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    Retirement Blind Spots Infographic

    September 16, 2022

    Questions: Why do so many retirees continue to "save their savings" in retirement? What's holding them back from a lifestyle they can afford? Answer: They are emotionally resistant to drawing down their assets.

    One of the biggest financial challenges many retirees face may surprise you... Giving themselves permission to spend.

    3 in 4 retirees report their assets remain the same or grew in retirement yet 55 percent of financial professionals report many of their retired clients spend much less than they can afford.
    Questions: Why do so many retirees continue to "save their savings" in retirement? What's holding them back from a lifestyle they can afford? Answer: They are emotionally resistance to drawing down their assets.

    "The skill set required to create a retirement nest egg is the exact opposite of the one you need to spend it."4

    -David Blanchett, Head of Retirement Research PGIM

     

    Fact: A host of behavioral biases fight against retirees' best interests. 

     

    Masters of deception

    Three retirement blind spots that may cloud your vision

    1. Planning Fallacy
    Overestimating the likelihood of future events
    Result: More Years spent in retirement than planned
    We plan to ease into retirement but don't. 55 percent of retirees plan to ease into retirement. 18 percent of retirees actually ease into retirement.
    We claim Social Security before we should. 79 percent of retirees between ages 62-64 claim Social Security early because they can, but only 8 percent optimally should claim between ages 62-64.
    2. Anchoring Bias
    Giving undue weight to the first option we hear
    Result: Smaller Social Security payout when collecting benefits
    3. Mental Accounting
    Placing different values on the same amount of money
    Result: We will lose hard-earned retirement savings to interest costs
    We may carry a high-interest credit card balance while maintaining a rainy-day savings account.

    Income shortfalls reduce retirement spending

    But guaranteed income* options can help retirees overcome the anxiety of lacking sufficient income, and research consistently confirms this fact:

    71% of consumers surveyed between 55 and 75 years old perceive GUARANTEED LIFETIME INCOME in addition to Social Security as highly valuable.7

     

    "Retirees will spend twice as much each year in retirement if they shift investment assets into guaranteed income wealth."8

    -David Blanchett, Head of Retirement Research, PGIM, and Michael Fink, The American College of Financial Services
     
    Talk to your financial professional today about guaranteed income options and how to avoid behavior blind spots that can affect your ability to get the most out of your retirement. Download our Retirement Blind Spots Infograhpic.

     

    1. EBRI, "Retirees' Dilemma: Spend or Preserve," May 6, 2021

    2. Jackson, "A Holistic Look at Annuities," September 2020

    3. David Blanchett, Head of Retirement Research, PGIM, Michael Finke and Frank M. Engle, The American College of Financial Services, "Guaranteed Income: A License to Spend," June 28, 2021

    4. Barron's, "Retirees Aren't Spending Enough of Their Nest Eggs. Here's Why," December 19, 2021

    5.  Society of Actuaries, "2019 Risks and Process of Retirement Survey, " May 2020

    6. United Income, "The Retirement Solutions Hiding in Plain Sight: How Much Retirees Would Gain by Improving Social Security Decisions," 2019

    7. Greenwald & Associates and Cannex, "The Top 10 Key Findings, A Study Summary of the Sixth Annual Guaranteed Lifetime Income Study (GLIS)," 2020

    8. David Blanchett, Head of Retirement Research, PGIM, Michael Finke and Frank M. Engle, The American College of Financial Services, "Guaranteed Income: A License to Spend," June 28, 2021

    Jackson, its distributors, and their respective representatives do not provide tax, accounting, or legal advice. Any tax statements contained herein were not intended or written to be used and cannot be used for the purpose of avoiding U.S. federal, state, or local tax penalties. Tax laws are complicated and subject to change. Tax results may depend on each taxpayer’s individual set of facts and circumstances. You should rely on your own independent advisors as to any tax, accounting, or legal statements made herein.

    *Guarantees are backed by the claims-paying ability of the issuing insurance company.

    Jackson® is the marketing name for Jackson Financial Inc., Jackson National Life Insurance Company® (Home Office: Lansing, Michigan),  and Jackson National Life Insurance Company of New York® (Home Office: Purchase, New York).