On Thursday, March 21, 10:00 a.m. (PT) / 1:00 p.m. (ET), Pacific Life's The Wave Strength podcast series presents a special LinkedIn Live event featuring Qi Sun, Ph.D., sharing thought-provoking takeaways from her new research study and whitepaper: Decoding Retirement: Key Insights into Participant Preferences for Lifetime Income Options.
We asked participants the first word that comes to mind when they think about retirement planning. These are the words most frequently mentioned by respondents.
Saving for retirement is reported as the top priority for retirement planning. In addition, participants are looking for stability and security in retirement.
We found that groups with different demographic backgrounds show a variety of financial and annuity knowledge levels.
In general, males show a higher level of financial and annuity literacy than females. Specifically, we found that females are 73% more likely to report low financial literacy than males.
Financial well-being is dynamically linked to financial literacy, age, and demographics.
Participants aged 50 and over are more likely to report higher financial well-being than those aged 20 to 34.
Respondents with more than $150,000 investable assets have a significantly higher financial well-being score across all ethnic groups; these respondents report 5.48 times higher financial well-being than those with investable assets below $50,000.
Participants are receptive to the concept of annuities depending on how the options and benefits are presented.
Respondents with the lowest level of financial knowledge have the highest probability of not using any lifetime income products. Financial education appears to be a primary contributor to using lifetime income products.
Younger respondents showed a higher tendency to take advantage of employer matching. 74% would consider lifetime income products with employer matching.
With defined contribution plans being the dominant employer-sponsored retirement plan, they should provide participants with the ability to turn some of their plan balance into guaranteed lifetime income to protect against the risk of outliving their retirement assets. At the same time, there is a need to address the challenge of helping participants realize how lifetime income can help them achieve their retirement expectations. This study provides insight into participants’ financial and annuity knowledge levels as well as their preferences for purchase frequency and amount, when to start income payments, and employer incentives.
The findings from this study can be leveraged when making decisions about providing financial education resources, personalizing communications to participants, and selecting lifetime income products for defined contribution plans.