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‘Peak 65’ women prioritizing lifetime income for retirement more than men, study shows

by Alliance America
August 8, 2023


Demographic history takes place in 2024, a year dubbed “Peak 65” because that’s when the largest number of Americans in history will turn age 65. More than 10,000 American baby boomers have been turning age 65 every day, and that number will peak to more than 12,000 daily reaching the milestone.

A new chapter of the Protected Income and Planning (PRIP) study conducted by the Alliance for Lifetime Income, titled “Retirement Outlooks Among Peak 65 Women,” examines the unique challenges women ages 61 to 65 (the Peak 65 group) navigate.

The study determined that more women than men in this group are considering utilizing income offered by annuities to provide a reliable strategy for retirement income.

The study found that Peak 65 women recognize they face greater obstacles to saving for retirement than men and have a greater need for protected income that lasts throughout retirement to preserve the lifestyle they desire.

The study provides some interesting findings about the financial considerations, priorities and concerns of Peak 65 women, including the following:

  • 53% of Peak 65 women do not think their retirement savings and sources of income will last their lifetime compared to 36% of their Peak 65 male counterparts.
  • 61% report they are highly interested in a financial product that guarantees lifetime income compared to 53% of Peak 65 men.
  • Peak 65 women are less familiar with annuities even though more of them than Peak 65 men want a financial product that guarantees lifetime income. Peak 65 men are twice (20%) as likely to be extremely familiar with annuities as Peak 65 women (just 10%).

“Despite deep-seated obstacles and hurdles women face in saving for retirement, women recognize annuities can give them the must-have retirement income they can count on for the peace of mind and freedom to live the retirement they want,” said Jean Statler, CEO of the Alliance for Lifetime Income. “Today, women control a third of total household assets, estimated at more than $10 trillion. Financial professionals who ignore the unique challenges and needs their female clients face better wake up and find ways to protect their income in retirement. Speaking from personal experience, if they don’t, those women will most likely go to another advisor who does.”

What do retirement-age men and women think about annuities?

  • 48% of Peak 65 women are extremely interested in owning an annuity that guarantees steady lifetime income compared to 37% of Peak 65 men.
  • 59% of Peak 65 women who work with a financial professional say their advisor doesn’t discuss annuities with them, or if they do, they’re unaware compared to 44% of Peak 65 men.
  • 43% of Peak 65 women with a financial professional who recommended an annuity bought one compared to 20% of Peak 65 men.
  • Among partnered Peak 65 people (married or living with a partner), 47% of women are extremely interested in owning an annuity compared to 33% of men.
  • For those who are not partnered (never married, separated, divorced or widowed), Peak 65 women and men have similar interest in owning an annuity (50% of non-partnered women and 48% of non-partnered Peak 65 men).

“It’s no surprise that women are more interested in annuities than men, and yet, many advisors often overlook them during retirement planning conversations,” said Suzanne Norman, education fellow at the Retirement Income Institute. “Advisors have a responsibility to present financial strategies that can best meet female clients’ unique needs and goals. For both women and men alike, it is always important to consider how protected income, like annuities, can help clients live out the retirement they want, especially in today’s economic climate.”

Why is there a retirement crisis?

Three eggs balanced on a rope that is about to break

Researchers, economists and retirement security experts have warned of a looming retirement income crisis for many years.

With more than 10,000 people reaching the age 65 milestone daily in the United States and people living longer in retirement, more stress is put on Social Security, pensions, retirement accounts and individual savings as sources of lifetime income. Steady increases in the cost of living add to the challenges Americans face as they try to build and maintain retirement nest eggs.

Over the past several decades, traditional pension plans, which provide a guaranteed income in retirement, have become less common. Pensions, known as defined-benefit plans, have been replaced by defined-contribution plans like 401(k)s and individual retirement accounts (IRAs). As a result, the risk and responsibility of retirement planning have become an increasing burden on individuals – not their employers.

Concerns about the future solvency of Social Security in the long term don’t soothe the frayed financial nerves of today’s baby boomers. Adding to the long list of concerns are increasing health care costs that have the potential to quickly wipe out retirement savings.

However, the study indicates Peak 65 has activated the perfect storm.

According to a recent Pew Charitable Trusts study, Americans’ insufficient retirement savings could create a combined $1.3 trillion burden for state and federal governments over 20 years due to increased public assistance costs and decreased tax revenue and household spending.

What is Peak 65?

Peak 65 is the term used to describe the moment in time when more Americans will turn age 65 than at any other point in history. This historic demographic milestone will take place in 2024, and it is expected to have a significant impact on the U.S. retirement landscape.

Peak 65 is upon us because the bulk of the baby boomer generation is reaching retirement age. The baby boomers are the largest generation in American history, and they are starting to retire in large numbers. Also, life expectancy is increasing. Americans are living longer than ever before, which means that they will need to save more for retirement. In 1950, the average life expectancy for a baby born in the United States was 68.2 years. By 2021, the average life expectancy had increased to 78.9 years. This represents an increase of 10.7 years, or about 1.7 years per decade.

The increase in life expectancy has had a significant impact on American society. It has led to an aging population, as people are living longer and healthier lives. This has put a strain on Social Security and Medicare, as well as other government programs that support older Americans. It has also led to an increase in the demand for long-term care services.

The increase in life expectancy is a positive development, but it also poses some challenges. It is important to ensure that all Americans have access to the resources they need. We also need to plan for the challenges that an aging population will pose to our social and economic systems.

The combination of these factors is creating potential problems for the U.S. retirement system. In 2024, there will be more Americans turning 65 than there are working Americans paying into Social Security. This means that Social Security benefits will be stretched thinner, and it may not be enough to cover the cost of living for many retirees.

In addition to Social Security, many retirees will also rely on their personal savings and investments to fund their retirement. However, many Americans have not saved enough for retirement. According to a 2022 study by the Employee Benefit Research Institute, only 34% of workers have saved enough to cover their basic expenses in retirement.

The Peak 65 demographic shift is a major challenge for the U.S. retirement system. It is important for pre-retirees to start planning now for their retirement. They should make sure to save enough money, and they should also consider other options for generating retirement income, such as annuities or pensions.

Here are some tips for pre-retirees who are concerned about Peak 65:

coins stacked at different height showing growth
  • Start saving early. The earlier you start saving for retirement, the more time your money has to grow.
  • Save as much as you can. The more you save, the more comfortable your retirement will be.
  • Consider other income options. In addition to Social Security and your personal savings, you may also want to consider annuities or pensions to generate retirement income.
  • Get professional help. A financial advisor can help you create a retirement plan that is tailored to your individual needs.

Peak 65 is a challenge, but it is not insurmountable. By planning ahead and taking steps to secure your retirement income, you can ensure that you have a comfortable and secure retirement.

Alliance America can help

Alliance America is an insurance and financial services company dedicated to the art of personal financial planning. Our financial professionals can assist you in maximizing your retirement resources and achieving your future goals. We have access to an array of products and services, all focused on helping you enjoy the retirement lifestyle you want and deserve. You can request a no-cost, no-obligation consultation by calling (833) 219-6884 today.

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