Survey Reveals Disconnect Between Retirement Income Expectations and Reality

Americans plan to turn retirement savings into income for life, but few know how they’ll do it

NEW YORK--()--More than half (58 percent) of American adults feel confident that they can successfully turn their retirement savings into income after they stop working, according to the 2016 TIAA Lifetime Income Survey. Only 35 percent are concerned about running out of money in retirement. Yet that confidence could be misplaced – fewer than half (46 percent) even know how much they have saved in their retirement savings accounts, and just 35 percent know how much monthly income they’ll have in retirement.

The survey highlights this and other disconnects when it comes to retirement planning:

  • 41 percent are saving 10 percent or less of their income for retirement, while experts recommend people save at least 10 to 15 percent.
  • 63 percent of those who are not retired estimate that they will need less than 75 percent of their current income to live comfortably in retirement, but most experts recommend that individuals aim to replace 70 to 100 percent of their pre-retirement income.
  • 28 percent of respondents who are not retired are not saving anything for retirement – yet fewer than half (47 percent) of those not saving are worried about not having enough money in retirement.
  • 49 percent say that their retirement plan’s No. 1 goal should be to provide guaranteed monthly income in retirement, but 41 percent are unsure if their current plan provides an option for lifetime income.

“Today, people are living longer and spending more years in retirement, which can mean outliving their retirement savings if they don’t plan carefully for the years ahead. Saving is crucial, but it’s not enough,” said Roger W. Ferguson, Jr., president and CEO at TIAA. “Workers also need to take a realistic look at what their expenses will be, and make a plan to generate reliable monthly income to cover those expenses in retirement. Guaranteed income for life is critical to a long, comfortable retirement.”

Planning for Lifetime Income

Understanding how to create income in retirement doesn’t just help people succeed in the long run; it can bolster their confidence today. Only 28 percent of those who have analyzed how their savings will translate into retirement income are concerned about running out of money after they stop working, as opposed to 40 percent of those who have not done the analysis.

Americans are turning to many sources for generating monthly income in retirement. Seventy-three percent of respondents plan to use Social Security, and 29 percent will use funds from a defined benefit pension plan. Fifty-four percent will rely on withdrawals from retirement accounts like a 401(k), 403(b) or IRA – but relying on withdrawals could mean outliving their retirement savings. Only 14 percent plan to use annuities, even though they can offer the option of turning savings into guaranteed income throughout retirement.

“Too often overlooked, annuities can provide income for as long as you live – even when your other retirement savings run out1,” said Ferguson. “Rather than attempting to stretch a lump sum of savings over a retirement that could last several decades, retirees can budget for living expenses and better weather unexpected challenges if they have a reliable source of monthly income.”

In fact, when given a choice among several lifetime benefits, 68 percent would first choose a retirement “paycheck” that lasts as long as they live over shinier options like an unlimited lifetime airline ticket (9 percent) or a new car every year for the rest of their lives (9 percent). However, only 43 percent are willing to commit a portion of their retirement savings to a choice that would allow them to receive a monthly payment for life.

Retirement Income Strategies Vary by Generation, Income Levels

Despite a common desire for reliable monthly income in retirement, the survey results capture differences among generations and among income levels when it comes to choosing savings vehicles to generate that income. For example, 84 percent of Baby Boomers plan to rely on Social Security for retirement income, while 69 percent of Gen X and 61 percent of Gen Y say the same. At the same time, Gen X and Gen Y are more likely than Baby Boomers to plan on withdrawals from retirement accounts.

Millennials are the most unfamiliar with annuities: 20 percent said they are familiar, compared to 38 percent of Gen X and 41 percent of Baby Boomers. However, they are most likely to say they would be willing to commit a portion of their retirement savings to a choice that will allow them to receive a monthly payment for life.

Differences among people at different income levels are even more stark than generational differences. People with incomes over $100,000 per year are more likely to draw on a wide array of options than people with incomes under $50,000 per year. For instance, 69 percent of those at the higher income level plan to withdraw savings from a retirement plan, compared to 41 percent of those at the lower level, and they are more likely to get payments from a pension plan (40 percent vs. 19 percent). They are also more likely to plan on income from annuities (27 percent vs. 10 percent).

But even if people with higher incomes are tapping more options for lifetime income, they still may be putting more emphasis on saving for retirement than generating income. There was a significant gap between the percentage of people in the higher income bracket who know how much they have in their retirement savings (70 percent know exactly or approximately how much) and the percentage of people in the lower bracket (29 percent). However, that gap narrowed when we asked if they knew how much income they would get each month in retirement: 45 percent of those in the higher bracket knew exactly or approximately, compared to 27 percent of those in the lower bracket.

“Many people focus on how much they have saved, without considering how their savings will translate into income,” Ferguson said. “Until recently, many financial services companies did the same. But at TIAA, we have always put emphasis on working to provide retirees with a consistent and reliable source of income that lasts throughout retirement.”

Turning to Employers for Direction

Many Americans are looking for help from their employers in accessing lifetime income options. Among those whose retirement plan does not offer or who do not know if their plan offers this kind of option, 56 percent would be interested in a retirement plan that does. In fact, 62 percent say they would prefer a lifetime income option offered by their employer, compared to 31 percent who would prefer to purchase it themselves.

Employers may play an especially important role in helping younger workers. While Gen Y respondents are the least likely generation to say they’re familiar with annuities (20 percent compared to 34 percent overall), more than half (55 percent) would be willing to commit a portion of their retirement savings to a choice that will allow them receive a monthly lifetime payments.

“Planning for retirement can be a daunting task, and individuals look to their employers for direction,” said Ferguson. “By understanding employees’ ultimate retirement plan goals, such as providing guaranteed monthly income, employers can make sure they’re offering investment options and savings tools that can meet their employees’ needs.”

For more information about the TIAA 2016 Lifetime Income survey, read the executive summary.


1 Guarantees are subject to the claims-paying ability of the issuing company.


About TIAA

TIAA ( is a unique financial partner. With an award-winning1 track record for consistent investment performance, TIAA is the leading provider of financial services in the academic, research, medical, cultural and government fields. TIAA has $889 billion in assets under management2 (as of 6/30/2016) and offers a wide range of financial solutions, including investing, banking, advice and guidance, and retirement services.

The survey was conducted by KRC Research by phone among a national random sample of 1,000 adults, age 18 years and older, from June 7 to June 16, 2016, using a combination of landline and cell phone interviews. The margin of error for the entire sample is plus or minus 3.1 percentage points.

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© 2016 Teachers Insurance and Annuity Association of America-College Retirement Equities Fund, 730 Third Avenue, New York, NY 10017

1 The Thomson Reuters Lipper Large Fund Award is given to the group with the lowest average decile ranking of three years’ Consistent Return for eligible funds over the three-year period ended 11/30/12, 11/30/13, 11/30/14 and 11/30/15, respectively. TIAA was ranked among 36 fund companies in 2012, 48 fund companies in 2013 and 2014, and 37 fund companies in 2015 with at least five equity, five bond or three mixed-asset portfolios. Classification averages are calculated with all eligible share classes for each eligible classification. The calculation periods extend over 36, 60 and 120 months. The highest Lipper Leader for Consistent Return (Effective Return) value within each eligible classification determines the fund classification winner over three, five or 10 years. A detailed awards methodology can be found at For current performance and rankings, please visit the Research and Performance section on Past performance does not guarantee future results.

2 Based on assets under management across Nuveen Investments affiliates and TIAA investment management teams


Release Summary

TIAA's 2016 Lifetime Income survey found that Americans plan to turn retirement savings into income for life, but few know how they’ll do it