New Study Highlights Key Gaps in Retirement Planning Conversations Findings Reveal Critical Misunderstandings on Protected Income, Annuities, Long-Term Care, and Social Security Awareness

Washington, D.C., October 1, 2024 — The Alliance for Lifetime Income today released the third chapter of its 2024 Protected Retirement Income and Planning (PRIP) annual study, revealing significant disconnects between financial professionals (FPs) and investors who currently work with an FP. Now in its sixth year, the PRIP study is the only research of its kind that simultaneously surveys both consumers and financial advisors to provide a comprehensive look at retirement attitudes and behaviors.

Key Findings from the third chapter of the PRIP study highlight several critical gaps in how investors and financial professionals’ approach, communicate, and consider protected income and annuities in retirement planning conversations, specifically:

• Protected Income: While 62% of financial professionals say they initiate the topic of protected income with their clients, only 27% of investors agree. Nearly 100% of investors believe protecting retirement assets is important, compared to just 79% of FPs. This gap underscores a disconnect in priorities when planning for a secure retirement and how investor-FP conversations are perceived.
• Retirement Income Planning: When it comes to important facets of retirement income planning, there is a consistent gap of about 30% between what financial professionals say they discuss with clients and what the clients say they are hearing.
  • 98% of FPs say they discuss sources of protected income such as Social Security, pensions, and annuities, but only 69% of clients agree.
  • 96% of FPs say they discuss when clients should withdraw from certain accounts, but only 66% of clients say that is true.
  • 95% of FPs say they talk about how to minimize taxes, but only 64% of clients say that conversation occurs.
• Likelihood of Assisted Care: Almost six out of ten investors believe they may need independent living, assisted living, or nursing home care in the future, yet only 34% of FPs estimate their clients ages 45 and over think they will need such care at some point, revealing a significant underestimation of long-term care needs.
• Cognitive Decline: 90% of FPs say they talk with at least some of their clients to identify steps they could take in case of experiencing cognitive decline later in life, yet only 27% of clients say their financial advisor brought up that topic.
• Social Security Awareness: Financial professionals estimate that only 43% of their non-retired clients ages 45 and older are aware of their future Social Security benefits. And while 92% of FPs say they help clients decide when to claim Social Security, only 22% of clients say their FPs helped the most when they decided to start claiming.  This finding highlights the need for improved communication on essential income sources.
• Employer-Sponsored Retirement Plans (401K or 403B): While 81% of clients find annuities or protected income products within employer-sponsored retirement plans to be very or somewhat helpful, only 68% of financial professionals recognize this interest, highlighting a significant gap in understanding between investors and their advisors.

“There’s a clear and concerning gap between what investors need and want versus what many financial professionals are communicating when it comes to planning for retirement,” said Jean Statler, CEO of the Alliance for Lifetime Income. “The findings in Chapter 3 of our annual survey with consumers and advisors should serve as a wake-up call. There’s growing consumer interest and demand for protection, but we need to bridge this communication divide to ensure that all those approaching retirement, feel prepared and protected for the years ahead.”

Despite these differences, there are areas of alignment between investors and financial professionals. Both groups believe that retirement marks a new beginning rather than an end, and they view it as a major milestone in life rather than just a continuation of their current lifestyle. This shared perspective provides a foundation for enhancing the retirement planning conversation.

“The disconnect between investors and financial professionals isn’t just a data point—it has real consequences for people’s lives,” added Jean Statler, CEO of the Alliance for Lifetime Income. “Take, for example, an American couple in their early 60s, John and Linda. They’ve worked hard, saved diligently, and are excited about their upcoming retirement. But like many, they’re unsure about how much of their savings will last, if they’ll need long-term care, or how much they can count on Social Security. Meanwhile, their financial advisor isn’t fully addressing these concerns because they don’t realize the couple’s fears about their future. This communication gap means Linda and John might not have the protection they need when unexpected health issues arise or when market volatility threatens their nest egg. It’s critical that advisors and consumers start having these important conversations now to ensure a secure and fulfilling retirement.”

The PRIP findings will inform key panels at the Alliance’s 2024 Protected Retirement Summit in Washington, DC, on October 9, 2024. Unlike other financial industry conferences, this invitation-only Summit focuses on the retirement needs and aspirations of consumers, giving financial industry executives and leaders across the retirement ecosystem a unique opportunity to engage in direct conversations with Americans approaching retirement or recently retired. Members of the media who are interested in attending or joining the live stream are encouraged to contact us for access.

About Protected Retirement Income and Planning (PRIP) Survey

The PRIP online survey of consumers was conducted by Artemis Strategy Group from February 15 to March 2, 2024. The 2,516 consumers surveyed are aged 45 to 75, of which 567 are investors aged 45 to 72 with $150k+ in investable assets and work with a financial professional. Data is weighted to align with the population on age, income by gender, race/Hispanic ethnicity, region, work and retirement status, assets, and education. From February 12 to March 4, 2024, PRIP 2024 also surveyed 508 financial professionals who conduct retirement planning for individual clients.

About the Alliance for Lifetime Income

The Alliance for Lifetime Income (ALI) is a non-profit 501(c)(6) consumer education organization based in Washington, D.C., that creates awareness and educates Americans about the value and importance of having protected income in retirement. Our vision is for a country where no American has to face the prospect of running out of money in retirement. The Alliance provides consumers and financial professionals with unique educational resources and interactive tools to use in building retirement income strategies and plans. We believe annuities – one of only three sources of protected lifetime income – can be an important part of the solution for retirement security in America. The Alliance’s Retirement Income Institute houses the leading retirement scholars and experts in retirement income who create evidence-based research and analysis, with practical ideas and actions to help protect retirees. For more information about the Alliance, visit www.protectedincome.org.

About Cannex

CANNEX Financial Exchanges Ltd. supports the exchange of pricing and data for annuities and bank products, including term deposits and guaranteed interest contracts (GICs). The firm’s data gives financial institutions the ability to evaluate and compare various guarantees associated with savings and retirement products. For more information about CANNEX, visit www.cannex.com.