The Alliance for Lifetime Income has launched the “Protected Lifetime Income Index,” a research initiative designed to track how effectively American households are planning to secure retirement income that will last their entire lives.
With the Index, the Alliance is urging Americans to consider a new category of retirement planning — “protected retirement income” – or lifetime income they can’t outlive.
“We’re facing the first generations of American workers approaching retirement with no clear idea of how much money they can count on receiving or what they can safely spend from their savings such as IRAs and 401(k) accounts, without running out of money,” said Dr. Michael Finke, Alliance for Lifetime Income Research Fellow and Dean and Chief Academic Officer of The American College of Financial Services. “Americans should always consider how to acquire lifetime income for retirement that can give them the confidence to maintain the retirement lifestyle they want.”
The Alliance is a nonprofit 501(c)(6) organization formed and supported by some of the nation’s leading financial services organizations to create awareness and educate Americans about the importance of protected lifetime income. NAIFA is a partner.
According to a survey by the Alliance, two-thirds of pre-retirees have not calculated their expected retirement expenses, and half have not determined their expenses before they retired. Only 38 percent of households have protected lifetime income in the form of an annuity or pension, leaving approximately 63 million households without protection, according to Alliance for Lifetime Income research.
These and other findings from the Alliance for Lifetime Income’s new Protected Lifetime Income Index illustrate the retirement crisis facing Americans who have focused primarily on accumulating retirement assets, without also considering the need for retirement income. The Index is a first-of-its-kind ongoing research initiative that will shine a spotlight on the larger societal impact of the income-planning gap.
“Americans are living longer and face a variety of risks in retirement,” Finke said. “Today, most retirees rely on withdrawals from their defined contribution savings to pay for expenses in retirement. If they had an annuity to accompany their savings and investments, they could always count on a source of guaranteed monthly income, which would reduce the risk of running out of money. And annuities are a solution that can provide that protected income for life.”
Consumers and financial advisors can find educational content and other resources about the new category of protected lifetime income at www.RetireYourRisk.org. For more information on the Alliance for Lifetime Income, visit www.AllianceForLifetimeIncome.org and follow the Alliance on Twitter, LinkedIn and Facebook.