State Street Report Gives Glimpse into Workers’ Thoughts On Annuities

Workers want access to lifetime income products more than other employer resources aimed to boost their retirement readiness, new data shows.

Among the resources available to workers from their employers to help them “pivot” into retirement, 67% of respondents are most focused on a having their employers implement a guaranteed income product—ahead of access to financial consulting, retirement calculators and in-person or town hall-style education forums—according to the U.S. research snapshot of the State Street Global Advisors 2022 Global Retirement Reality Report.

The U.S. research slice revealed workers’ thoughts on annuities, showing 46% of workers agreed or strongly agreed with the statement that annuities provide safety and stability, 40% agreed or strongly agreed with the notion of annuities being an essential part of providing income in retirement, 32% agreed or strongly agreed with annuities having a bad reputation for limiting access to savings and 27% of respondents said they don’t represent good value for money.

“Of the global sample, Americans were most aware of and keen on annuities, with some considering the product tantamount to retirement income,” states the report’s closing thoughts section, which attempts to offer insights for employers, advisers and policymakers to support greater retirement plan access, coverage and income.

Although some employers have changed their 401(k) plans for 2023, they have generally not embraced additional enhancements that were provided by legislation passed in 2019, data released this year by Alight Solutions shows. Employers largely have not, according to research, embraced adding in-plan annuities to defined contribution plans, which was one of the legislative provisions of the Setting Every Community Up for Retirement Act of 2019.

Workers’ Concerns

Inflation was the top concern for workers in 2022, among several negative impacts to retirement readiness, at 68%, the SSGA research found. For 38% of workers last year, the top concern likely affecting their retirement was medical expenses, unchanged from 2020, while 37% cited the current political climate, compared to 47% who said this two years ago.

Retirement expectations?

The most popular retirement age for U.S. workers is from ages 65 to 69, and 26% of Americans expect to live past 90, SSGA data shows.

Alongside this longevity expectation, 30% of U.S. workers showed the highest concern for making their money last in the later years of retirement, defined as age 80 and above, and for later-life health care costs, SSGA research finds.

The SSGA report also revealed that 84% of U.S. workers expected to enjoy some variation of retirement — 59% of respondents said they expect to have a full retirement and 25% said their retirement plan does include partial work.

Among workers, 10% said they did not think retirement would ever be financially feasible, and of those who don’t see retirement as a practical reality, 6% are eager to stay engaged in work life, according to SSGA.

Data for the State Street Global Advisors 2022 Global Retirement Reality Report was gathered by global analytics firm YouGov. An online survey was used to collect information from from 3,553 individual retirement savers with access to employer-sponsored defined contribution plans between July 20 and August 22, 2022.