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Data & Research February 2, 2016
Retirement Savers Value Formal Written Plans
Most pre-retirees and retirees surveyed said they would not
have been as financially successful without a formal written retirement
plan.
Reported by Rebecca Moore
A new LIMRA Secure Retirement Institute study finds that pre-retirees and retirees (ages 55 to 75 with financial assets of $100,000 or more) who have a formal written retirement plan are more likely to feel more confident they are saving enough for retirement and more than twice as likely to feel very prepared for retirement than those without one.
The study, The Benefits of Retirement Planning, found three-quarters of pre-retirees and retirees have some kind of financial retirement plan, but only 16% have a formal written retirement plan.
Half of pre-retirees and retirees who have a formal written plan say they feel very prepared for retirement, compared with just 17% of those without one. Eighty percent of those with a formal written plan have estimated how many years their assets will last into retirement—nearly double those who don’t have a formal written plan (42%).
More than three-quarters (78%) of pre-retirees and retirees who have a formal written plan have developed a specific plan for generating income from savings; only 38% of those without a formal written plan have done so.
NEXT: Converting to guaranteed income“Strikingly, most of pre-retirees and retirees we interviewed said they would not have been as financially successful without a formal written retirement plan, acknowledging their own lack of awareness and skill,” notes Matthew Drinkwater, PhD., assistant vice president, LIMRA Secure Retirement Institute. “Even the wealthier consumers said they found value in a formal plan—if only to review and vet their own ideas.”
The Institute found that pre-retirees and retirees who have formal written retirement plans are more likely to roll over and consolidate their assets within two years. They are also more likely to convert a portion of their assets into an annuity within two years.
Pre-retirees with formal written plans are twice as likely to convert a portion of their assets into guaranteed income (22% vs. 11%). Retirees with formal written plans are three times as likely to convert a portion of their assets into guaranteed income (25% vs. 8%).
“Our research demonstrated that taking the time to create a formal written retirement plan—which involves a comprehensive discussion about goals, asset management and risk mitigation—often leads to better outcomes in retirement,” says Drinkwater.