US - The potential for ‘baby boomers' to outlive their wealth in retirement has increased dramatically, heightening uncertainty over financial security in retirement, according to a new study by Conning Research and Consulting.
“Some baby boomers have already entered early retirement, and other are fast approaching retirement age at a time when longevity risk could drastically reduce their ability to afford a lifestyle they dreamed about,” said Terence Martin, analyst at Conning.
“In the boomer’s lifetime, there has been a substantial decrease in defined benefit pension plans, with little offsetting increase in personal savings or in educating the pre-retiree to effectively plan for their retirement.”
The study, Changing Times in the Retirement Market: Growing Longevity Risk, Growing Opportunities, calls on insurers to educate workers about longevity risk and offer products to manage that risk.
“The insurer is the only financial entity that can ensure a lifetime monthly income stream for the retiree, but the insurance industry has not yet done a great job at getting its message across to the market,” said Stephan Christiansen, director of research.
“The industry’s ongoing product innovation needs to be communicated more effectively.”
The study presents financial issues facing future retirees and assessment of the insurance industry’s product offering against the mutual fund industry.
Hartford-based Conning provides public and proprietary research and consulting services to the financial services industry.
The Pensions and Lifetime Savings Association (PLSA) is in the process of convening an industry-wide group to take forward the work of the Institutional Disclosure Working Group (IDWG).
The Transfers and Re-registration Industry Group (TRIG) has given its support to an initiative which aims to complete occupational pension transfers within three weeks.
Scottish Widows has completed a bulk annuity deal for the Hitachi UK Limited Pension Scheme.