73%)
say they plan to transition into retirement at age 65. Not
surprisingly, with the clock ticking, many report feeling
overwhelmed and anxious with more than half (55%) expressing
concern about the possibility of using their money too quickly in
retirement.
For this group of boomers, it may be particularly important to
start planning now. In a shift from older generations, today’s
pre-retirees are relying less on pensions and more on 401(k)s and
IRAs, which means the burden is shifting from employers to
individuals to fund their own retirement. It’s likely the next wave
of boomers to retire will need to spend more time than their older
peers calculating optimal withdrawal rates and exploring guaranteed
sources of income.
A majority of boomers surveyed relied on financial professionals
to design their retirement income plans. The study showed that
retirees and pre-retirees who have worked with a financial advisor
on a plan are more confident about their retirement income. In
fact, the majority (98%) of boomers who work with an advisor have
talked with them about strategies for income in retirement.
“When transitioning from a pre-retiree to a retiree, figuring
out how to spend your savings can be an overwhelming process. A
financial advisor can serve as a critical source of information to
help you develop a tailored, comprehensive plan to fit your
retirement income needs,” says Marcy Keckler.
For more information about the Pay Yourself in Retirement study,
please visit our research page at ameriprise.com/payyourself.
About the surveyThe Pay Yourself in Retirement study was
created by Ameriprise Financial utilizing survey responses from
1,305 Americans ages 55 to 75 with investable assets of at least
$100,000. The online survey was commissioned by Ameriprise
Financial, Inc., and conducted by Artemis Strategy Group from
November 16–22, 2015.
About Artemis Strategy GroupArtemis Strategy Group
(www.Artemissg.com) is a
communications strategy research firm specializing in brand
positioning, thought leadership and policy issues.
About Ameriprise FinancialAt Ameriprise Financial, we
have been helping people feel confident about their financial
future for more than 120 years. With extensive asset management,
advisory and insurance capabilities and a nationwide network of
approximately 10,000 financial advisors, we have the strength and
expertise to serve the full range of individual and institutional
investors' financial needs. For more information, or to find an
Ameriprise financial advisor, visit ameriprise.com.
For further information and detail about the Pay Yourself in
Retirement study including verification of data that may not be
published as part of this report, please contact Ameriprise
Financial.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2016 Ameriprise Financial, Inc. All rights reserved.
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Ameriprise Financial, Inc.Kathleen McClung, Media Relations,
612-678-1069Kathleen.H.McClung@ampf.comConnect with us:
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