Single Retirees Feel More Vulnerable To Longevity Risk

CHICAGO – New LIMRA Secure Retirement Institute (LIMRA SRI) research finds single retirees - particularly single women retirees - feel less secure about their financial security in retirement and are more concerned about outliving their savings than those who are married or have partners.

The study finds only 64 percent of single retirees feel confident they will be able to live the lifestyle they want in retirement, compared with 71 percent of married retirees. Four in ten single retirees believe their savings won’t be enough if they live to age 90 – close to half of single women are not confident their savings will last through age 90.

“We have long known that longevity risk is greater for women. Because essential living expenses are proportionally higher for single-person households than couples’ expenses, the risk of running out of money is greater for all single people as they age,” noted Jafor Iqbal, assistant vice president, LIMRA Secure Retirement Institute. “Today, there are 47.5 million single Americans who are age 65 or older – a third of them live alone and are solely responsible for their own retirement security.”

One in three women retirees report their basic retirement expenses are higher than expected, compared to only 1 in 5 men. Single women typically spend a higher percentage of their income on basic and health care costs in retirement (68 percent vs. 62 percent) and spend less on discretionary activities than do single men (15 percent vs. 20 percent). Working with an advisor to develop a formal retirement plan could help single women have a more realistic picture of their expenses in retirement.

Annuity Ownership and Working with an Advisor Drives Confidence

LIMRA SRI finds single retirees who own an annuity are more likely to believe they can achieve their desired lifestyle in retirement and their savings will last if they live to be age 90 (chart). The study also shows single retirees who own an annuity are less likely to withdraw more than they expected from their savings.

“It is clear that annuity ownership dramatically improves single retirees’ confidence in their financial security. Our study demonstrates that single retirees who have a relationship with an advisor are significantly more likely to own an annuity,” Iqbal observed. “Six in ten single women who work with an advisor own an annuity and nearly half of single men working with an advisor own an annuity. This is at least double the rate of single retirees who don’t work with an advisor.”

Single retired women are more likely to work with an advisor than their male counterparts (40 percent vs. 30 percent) do, yet these rates remain far below those of married households (47 percent). For those working with an advisor, confidence levels soar. Three-quarters of single men and women retirees who work with an advisor believe they will be able to achieve the life style they desire, compared with just 66 percent of single men and 54 percent of women. For single retired women, working with an advisor significantly improves their confidence that their savings will last if they live to be 90 –38 percent higher than those who don’t work with an advisor.

Single retirees who work with an advisor also are substantially more likely to have a formal retirement income plan. One in three single retirees who work with an advisor have a formal retirement income plan – more than four times higher than those who don’t work with an advisor.

“Our findings present an opportunity for advisors,” said Iqbal. “We know that formal retirement income planning is linked with improved financial outcomes. Yet two thirds of single retirees who work with an advisor do not have a formal retirement plan. We recommend advisors engage their clients – married or single – and begin the process of developing a formal retirement income plan.”

LIMRA SRI surveyed 1,130 single-men-and-women retiree households, aged 55 to 79; who had been retired for at least one year and had household incomes of at least $35,000.