Retirement Income Participant Interest Surveys: A Contrarian View

Retirement income products can serve an important purpose as a participant investment option for retirement plans.

Surveys gauging participant interest in these options may be open to interpretation, especially when the survey is conducted by a retirement income vendor. A survey conducted by the well-known and respected JP Morgan gauged participant interest for a retirement income product that could be meaningful to many retirement plan participants. Retirement income vendors have increased marketing efforts for their retirement income products bolstered, in part, by employee surveys affirming interest. It is prudent for plan sponsors to look critically at survey conclusions when evaluating the potential benefits of any new product for your retirement plan participants.

The JP Morgan survey conclusions are similar to those of others.1

“There is notable variability in participants’ expected retirement age and style. The mean age when respondents expect to retire is 64.7, with 51% planning a gradual move into full retirement.”

“Notable variability” in participant expected retirement ages is not surprising. Many plans have an average employee age of well under 40. Younger employees may often hope to retire early without careful evaluation of financial planning targets. Some may have done considerable research while others may just be hoping or guessing. Plan sponsors may not find this particularly helpful. The mean expected retirement age of 64.7 is not surprising and not specifically supportive of annuitization.

“Most are concerned about outliving their money and unsure about how much they need to save for retirement. Nearly 7 out of 10 respondents are concerned about outliving their money in retirement.”

Again, this conclusion is expected and understandable as 7 out of 10 (at least) should be concerned about outliving their retirement. Also, there is little difference between the uncertainty of how much they need to save for retirement in a lump sum or lifetime income as an annuity can always be purchased at the point of retirement if they so choose. “Dollar-cost averaging” into annuities (rather than a single sum purchase) however may be beneficial as annuity rates change over time as does life expectancy.

“Many would welcome a post-retirement income option in their plan. A large majority of respondents (85%) say that they would likely leave their balances in their plans post-retirement if there was an option to help generate monthly retirement income.”

Again, no surprise here. Most participants would probably agree that a lifelong retirement income would be a good thing. Even assuming a relatively significant $1 million account balance, the typical retirement income fund would only generate $23,800 in annual income. (

At first glance, the above survey conclusions may reflect an implied interest by participants for a retirement income option, however evidence of impending substantial deferral commitments is uncertain.

The question becomes how many participants would actually select to defer into a retirement income option, and at what percentage of their total deferral amount? Considering the proliferation of articles on plan interest in adopting retirement income options, the actual adoption rate is not as high as expected, and little is available substantiating the significant utilization of these options by participants.

This does not mean that these options may not thrive in the future. On the contrary, they may certainly be appropriate for retirement plans. Consider the similarity with auto-enrollment which, when first offered, was met with less-than-tepid acceptance and now is ubiquitous among retirement plans…and for very good reason.

1Additional JP Morgan survey information can be found at
Representatives offer products and services using the following business names: Summit Group of Virginia LLP – insurance and financial services | Ameritas Investment Company, LLC (AIC), Member FINRA/SIPC – securities and investments | The Ascent Group, LLC – investment advisory services. AIC is not affiliated with Summit Group of Virginia LLP, The Ascent Group, LLC, or any other entity mentioned herein. Products and services are limited to residents of states where the representatives are registered. This is not an offer of securities in any jurisdiction, nor is it specifically directed to a resident of any jurisdiction. As with any security, request a prospectus from your representative. Read it carefully before you invest or send money. A representative will contact you to provide requested information. Representatives of AIC do not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.

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