Employees Want to Control Some Assets in Retirement

As part of its 2019 Retirement Confidence Survey, the Employee Benefit Research Institute (EBRI) looked into whether workers and retirees place more importance on income stability or maintaining wealth in retirement.

Nearly three-quarters (74%) of workers say income stability is more important when thinking about their financial priorities in retirement compared with 26% saying that maintaining wealth is more important. Retirees prioritize income stability in retirement over maintaining wealth but at a somewhat lower rate of 65%.

Workers with lower savings and lower household income were more likely to say income stability is more important (84% of workers with less than $10,000 in savings vs. 66% of workers with $100,000 or more in savings and 80% of workers with household incomes of less than $35,000 vs. 69% of workers with incomes of $75,000 or more). Furthermore, workers who are ages 45 to 54, are not confident in their ability to have enough money to live comfortably financially throughout retirement, or who have excellent/very good health status are more likely to say income stability is more important.

In the 2019 Retirement Confidence Survey, respondents were asked about two approaches to managing assets and generating income in retirement:

• Option 1: You manage your savings and investments on your own and determine your own strategy for generating income. This approach gives you control over your investments and withdrawals. You can choose investments with higher or lower fees. It does not guarantee income for life and your investments may lose money.
• Option 2: You purchase a product that guarantees you a set amount of monthly income for life. Monthly income would vary based on how much you “purchased.” This approach gives you little control over those assets. The fees may be higher than other financial products because of the guarantee it provides.

One-third of workers say they would take Option 1 (34%) or some combination of both options (30%), while two in 10 (20%) say they would take Option 2 or they are not sure of which option (17%). Of workers who say they would use some combination of the options, the average allocation of their assets to Option 1 is 52.2% and 47.8% to Option 2.

Workers who have higher household incomes, have higher savings and investments, have excellent/very good health status, are confident in being able to live comfortably financially throughout their retirement, and those who have any type of retirement plan are more likely to say that they would take managing their own savings and investments as their approach.