PLANADVISER - March/April 2022 - 14

trends
Participants Are Shunning Annuities
How to make participants comfortable with annuitizing their savings
ASKED what they will do with the savings in their employersponsored
retirement account when they retire, only 11%
of participants surveyed for
a
report by AB (formerly
AllianceBernstein) said they would buy an annuity. At the same
time, one-third selected a " steady stream of income in retirement "
as the quality most important about saving for retirement,
according to the firm's " Inside the Minds of Plan Participants. "
Tim Walsh, senior managing director at TIAA, has
previously said there is more flexibility with in-plan
annuities than participants or plan sponsors think. " In-plan
annuities are really hybrid annuities. They act like mutual
funds during the saving years, but when a participant
retires, he has the option to annuitize; it's not mandated to
annuitize, " Walsh said. " When participants get to retirement,
their plans may have changed, so flexibility is important. "
Walsh also pointed out that 403(b) plan participants-
who more likely have in-plan annuity options than do 401(k)
plan participants-typically only annuitize part of their
benefits. This addresses the issue that participants do not
want to lock up all of their assets. 403(b) plan participants
invest in annuities, but they can decide whether or not
to annuitize their savings at retirement. " A diversified
income strategy that includes partial annuitization,
systematic withdrawals and Social Security benefits is the
best combination for meeting daily expenses, emergency
expenses and leaving a legacy in retirement, " Walsh said.
According to the 2022 edition of MetLife's " Paycheck or Pot
of Gold Study, " nine in 10 pre-retirees feel it is valuable-i.e.,
very important or absolutely essential-to have a guaranteed
monthly income in retirement to pay their bills. Nine in 10
The Assets Participants Say They'll Need,
To Be Comfortable Retiring
33%
8%
<$100k
15%
$100k - $249k
19%
$250k - $499k
22%
4%
$500k - $999k
$1mm - $4.9mm ≥$5mm
Why Retirees Hesitate to Buy Products That Supply
Monthly Income for Life
31%
21%
Purchasing
power is
eroded by
inflation
Source: AB, 2021
Assets are
inaccessible-
e.g., in an
emergency
18%
Purchased
benefit is
lost with the
owner's early
death
18%
12%
Products
are too
expensive
Products
are too
confusing
pre-retirees (89%) also said
they were interested in an
option that would allow
them to have both a monthly
retirement " paycheck " that
would last as long as they,
or their spouse/partner, live
and access to a partial lump
sum of their retirement
savings to spend however
they want. When pre-retirees
were asked which they would
choose, though, 82% opted
for the annuity-the monthly
retirement paycheck-over
a lump sum that would give
them all of their retirement
savings at once but could
potentially run out.
AB's study reports that
people misjudge the pace at
which they can draw down
their assets in retirement.
Nearly half (48%) said they
think if they had a $500,000
account balance, they
could withdraw 7% or more
each year and not run out
of money in their lifetime.
Another 28% said they could
withdraw from 4% to 6%
each year.
A 4% withdrawal rate with
annual inflation adjustments
has been considered a safe
withdrawal rate for years.
14 | planadviser.com March-April 2022
http://www.planadviser.com

PLANADVISER - March/April 2022

Table of Contents for the Digital Edition of PLANADVISER - March/April 2022

A Digital Divide
Staying Power
The Prospects of Staying Virtual
Another Retention Tool
Is It Time to Let Go?
The Evolving Use of RFPs
Best Interest Reasons For a Rollover
Guaranteed Lifetime Income
PLANADVISER - March/April 2022 - C1
PLANADVISER - March/April 2022 - FC1
PLANADVISER - March/April 2022 - FC2
PLANADVISER - March/April 2022 - C2
PLANADVISER - March/April 2022 - 1
PLANADVISER - March/April 2022 - 2
PLANADVISER - March/April 2022 - 3
PLANADVISER - March/April 2022 - 4
PLANADVISER - March/April 2022 - 5
PLANADVISER - March/April 2022 - 6
PLANADVISER - March/April 2022 - 7
PLANADVISER - March/April 2022 - 8
PLANADVISER - March/April 2022 - 9
PLANADVISER - March/April 2022 - 10
PLANADVISER - March/April 2022 - 11
PLANADVISER - March/April 2022 - 12
PLANADVISER - March/April 2022 - 13
PLANADVISER - March/April 2022 - 14
PLANADVISER - March/April 2022 - 15
PLANADVISER - March/April 2022 - 16
PLANADVISER - March/April 2022 - 17
PLANADVISER - March/April 2022 - A Digital Divide
PLANADVISER - March/April 2022 - 19
PLANADVISER - March/April 2022 - 20
PLANADVISER - March/April 2022 - 21
PLANADVISER - March/April 2022 - 22
PLANADVISER - March/April 2022 - 23
PLANADVISER - March/April 2022 - Staying Power
PLANADVISER - March/April 2022 - 25
PLANADVISER - March/April 2022 - 26
PLANADVISER - March/April 2022 - 27
PLANADVISER - March/April 2022 - 28
PLANADVISER - March/April 2022 - 29
PLANADVISER - March/April 2022 - The Prospects of Staying Virtual
PLANADVISER - March/April 2022 - 31
PLANADVISER - March/April 2022 - Another Retention Tool
PLANADVISER - March/April 2022 - 33
PLANADVISER - March/April 2022 - Is It Time to Let Go?
PLANADVISER - March/April 2022 - 35
PLANADVISER - March/April 2022 - The Evolving Use of RFPs
PLANADVISER - March/April 2022 - 37
PLANADVISER - March/April 2022 - 38
PLANADVISER - March/April 2022 - Best Interest Reasons For a Rollover
PLANADVISER - March/April 2022 - Guaranteed Lifetime Income
PLANADVISER - March/April 2022 - C3
PLANADVISER - March/April 2022 - C4
https://www.planadviserdigital.com/planadviser/industry_leader_awards_2022
https://www.planadviserdigital.com/planadviser/march_april_2022
https://www.planadviserdigital.com/planadviser/january_february_2022
https://www.planadviserdigital.com/planadviser/november_december_2021
https://www.planadviserdigital.com/planadviser/september_october_2021
https://www.planadviserdigital.com/planadviser/july_august_2021
https://www.planadviserdigital.com/planadviser/may_june_2021
https://www.planadviserdigital.com/planadviser/march_april_2021
https://www.planadviserdigital.com/planadviser/january_february_2021
https://www.planadviserdigital.com/planadviser/november_december_2020
https://www.planadviserdigital.com/planadviser/september_october_2020
https://www.planadviserdigital.com/planadviser/july_august_2020
https://www.planadviserdigital.com/planadviser/may_june_2020
https://www.planadviserdigital.com/planadviser/march_april_2020
https://www.planadviserdigital.com/planadviser/january_february_2020
https://www.planadviserdigital.com/planadviser/november_december_2019
https://www.planadviserdigital.com/planadviser/september_october_2019
https://www.planadviserdigital.com/planadviser/july_august_2019
https://www.planadviserdigital.com/planadviser/may_june_2019
https://www.planadviserdigital.com/planadviser/march_april_2019
https://www.planadviserdigital.com/planadviser/january_february_2019
https://www.planadviserdigital.com/planadviser/november_december_2018
https://www.planadviserdigital.com/planadviser/september_october_2018
https://www.planadviserdigital.com/planadviser/july_august_2018
https://www.planadviserdigital.com/planadviser/may_june_2018
https://www.planadviserdigital.com/planadviser/march_april_2018
https://www.planadviserdigital.com/planadviser/january_february_2018
https://www.planadviserdigital.com/planadviser/november_december_2017
https://www.planadviserdigital.com/planadviser/september_october_2017
https://www.planadviserdigital.com/planadviser/july_august_2017
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