(Originally posted on LinkedIn)
It's time to drop some of the common assumptions about work and retirement.
For one thing, there are many Americans (myself included) who are continuing to work past what was once considered the "traditional retirement age" of 65. Today, nearly 19 percent of those 65-and-older have at least a part-time job – and experts expect the trend to continue.
There are various reasons why. Many people (again, myself included) enjoy their jobs and the stimulation that comes from working. When the Nobel Prizes were recently announced, I loved reading that Rainer Weiss – a professor emeritus at the Massachusetts Institute of Technology who won the Nobel in Physics – still works six days a week at the age of 85.
For some, however, work is more necessity than choice. Recent articles have highlighted the plight of the so-called "workampers," older Americans who travel around the U.S. in RVs in search of seasonal jobs that pay hourly wages and offer few, if any, benefits.
I believe what most of us want most is to have the option to make our own choices about work and retirement. We want to call the shots on how long we stay in the workforce and what our lives look like when we're not employed in a full-time job anymore. That's real freedom, and the only route to get there is financial security.
I recently wrote about how annuities are great vehicles for getting to a financially secure retirement, because they give retirees guaranteed monthly income for life. It turns out that most Americans recognize the importance of having monthly income they can't outlive – but they don't know that annuities actually provide it.
And in any event, most Americans don't have access to annuities in their retirement plans. These are the findings of a recent TIAA survey on non-retired Americans that also showed a majority of people support legislative changes that would provide them more information about, and access to, lifetime income within their workplace retirement plans.
TIAA's survey also showed that Americans continue to have many concerns around retirement, including whether they will outlive their savings. Fortunately, there are many steps that both individuals and employers can take to mitigate that risk:
- Individuals can save more. TIAA's survey shows that 73 percent are saving less than 11 percent of their current annual income (including contributions from employers). Most experts recommend that you save 10-15 percent of your annual income for retirement if your personal situation allows.
- Employers can adjust the retirement plans they offer. They can add features that would automatically enroll employees in the plan and automatically increase their contributions each year. Our survey found that a majority of Americans would support legislation making it easier for employers to include these features.
- Individuals can identify how much income they need to replace in retirement – and employers can provide education to help them gain that understanding. Most experts agree that people should aim to replace 70-100 percent of their pre-retirement income, but TIAA found that only one-quarter of Americans think they will need at least 70 percent.
- Individuals can analyze how their savings will translate into retirement income. This is a critical step in the retirement planning process, and the earlier it's done, the better. But our survey found that over 40% have not taken this step, with women far less likely to have done so than men.
Taking these steps can help you build a financially secure retirement for yourself. And just as important, it can ensure that you have the freedom to live your own definition of retirement – not your grandparents'!
The Lifetime Income Survey was conducted by KRC Research from August 3 to 14, 2017, via an online survey among a random sample of 1,000 American adults age 18 or older. The sample includes 761 respondents who are not retired and 239 respondents who are retired.
Guaranteed lifetime income is subject to the claims paying ability of the issuing company.
This material is for informational or educational purposes only and does not constitute a recommendation or investment advice in connection with a distribution, transfer or rollover, a purchase or sale of securities or other investment property, or the management of securities or other investments, including the development of an investment strategy or retention of an investment manager or advisor. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made in consultation with an investor's personal advisor based on the investor's own objectives and circumstances.