First, although the incidence of private-sector pension
plans has been declining for several decades, pension
income still remains important to a substantial number
of wealthier households, an important market for new
retirement income services. This high level of guaranteed
income may explain the puzzle regarding the low current
rate of withdrawals from tax-deferred retirement
accounts, and the weak demand for services creating
systematic income streams from financial accounts.
As corporate pensions continue to decline in importance,
we expect that the demand for retirement income help,
whether in the form of income products or of advisory
services, will rise. But it is likely to do so only gradually.
Second, there is a substantial degree of variety in
the income sources and financial accounts owned by
wealthier households. This variety suggests the need for
nuanced and targeted advice and guidance customized to
the household’s retirement income holdings. Households
are clearly different, even at a high level, in terms of risk
characteristics, the nature of income guarantees they
own, tax status of accounts, liquidity preferences, and
the desire for help from an advisor.
Our findings also highlight the importance of Social
Security-claiming strategies for wealthier retirees. These
households have meaningful private resources that they
can rely on independent of Social Security, and so are
likely the most able to benefit from deferring receipt
of Social Security to a later age.