Guaranteed Income—Theoretically—a Popular Choice

Nonetheless, few people know where to find it, and many say their adviser doesn't bring it up.

Sixty-one percent of Americans between the ages of 55 and 75 believe having guaranteed income to supplement Social Security is a smart and sound benefit, Greenwald & Associates and CANNEX found in a survey of 1,105 people. Sixty-one percent believe it is incumbent on advisers to discuss guaranteed income products with them, and a great deal more, 90%, think their adviser should help them devise a retirement income strategy.

In addition, 81% of those over the age of 50 think it is important to protect their portfolio against significant investment losses. However, only 33% are highly familiar with annuities, and even fewer are familiar with annuities that guarantee income for life.

Even among those who own an annuity, only 53% say they are knowledgeable about the product’s features.

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Asked why they would want guaranteed income, respondents said it provides extra protection should they live to a ripe old age (35%), peace of mind (31%), the ability to budget with confidence (29%), maintaining a comfortable lifestyle (27%) and receiving a higher payout than what savings accounts and certificates of deposit (CDs) are currently paying in this low interest rate environment (24%).

Asked why they may not purchase a guaranteed income product, 25% said they have too many terms and conditions, 23% said they cost too much, 22% said they do not always pay back all of the money they cost to purchase, 21% said they are difficult to understand, and 19% said they tie up your money.

But people do not know what a monthly income payout from an annuity would cost; asked how much they would be willing to pay to receive $1,000 a month for life, 66% could not even hazard a guess.

Asked about withdrawal strategies, only 30% said they were pretty confident they knew what would be a good tactic.

Employees Using ESPPs Wisely, Fidelity Says

The investment firm says that employee stock purchase programs (ESPPs) can significantly boost workers’ savings.

Having taken a deep dive into the trading activity of 365,000 workers who purchase company stock through an employee stock purchase program (ESPP) over the past three years, Fidelity Investments concluded that many sold their shares at a profit.

Those most likely to sell their shares are those who got a significant discount on the price and those under 40, Fidelity says.

“Company stock plans are increasingly viewed as a top employee benefit and can play an important role in an employee’s overall financial health,” says Mark Haggerty, head of stock plan services at Fidelity. “Employees often use these plans as a savings vehicle alongside their 401(k), but money from an ESPP can be used to address short-term expenses and financial needs—and help workers avoid the need to tap their 401(k).”

In the past three years, 50% of workers in an ESPP sold all of their shares. Plans that offer stock at a 15% discount have twice the participation rates than plans with lower discounts.

Overall, older employees are more inclined to hold onto their company stock. However, the percentage of workers between the ages of 50 and 60 who sold all of their company stock increased from 41% in 2014 to 44% in 2015. Likewise, among those age 60 and older, the percentage who sold all of their stock increased from 34% in 2014 to 38% in 2015.

Fidelity also found that the more that employees contribute to their ESPP, the more likely they are to sell their shares; among workers who contributed $10,000 or more to their ESPP each year, 57% sold all of their shares in 2015, up from 52% in 2014.

Fidelity also asked survey respondents what they used the proceeds for. The most common was paying down debt (34%); followed by reinvesting the money, either directly in a mutual fund or through their retirement savings account (19%); home improvement (17%); and establishing an emergency fund (11%).

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