RICHMOND, Va.--(BUSINESS WIRE)--Sept. 9, 2003--GE Financial today released disturbing findings from a new Retirement Income Readiness Survey1 that indicates many Americans are on a path that could see them run out of money well before they die. Despite the fact that life expectancy in America continues to increase at a steady pace and people should be looking at spending as much as twenty to thirty years in retirement, forty-one percent of those surveyed were completely unfamiliar with the idea of retirement income planning. And for those who were familiar with the concept, only 24 percent were seeking the help of a professional to prepare a financial plan that may need to last a quarter century or more. These findings indicate a strong possibility many people will lack steady streams of monthly income at some point during their retirement years.
"Americans clearly don't understand the critical difference between retirement savings and retirement income requirements," said Pam Schutz, President & CEO of GE Life and Annuity Assurance Company and leader of GE Financial's Wealth & Income Management Division. "The results from this survey are consistent with other studies we've conducted. The numbers show yet again that many consumers are unaware of the basic elements -- both products and strategies -- that go into a retirement income plan. And the minimal understanding they have of retirement income planning is clearly not enough for such a complex challenge and important life need."
A major issue for Americans is that many have unrealistic expectations when asked to visualize their retirement income needs. Sixty-eight percent of those surveyed said they would need at least 75 percent of today's income in retirement, yet fewer than one in four Americans between the ages of 40-59 have saved more than $100,000 toward retirement.2 With so little saved, it would be nearly impossible to create a meaningful stream of retirement income, even if they understood how to do it.
Americans appear to not be able to make the distinction between building the nest egg and actually building a plan to make it last in retirement. To illustrate that, when asked for primary sources of retirement income, 63 percent cited traditional asset accumulation vehicles such as 401(k)s, company pensions, mutual funds, IRAs and stocks, and only 3 percent cited annuities as their biggest potential source for retirement income. When given a choice of basic definitions of the term "annuity," 45 percent couldn't correctly define it or did not even feel qualified to choose a definition.
Possibly the most interesting finding from the survey is the small percentage of people actually seeking help. Most are going it alone. These survey findings indicate a clear danger many people will reach retirement without a plan that will guarantee steady streams of monthly income that will last throughout their retirement years, no matter how long they live.
Frank Gencarelli, Executive Vice President and leader of GE Financial's Retirement Services Group, said "We are committed to raising visibility for this topic and addressing these issues for American investors and the advisors who serve them. So much basic education is needed, and our high level goal is taking a complex topic and somewhat scary topic and making it more understandable and friendly for Americans and their financial professionals." To put more focus on the issues and opportunities, GE Financial recently created a Retirement Income Center, led by Matt Sharpe. The team is focused is focused on building a full complement of retirement income and protection products, as well as services, including point-of-sale support by specialists, to help financial professionals identify and address their clients' retirement planning needs.
1. GE Financial's Retirement Income Readiness Survey was commissioned in March 2003 through ORC International. The survey was conducted among 1,010 American adults (506 men and 504 women) living in private households. The overall margin of error for the survey was +/- 4%.
2. Source: 2003 Retirement Confidence Survey (RCS) - released April 2003 by the Employee Benefits Research Institute (EBRI), the American Savings Education Council (ASEC) and Matthew Greenwald & Associates.
To hear more about this survey and retirement income initiatives at GE Financial, or to speak directly with Pam Schutz, Frank Gencarelli or Matt Sharpe for additional insights, contact Tim Benedict, GE Financial Public Relations, at 203.229.5206.
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CONTACT:
GE Financial Public Relations
Tim Benedict, 203-229-5206
Jeff Wilson
GE Capital Corporate Finance
[email protected]
1-203-749-6340