Americans Worried They'll Mess Up Retirement Income Planning, Almost Half Fear Living Too Frugally

New research from Allianz Life reveals significant concerns among Americans about retirement income planning. Nearly half of investors worry about how to take distributions from their retirement plans, while 44% admit they have no retirement income plan at all. These concerns are particularly timely as the “Great Retirement” begins, with approximately 13,000 Americans turning 65 daily.

Kelly LaVigne, vice president of consumer insights at Allianz Life, emphasizes that retirement readiness extends beyond asset accumulation to understanding how those assets will fund post-retirement life. Without proper planning, retirees risk making costly errors in tax management and asset drawdown strategies, potentially compromising their retirement assets’ longevity.

The survey also found that 48% of investors fear living too frugally and not enjoying their retirement quality of life. This highlights a common tendency among retirees to underspend when lacking a comprehensive income strategy.

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A concerning communication gap exists between advisors and clients regarding retirement income planning. While 62% of advisors claim they discuss secure income with clients, only 27% of investors recall these conversations, according to the Alliance for Lifetime Income’s 2024 study. Similarly, 96% of advisors say they discuss account withdrawal timing, but only 66% of clients remember these discussions.

Recent legislative changes through the SECURE 2.0 Act have expanded retirement plans’ ability to offer guaranteed income products and annuities. The law allows for tax-free rollovers of up to 25% of plan assets to qualified longevity annuity contracts (QLACs), which can reduce required minimum distributions and defer income until age 85.

Industry experts suggest advisors shift their focus from pure investment management to secure income planning. This transition becomes increasingly important as annuity sales have reached $1.3 trillion over the past four years, indicating strong consumer interest in guaranteed income solutions.

To address these challenges, LaVigne recommends implementing risk-mitigation strategies that address concerns about longevity risk, inflation, taxes, and healthcare costs as part of a comprehensive retirement income plan.

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