The Cogent report reveals that only one in five (22%) Silent Generation investors are open to products specifically geared for producing retirement income. By contrast, 35% of 1st Wave Boomers express interest in these same types of products. A major contributing factor to this generational divide is the fact that Boomers are twice as likely as Silent Generation investors to be willing to “give up control of principal in exchange for guaranteed regular income payments” (31% 1st Wave Boomers vs. 17% Silent Generation).
According to Cogent Principal John Meunier, these differences by generation are merely a reflection of current reality. “Boomers are far less likely than their older counterparts to have a pension to rely upon in retirement. That leaves many pre-retirees searching for products, strategies, and frankly, compromises that can help render the peace of mind pensions have traditionally offered.”
Yet, despite general heightened acceptance of retirement income products among Boomers and pre-retirees, providers still face formidable challenges in their efforts to increase use. Topping the list is a stubborn perception among four in ten (42%) current and pre-retirees that they can effectively manage their retirement income on their own. Almost as many, 39%, cite a desire to maintain control and access to their principal. A third (34%) want unfettered access to funds at all times; and 27% say they simply lack trust in the idea of “guaranteed income.”
According to Cathy Weatherford, President and CEO of the Insured Retirement Institute (IRI), the current environment presents both a challenge and an opportunity for industry leaders, “By stepping up efforts to educate them, the marketplace can effectively address consumers’ fears about retirement security, and at the same time demonstrate how guaranteed income products can fill the critical retirement income need facing millions of aging Boomers.”
In addition to looming fears about retirement among boomers, Weatherford points to product innovation as another reason for higher receptivity among pre-retirees to retirement income products. “Over the last year, we have seen the marketplace respond to potential barriers of use of insured retirement strategies through product innovation and a swing toward more generous benefits, a trend that will likely continue.”
According to John Meunier at Cogent, as new products are developed, providers need to continue to focus on consumers’ top three retirement income goals; ensuring regular income payments regardless of market activity, providing income that keeps up with inflation, and ensuring that retirees don’t outlive their money. “On the one hand, granted, it’s a tall order,” said Meunier. “On the other hand, consumers are speaking with great clarity about what they want and need.”
