The baby boom generation is facing one of the most pronounced retirement income challenges in history. They'll risk outliving their savings. They'll be more vulnerable to market downturns. And once-reliable sources of retirement income may disappear.
With these challenges in mind, we designed The Allianz Reclaiming the Future Study to look comprehensively at how baby boomers are responding. We also looked into consumer and financial professional attitudes toward annuities. Our findings are summarized below.
When asked, "Do you believe there is a retirement crisis in this country?" 92% of the respondents answered affirmatively. Among those in their late 40s, that number rose to 97%. And all 100% of the respondents with lower income levels agreed that the U.S. is facing a retirement crisis.1
Many respondents indicated they have become unsure about their own retirement.
Life expectancy is increasing and causing people to spend more years in retirement. As pension plans disappear and Social Security benefits dwindle, many face the challenge of funding their own retirement. The result? Americans are increasingly at risk of outliving their assets.
The study indicates that many people are acutely aware of these risks:
The economic downturn that began in 2008–2009 caused a major shift in the finances and behaviors of many Americans.
Respondents provided specific examples of how the downturn affected them:
The rules were changing – and many of the respondents' behaviors soon followed:
Many of the respondents said the downturn prompted greater financial engagement:
When planning for retirement, Americans must now address three primary challenges:
A majority of the study's respondents agreed that the safety of their money matters more to them than it did a few years ago. Respondents were asked to choose from a wide selection of variables that included high returns, low fees, and so forth:
A number of participants disliked the word "annuity"—even after describing an annuity-like solution as ideal. Many admitted their opinions were formed many years ago, and that they hadn't researched annuities since.
Annuities were ranked second-highest in satisfaction among consumers, beating out mutual funds, stocks, U.S. Savings Bonds, and CDs. (Gold and precious metals came in first). Of those surveyed who own annuities, 76% are happy with their purchase because they consider annuities to be:
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1"Lower income" was defined as a household income of $30,000-$45,000 and investable assets of under $50,000.
2"Middle-class respondents" were defined as households with an income of $45,000-$75,000 and investable assets of $50,000-$100,000.
3The "mass affluent" were defined in this study as households with an income of $100,000-$150,000+, and investable assets of $300,000-$500,000+.