Retirement Income Strategies and Expectations

Retirement Strategies and Expectations Differ Across Generations

Majority agree though: Good advice is critical

SAN MATEO, CA–(Marketwired – Apr 22, 2016) – Franklin Templeton’s 2016 Retirement Income Strategies and Expectations (RISE) survey revealed that fewer respondents are saving for retirement than in prior years, with 41 percent of respondents indicating that they are not yet saving, compared to 35 percent in 2014.1

Stress when thinking about retirement savings and investments saw a slight uptick year-over-year, with 70 percent of all respondents reporting stress this year versus 67 percent in 2015.2

While anxiety has increased, stress levels and attitudes about retirement appeared to fluctuate across different generations.3

Although the furthest from retirement, Gen Xers and Millennials reflected the highest levels of stress and anxiety when thinking about retirement savings and investments (76 and 70 percent, respectively). Diverging from their Gen X counterparts, Millennials reflected a far more positive outlook, with 35 percent believing their retirement will be better than previous generations compared to only 26 percent of Gen Xers who felt the same.

Concern Levels Rising

When asked how concerned they are today versus 12 months ago about outliving assets or having to make major sacrifices during retirement, respondents again expressed higher levels of concern today (52 percent) compared to last year (43 percent).

Again, levels appeared to peak among Gen Xers and Millennials, with these groups indicating the most concern overall about paying for expenses in retirement (89 and 90 percent, respectively). Respondents indicated the most concern about paying for health care (33 percent), with levels peaking among Baby Boomers and Gen Xers (both 39 percent).

An examination of retirement planning progress also revealed inconsistencies by age group and lifestyle. Overall, only 25 percent of respondents indicated that their retirement income strategy is complete.

At the same time, the 2016 RISE survey found that half of Gen Xers (51 percent) felt their retirement income strategy is inadequate, and 40 percent of Millennials do not have a strategy in place at all. Household size also appeared to have impacted retirement planning and expectations among respondents, with only 15 percent of those with children under 18 in the household indicating that they felt their retirement income strategy is complete compared to 29 percent of those without children who indicated the same.

Respondents with children under 18 were also more likely than their counterparts without children to consider retiring later due to insufficient income (64 percent and 54 percent, respectively).

“Our annual RISE survey consistently underscores the importance of creating a retirement income strategy to not only help meet long-term savings goals, but also reduce stress and anxiety surrounding retirement planning,” said Michael Doshier, vice president of Retirement Marketing for Franklin Templeton Investments. “That being said, retirement planning strategies are not one-size-fits-all, a fact that this year’s data certainly reinforces. Needs, expectations and concerns can vary widely depending on a variety of factors — such as age and lifestyle considerations — all of which can play a key role in the development and implementation of a successful retirement income strategy.”

Bridging the Gap

When examining key elements of retirement planning, the 2016 RISE survey revealed a significant disconnect between understanding and implementation of various retirement strategies.

For example, nearly all (94 percent) respondents who have a workplace retirement plan funded through salary deduction indicated that their employer-sponsored plan was important to their overall retirement strategy. However, when all respondents were asked whether they could say, with a high degree of confidence, how much of their current income will be replaced by income from a retirement plan at work, 38 percent could not do so.

Too often, the unknown can have an adverse effect on the retirement planning process, which in turn can lead to increased levels of stress and anxiety. For example, of those respondents who reported experiencing significant stress when thinking about their retirement savings, 65 percent indicated that they did not have an understanding of how much they should expect to withdraw/spend on an annual basis during retirement.

Similarly, 60 percent of those who were concerned about managing retirement income do not know how they will pay their medical expenses during retirement.

Fortunately, various tactics can be implemented to help reduce uncertainty levels surrounding retirement planning. For example, uncertainty decreased dramatically among respondents who have a formal or completed (26 and 29 percent, respectively) retirement plan, compared to 73 percent of those who do not.

Professional advice also appeared to have a positive impact on the retirement planning process. The majority of respondents (60 percent) considered a financial advisor important to both the planning process and generating income during retirement, and across all age groups, Millennials were most likely to reflect this attitude (69 percent).

Even those who have not started saving for retirement recognized the positive role a financial advisor can have, with more than half (57 percent) echoing this sentiment. However, less than a quarter of respondents (23 percent) currently work with an advisor and a mere two percent said they plan to do so in the next five years.

levels appeared to peak among Gen Xers and Millennials, with these groups indicating the most concern overall about paying for expenses in retirement

“While there’s no question that individuals understand the importance of planning for retirement, they may be overwhelmed with preconceived and often unrealistic expectations that can prevent them from taking any action, as they don’t know where to start,” said Yaqub Ahmed, head of Defined Contribution – U.S. for Franklin Templeton. “The RISE survey shows us that the first step of saving for retirement — whether in a retirement plan at work or an individual investment — is often the best step. By utilizing both professional and informal resources and taking small steps to address evolving needs, you can build a retirement strategy from the bottom up and lay the foundation for a successful and happy retirement.”

Keys to Success

The 2016 RISE survey also underscored the importance of taking advantage of all available retirement savings options, with 67 percent of retirees advising pre-retirees to contribute as much as they can either to their personal savings (56 percent) or workplace retirement plan (54 percent). Retired respondents also emphasized the value of professional advice, with nearly one-third (30 percent) recommending that pre-retirees work with a qualified financial advisor to help achieve retirement goals.

However, the need for specific retirement planning resources varies across generations. When working respondents were asked to identify which financial wellness topics/tools would be the most helpful for their current employer to provide resources on, Millennials were most likely to choose debt management (22 percent) and college savings resources (13 percent), while 31 percent of Baby Boomers indicated that resources to help determine medical costs in retirement would be the most relevant.

Year after year, the number one piece of advice retirees have for their non-retired counterparts is to save early, often and consistently (71 percent). Case in point, when respondents were asked to describe their feelings about their retirement income plan, those who were already saving exhibited more understanding, confidence and happiness overall, compared to those who have not started saving for retirement (63 percent vs. 24 percent).

“At Franklin Templeton, we understand that each individual’s retirement reality is different,” added Doshier. “This is why, for more than 65 years, we have been committed to providing investment options and resources to fit a variety of specific needs and goals, in order to help individuals appropriately prepare for and enjoy their retirement.”




The 2016 Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,019 adults comprising 1,011 men and 1,008 women 18 years of age or older. The survey was administered between January 4 and 18, 2016, by ORC International’s Online CARAVAN®.
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1. Source: The 2014 Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,011 adults comprising 1,008 men and 1,003 women 18 years of age and older. The survey was administered from January 2 and 16, 2014, by ORC International’s Online CARAVAN®.
2. Source: The 2015 Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,002 adults comprising 1,001 men and 1,001 women 18 years of age or older. The survey was administered between January 8 and 22, 2015, by ORC International’s Online CARAVAN®.
3. Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey 2016. Generations are defined as those who fell within a specific age range in 2016. Millennial: 18-35; Generation X: 36-51; Baby Boomer: 52-70; and Silent/Greatest: 71-100.