Americans are worried about how they'll pay their bills if they don't get pay raises, and that extends to retirement income.
That's according to a new study from Allianz Life Insurance Co. of America, which found Americans starting to look beyond the job to wonder how they'll get pay raises during retirement.
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Allianz, according to "Wink's Sales & Market Report," was the top provider of indexed annuities in the fourth quarter of 2015, holding a market share of 14.5 percent. The company was also the 9th largest annuity provider in the U.S. during 2015, according to the National Association of Insurance Commissioners.
In this latest Allianz study, 53 percent of respondents said that, if faced with a frozen income that offered no chance for an increase in annual salary, they would be "very worried" or even "panicked" about how they would pay for everyday expenses. In addition, 67 percent of respondents said they received a pay raise at least half of the time during their working years.
The survey also sought to gauge respondents' interest in a product that offers income for life. Allianz said that 80 percent expressed interest, and 86 percent said they were interested in a product that not only offered guaranteed income for life but also the opportunity for income to increase over time.
Given a choice between a product that starts off at a higher rate but does not increase, and one that starts off lower but has the possibility of increasing, 77 percent said they were interested in the latter; 50 percent said they thought it was "very" or "extremely important" for a product to offer that possibility.
It's not surprising that people are looking for ways to make their income increase during retirement, with so many having a tough time making ends meet while still working — or not having enough left over to set much aside for retirement.
Not only were respondents concerned that inflation will affect their overall retirement plans, when asked how they expect the rising cost of living will affect their retirement lifestyle, 28 percent said they worry that they won't be able to pay for the essentials including basic needs such as housing, food and medical care.
Among respondents with a lower income, this was even more of a worry; 41 percent of people earning less than $50,000 indicated they would worry about paying for essentials.
Even though there's a growing movement in both the U.S. Department of Labor and U.S. Department of Treasury to find ways to incorporate guaranteed lifetime income into retirement plans, it remains to be seen — particularly amid all the outcry over the Labor Department's fiduciary rule, and its effects on annuities — how annuities will fit into the picture. Workers will certainly be anxious to learn the outcome.
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