Findings show boomers who have worked with a financial advisor are
more confident they will have enough money to last throughout retirement
MINNEAPOLIS–(BUSINESS WIRE)–For most people, the decision to retire comes with many considerations,
primary among them, “How will I pay for my living expenses after I stop
receiving a paycheck?” New research from Ameriprise Financial (NYSE:
AMP) posed this question to baby boomers and found surprising
differences between those who have already retired and those who are
still in the workforce.
The Pay Yourself in Retirement study found that the overwhelming
majority of retirees (85%) say they have a plan in place to pay
themselves in retirement, which may include calculating expenses,
identifying investments that generate income, and determining which
assets to draw down first. Having taken steps to prepare, these retirees
report being more at ease with their finances. Compared to pre-retirees
– only about half of whom (52%) say they’ve developed a retirement
income plan – retirees are nearly twice as likely to say they feel
completely confident they’ve saved enough money to last their lifetime.
The Pay Yourself in Retirement study surveyed more than 1,300
baby boomers between the ages of 55-75 with at least $100,000 in
investable assets. While the study uncovered differences between
retirees and pre-retirees, both groups say they define paying themselves
in retirement as having enough cash flow to maintain their independence
and lifestyles in retirement. The two groups do have similar worries.
Nearly two-thirds of all respondents cite healthcare expenses (63%) and
protection from market volatility (64%) as concerns.
“Figuring out how to recreate a “paycheck” in retirement can be one of
the most daunting challenges investors face,” said Marcy Keckler, vice
president of financial advice strategy at Ameriprise. “Add to it recent
market volatility and it’s easy to see why pre-retirees who have not
developed a retirement income plan feel less confident that they’ll have
the money they need to cover their expenses. The good news is that they
still have time to take action. By putting a plan in place now, while
they’re still earning a traditional paycheck, they may be able to
achieve similar levels of confidence as their older peers.”
Retirees: Setting the Stage for Success
started off this new chapter of life feeling optimistic about their
ability to pay themselves in retirement. One reason may be their
reliance on guaranteed sources of income like company pensions. The
overwhelming majority of retired boomers (71%) are relying on pension
plans to help fund their retirement and have focused on making
investments expected to generate additional income (41%). In addition,
nearly two-thirds (65%) have identified the assets they plan to draw
down first in retirement.
Among this group of boomers, (77%) named tax treatment of investments as
one of the most important considerations when deciding how or when to
draw income. As boomers reach their 70½ birthdays, Required Minimum
Distributions will kick in and dictate how much money they must withdraw
from their retirement accounts annually. If not taken or calculated
incorrectly, retirees could be facing penalties because of RMD
requirements. Therefore, it is very important for boomers to consider
these tax rules when formulating their retirement income plans so that
they aren’t surprised.
Overall, it appears that retired boomers’ retirement income plans are
working well. Only 10 percent report they have needed to make
significant adjustments like reining in their spending habits.
Top Three Takeaways From Retirees:
1. Start planning your retirement income early
2. Decide which assets you will need to draw down first
3. Consider tax implications that could affect your income down the road
Pre-retirees: Beginning to Design a Retirement “Paycheck”; Still Have
Time on Their Side
While more than half of pre-retirees (53%)
have not thought about their retirement income plan or feel it will be
difficult to map out, the majority (73%) say they plan to transition
into retirement at age 65. Not surprisingly, with the clock ticking,
many report feeling overwhelmed and anxious with more than half (55%)
expressing concern about the possibility of using their money too
quickly in retirement.
For this group of boomers, it may be particularly important to start
planning now. In a shift from older generations, today’s pre-retirees
are relying less on pensions and more on 401(k)s and IRAs, which means
the burden is shifting from employers to individuals to fund their own
retirement. It’s likely the next wave of boomers to retire will need to
spend more time than their older peers calculating optimal withdrawal
rates and exploring guaranteed sources of income.
A majority of boomers surveyed relied on financial professionals to
design their retirement income plans. The study showed that retirees and
pre-retirees who have worked with a financial advisor on a plan are more
confident about their retirement income. In fact, the majority (98%) of
boomers who work with an advisor have talked with them about strategies
for income in retirement.
“When transitioning from a pre-retiree to a retiree, figuring out how to
spend your savings can be an overwhelming process. A financial advisor
can serve as a critical source of information to help you develop a
tailored, comprehensive plan to fit your retirement income needs,” says
For more information about the Pay Yourself in Retirement study,
please visit our research page at ameriprise.com/payyourself.
About the survey
The Pay Yourself in Retirement study
was created by Ameriprise Financial utilizing survey responses from
1,305 Americans ages 55 to 75 with investable assets of at least
$100,000. The online survey was commissioned by Ameriprise Financial,
Inc., and conducted by Artemis Strategy Group from November 16–22, 2015.
About Artemis Strategy Group
Artemis Strategy Group (www.Artemissg.com)
is a communications strategy research firm specializing in brand
positioning, thought leadership and policy issues.
About Ameriprise Financial
At Ameriprise Financial, we have
been helping people feel confident about their financial future for more
than 120 years. With extensive asset management, advisory and insurance
capabilities and a nationwide network of approximately 10,000 financial
advisors, we have the strength and expertise to serve the full range of
individual and institutional investors’ financial needs. For more
information, or to find an Ameriprise financial advisor, visit ameriprise.com.
For further information and detail about the Pay Yourself in
Retirement study including verification of data that may not be
published as part of this report, please contact Ameriprise Financial.
Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2016 Ameriprise Financial, Inc. All rights reserved.