It’s All About Income: Inaugural Study on the American Retirement Experience

IRI Study: Lifetime Income Providing Financial Security for Retirees

Inaugural Study on Experiences of Retirees Offers Insights for Future Generations

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today released a new research report that found the overwhelming majority of retirees who had at least $50,000 of savings at retirement have retirement income above the national median and have relatively few concerns about their finances. The catch? A significant portion of these retirees are receiving lifetime income from traditional pension plans and annuities.

More than eight in 10 retirees are receiving some income from a pension plan, and 42 percent are receiving at least half of their retirement income from a pension. Conversely only 24 percent of current private-sector workers are covered by a defined benefit plan. IRI estimates that as many as 56 million Baby Boomers will not receive retirement income from a pension, and future retirees may need upwards of $400,000 to make up for this income shortfall.

“Replacing pensions and achieving the financial security these plans provide to retirees will be a key issue for future generations,” IRI President and CEO Cathy Weatherford said. “As Baby Boomers retire in greater numbers over the next decade, and as GenXers begin to leave the workforce, financial professionals have an historic opportunity to help Americans create their own pensions, through Social Security optimization and the use of lifetime income strategies, to help their clients attain the same security, lifestyles, confidence and positive outlooks as the participants in this study.”

 Other key findings from the report:

  • Working with an advisor: Nearly six in 10 retirees have worked with a financial professional and 93 percent of them say the advice and guidance they have received has been effective.
  • Lifetime income: 72 percent of retirees receiving income from an annuity were satisfied with their investment. This was higher than any other type of investment or retirement savings vehicle.
  • The unexpected: Four in 10 retirees have experienced a major health event, such as a heart attack or stroke, and 25 percent have experienced a significant non-medical event, such as a major home repair.
  • Relocation: 27 percent of retirees in the study have relocated their primary residence in retirement. Six in 10 have relocated for lifestyle reasons, while only three in 10 relocated to realize a lower cost of living.
  • Long-term care considerations: The majority of retirees, 67 percent, believe they have less than a 25 percent chance of requiring long-term care services in retirement. Yet, the Department of Health and Human Services estimates that 70 percent of those turning 65 today will need such services. Six in 10 retirees incorrectly believe that Medicare will pay for long-term care services.

The IRI study is based on a survey of 806 Americans aged 65 to 80 who retired with at least $50,000 in investable assets and have been retired for at least five years. The survey was conducted by Greenwald & Associates. The margin of error for the study is +/- 3.7 percent. The report was released during VISION: IRI Annual Meeting 2016 in Colorado Springs, Colorado.

The entire report, “It’s All About Income,” is available here in PDF format or read below.