Spending and Investing in Retirement - soa

A 2006 Report

SPENDING AND INVESTING IN RETIREMENT

IS THERE A STRATEGY?

Mathew Greenwald, Ph.D. Mathew Greenwald & Associates

202-686-0300 x 101 mathewgreenwald@

Sally A. Bryck Retirement Research, LIMRA International

860-285-7730 sbryck@

Eric T. Sondergeld, ASA, CFA, MAAA Retirement Research, LIMRA International

860-285-7754 esondergeld@

? 2006, LIMRA International, Inc., and the Society of Actuaries

007288-0706-1000-G23

Printed in U.S.A.

CONTENTS

Page

EXECUTIVE SUMMARY .................................................................................................. 5 Key Findings................................................................................................................. 6

REPORT ON FOCUS GROUP RESEARCH....................................................................... 10 Financial Characteristics of the Participants............................................................... 10 Married Versus Nonmarried ....................................................................................... 11 The Decision to Retire ................................................................................................ 11 How People Know They Can Afford to Retire........................................................... 13 Did Investments Change After Retirement? ............................................................... 15 How Income Is Withdrawn......................................................................................... 16 Expenses After Retirement ......................................................................................... 17 The Belief in Reducing Expenses ............................................................................... 19 Key Concerns.............................................................................................................. 20 Concern About Longevity........................................................................................... 22 Attitudes Toward Financial Advisors ......................................................................... 22 Viewpoints Toward Risk-Reducing Mechanisms: Long-Term Care Insurance and Life Annuities....................................................................................................... 23 Advice to the Next Generation ................................................................................... 26 Conclusions of the Researchers .................................................................................. 26

METHODOLOGY........................................................................................................... 29

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