Nationwide Retirement Income Confidence Survey Reveals Retirees Might Be Under-Utilizing Retirement Savings
Findings show need for investment professionals to help clients manage complex transition into retirement; Nationwide announces formal launch of its Income Planning Desk to assist
COLUMBUS, Ohio (June 6, 2008) – New research conducted by Nationwide, in conjunction with Yankelovich, found that 57 percent of retirees are living on Social Security and pensions alone – leaving a significant chunk of their retirement nest egg untouched. Furthermore, the research – Nationwide’s Retirement Income Confidence Survey – found that, of those who said they live solely on Social Security and pensions, almost a quarter admitted they were afraid to spend down their retirement investments.
“It’s natural for consumers to have a tendency to ‘play it safe’ when it comes to their nest eggs,” said John Carter, president of Nationwide Financial Distributors, Inc. “But an overly conservative approach can also mean they’re not fully utilizing the resources available to them, leaving themselves potentially vulnerable to market, inflation or longevity risk.”
For years, the financial services industry has been focused primarily on helping clients accumulate wealth. Now, with the wave of baby boomers on the brink of retirement, financial professionals are challenged to help clients use that accumulated wealth to generate income – and help them ensure that income is working for them throughout retirement.
“Retirees can’t spend all their savings, but they need to utilize their nest egg wisely, especially given today’s market volatility and rising gas and food prices. There needs to be a strategy in place that helps them balance their needs for income, protection and growth potential,” said Carter.
To meet this growing need, Nationwide today announced the formal launch of its Nationwide Income Planning Desk to serve as the investment professional’s consultant on income solutions for their clients. The Nationwide Income Planning Desk, which has received more than 25,000 inquiries in its pilot phase alone, has proven a valuable resource for investment professionals as they address the complex needs of the new retiree.
“Americans nearing retirement face a complex challenge, as they don’t have the luxury of current retirees, who say they are funding retirement out of Social Security and pensions,” said Carter. “The burden on this new generation of retirees is to have enough income for essential living expenses, or ‘must-have’ income, and their ‘want-to-have’ income to pursue the lifestyle they want in retirement. To do so, they’ll need a portion of their nest egg that keeps accumulating for them to fund a retirement period of 30 years or more.”
Opportunity for Investment Professionals
This presents an opportunity for investment professionals – the research also reveals that two-thirds of retirees who work with an investment professional are looking for help on how to grow and protect their investments and take income out safely. Yet, of the counsel they receive from their investment professionals, they are least satisfied with advice about how to determine how much income can be safely withdrawn in retirement.
“While the majority of retirees and pre-retirees overall believe their investment professionals are doing a good job, the research indicates there’s opportunity for better client service around growing, protecting and maximizing retirement income,” said Carter.
Nationwide and Yankelovich’s Retirement Income Confidence
Nationwide commissioned Yankelovich to conduct an opinion survey among American adults aged 55 to 77 who have at least $100,000 in investable assets. Survey results were obtained through telephone interviews among a representative, randomized sample of 1,000 adults to determine pre-retirees and retirees’ confidence in having enough money for retirement, as well as how pre-retirees and retirees evaluate financial investment professionals and their own ability to manage their retirement investments and spending. The research shows that less than 20 percent of retirees and pre-retirees felt completely confident about having enough money to live on comfortably throughout retirement.
Additional survey findings include:
- 47 percent of retirees and pre-retirees are not sure their expected retirement income will be sufficient.
- Less than one in five pre-retirees put their chances of having enough income to live on comfortably in retirement at 100 percent.
- Only 37 percent believe the income they will receive from their retirement investments is very predictable; less than half are “very sure” they have the right mix of retirement investments.
- Pre-retirees are less likely than retirees to say they have the “right mix” of investments.
- If respondents had 10 percent more income each year in retirement, they would use it for travel (36 percent) and children/grandchildren (36 percent).
Nationwide’s Income Planning Desk
“Nationwide’s Income Planning Desk already has achieved significant success in its pilot phase and we’re extremely pleased to be able to offer this resource to the broader investment community,” said Carter. “It’s another example of our consultative approach to working with investment professionals.”
The Desk features a team of highly credentialed specialists specifically trained to assist investment professionals in:
- Providing strategies to address the financial challenges and risks clients face in retirement
- Offering case design assistance and customized illustrations for even the most complex income planning cases
- Serving as a consultant for Investment Professionals during client point-of-sale meetings
Piloted in April of 2006, the Nationwide Income Planning Desk has already assisted investment professionals in helping more than 1,200 clients create strategies for distributing income.
“After a successful pilot, it became obvious investment professionals crave more resources to help simplify their clients’ complex income planning needs,” said Carter. “There is no one-size-fits-all solution. The Nationwide Income Planning Desk enhances investment professionals’ own expertise and aims to customize income solutions for each client.”
Investment professionals can reach income planning specialists at the Nationwide Income Planning Desk at 1-877-245-0763 Monday through Friday, 9 a.m. to 6 p.m. Eastern Time, or via email at IPLNDESK@nationwide.com. Please mention Retirement Team.
About Nationwide Financial®
Nationwide Financial Services, Inc. (NYSE: NFS), a publicly traded company based in Columbus, Ohio, provides a variety of financial services that help consumers investi and protect their long-term assets, and offers retirement plans and services through both public- and private-sector employers.
It’s part of the Nationwide group of companies, which offers diversified insurance and financial services. The group is led by Nationwide Mutual Insurance Company, which is ranked No. 108 on the Fortune 500 based on 2007 revenue.ii For more information, visit www.nationwide.com.
Variable annuities and variable life insurance products are issued by Nationwide Life Insurance Company or Nationwide Life and Annuity Insurance Company, Columbus, Ohio. Nationwide Life Insurance Company is a subsidiary of Nationwide Financial Services, Inc., a publicly traded holding company. The general distributor is Nationwide Investment Services Corporation, member FINRA. In MI only: Nationwide Investment Svcs. Corporation.
Nationwide, the Nationwide Framemark and On Your Side are federally registered service marks of Nationwide Mutual Insurance Company.