Employees Want Help Converting Their Retirement Savings into Income
Pop quiz: Your employees want your help converting their workplace retirement plan savings into a sustainable income that will last throughout their post-career years. True or false?
If you guessed true, congratulations, you’re right. Most employees don’t have the first clue about how to create a retirement income from a career’s worth of savings, and they really want — and need — your help.
It so happens, more employers are beginning to offer annuities in their retirement plans, according to this article from insurancenewsnet.com. The rules are still a bit fuzzy — the Pension Protection Act of 2006 set in motion the addition of annuities to retirement plans, and safe harbor rules are still being hammered out — but employers are getting ready. By getting their so-called ducks in a row now, employers can select their annuity providers and begin offering annuities in their defined contribution (DC) plans when the time comes.
Meanwhile, employees are looking to their employers for guidance when it comes to transforming their retirement savings into a steady stream of lifetime income — and that desire transcends generations. Employees young and old need help figuring out this retirement income thing. And they’re quite willing to lay the problem at their employer’s feet.
A recent Metlife survey, cited in the insurancenewsnet.com article, found that:
“When asked if they would prefer having their employer set aside a retirement paycheck for life or provide them with money to invest themselves, the steady paycheck wins by 58% to 42%.
Employees are six times more likely to want companies to be more involved, not less, in providing for their retirement security in the next five to 10 years, (61% vs. 9%).
Workers have accepted that they are on their own with 54% saying individuals are primarily responsible for their own retirement security versus 27% who say companies are responsible and 19% who say the government is responsible.”
The upside to annuities is that they offer guaranteed income that individuals can’t outlive. That’s an attractive option for the majority of employees, who are under-saved for retirement, and anxious about how to make their meager savings last throughout their lifetime. An in-plan annuity answers this problem and takes a lot of the guesswork out of the post-career income conundrum.
That said, American workers’ lack of savings is still an endemic problem. However, annuities can provide employees the ability to determine how their workplace retirement account balance translates to a monthly income stream in retirement, and that’s a significant place to start.
