Twenty-seven percent of U.S. workers between the ages of 55 and 64 don't know how they will use their defined contribution plan savings after they retire, and women are much more likely than men not to have planned how they will use these assets, according to a study by LIMRA Secure Retirement Institute.
Two-thirds of workers in this age group plan to make withdrawals either directly from their DC accounts or after rolling over the assets into an IRA. Only 1-in-6 says they plan to convert some or all of their balance into a guaranteed life income.
While 24 percent of workers age 55 to 64 who have developed specific income-generation strategies say they plan to take systematic withdrawals from their retirement savings, more than double, 65 percent, say they plan to withdraw money on an occasional basis or when needed.
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Among those who say they have no specific income strategy, procrastination is the top reason given for not yet creating one.
"It is surprising that such a large proportion of older workers have failed to do this basic level of income planning when most are within 10 years of retirement," said Matthew Drinkwater, associate managing director at LIMRA SRI Research. "Many believe that they can delay retirement indefinitely, or work in retirement, so it's possible they feel that there's no near-term need to engage in this kind of planning. But that belief is risky; people often retire earlier than anticipated. It makes sense to give thought to how you will use your DC plan balances sooner rather than later."
LIMRA Secure Retirement Institute provides comprehensive, unbiased research and education about all aspects within the retirement industry to improve retirement readiness and promote retirement security.
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