How to Quit Working and Keep Getting Paid - Securing a Paycheck Throughout Retirement

How to Quit Working and Keep Getting Paid - Securing a Paycheck Throughout Retirement

State Street Global Advisors' Study Finds a Shift in Mindset as Participants Move from Retirement Saving to Spending

BOSTON--(BUSINESS WIRE)-- The next wave of expected retirees want help planning a secure stream of income in retirement, according to a recent survey of US retirement plan participants released today by State Street Global Advisors (SSgA), the asset management business of State Street Corporation (NYS: STT) . SSgA's Biannual Defined Contribution Investor Survey, "Young at Heart: What DC participants are thinking about retirement income," highlights the needs, behaviors and concerns of plan participants and recent retirees about their retirement income and weighs the tradeoffs they are willing to make with their accumulated savings.


The study finds that a significant majority of participants (80%) believe a guaranteed monthly payout benefit is a "must have," even if it means compromising some access to their retirement savings. Other findings include:

  • 55% see generating a stable income as a top priority versus generating returns (27%), or preservation of capital (25%);
  • 69% believe that some sort of guaranteed monthly income stream will be necessary in addition to Social Security; and
  • 64% of respondents plan to take monthly withdrawals to cover their expenses while only 6 percent prefer a lump sum payout from their plans;
  • While a majority of plan participants are satisfied with the quality of support they receive from their plan, there remains an opportunity for plan sponsors to help participants establish guaranteed income during retirement

"Participants are looking forward to life in retirement, and they want to be able to enjoy their golden years without financial stress," said Fredrik Axsater, managing director and head of global Defined Contribution for SSgA. "They need guidance on what do with the savings they have accumulated - how to spend it and how to make it last."

Retirees' lack of confidence as they approach retirement is shaping their decisions about transitioning to decumulation. Only 24% are confident that they've saved enough to retire comfortably and nearly half (46%) aren't planning on retiring until after age 66, with 15 percent expecting to hold out until after age 70. In the run-up to retirement, catching up on savings takes a back seat to generating returns and preserving capital. As they near retirement, however, most (55%) shift their focus to generating a stable income in retirement. The opportunity is ripe for plan sponsors to not only be retirement savings providers, but retirement income partners.

The new issue of SSgA's The Participant magazine that features the survey is also supplemented by a series of interviews with senior decision-makers at some of the largest defined contribution (DC) plans in the industry. The interviews focus on the trade-offs that plan sponsors make when seeking better income products and how they might structure income solutions to match participants' needs. Both plan sponsors and participants agree that there is a need for an in-plan DC retirement income product offering that features high income replacement through a regular monthly payment. To make this income stable enough to last a lifetime, participants and plan sponsors affirm a willingness to sacrifice some liquidity.

"As workers shift from saving for retirement to spending in retirement, they are evaluating their investment choices and looking to plan sponsors to help them make that transition, Plan sponsors should seize this opportunity to begin a dialogue with participants about how to achieve retirement security," said Axsater.

To view the complete results from SSgA's Biannual DC Investor Survey or to subscribe to The Participant magazine, please visit: www.ssga.com/dc/theparticipant.

* SSgA's DC Investor Survey, conducted jointly with TRC Market Research, surveyed nearly 1,500 employees, aged 40 to 70, who participate in 401(k), 403(b), 457 and profit sharing plans.

About State Street Global Advisors

State Street Global Advisors (SSgA) is a global leader in asset management. The firm is relied on by sophisticated investors worldwide for its disciplined investment process, powerful global investment platform and access to every major asset class, capitalization range and style. SSgA is the asset management business of State Street Corporation, one of the world's leading providers of financial services to institutional investors.

CORP-0800



State Street Corporation
Anne McNally, +1 617-664-8576
www.ssga.com

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