Allianz Life Survey Reveals One-Third of ‘Transition Boomers’ Unsure about Their Retirement Income Needs

  Allianz Life Survey Reveals One-Third of ‘Transition Boomers’ Unsure about
  Their Retirement Income Needs

   Though Less Than 10 Years from Retirement, Transition Boomers Still Have
                         Significant Gaps in Planning

Business Wire

MINNEAPOLIS -- July 24, 2012

Although they are closing in on retirement, one-third of Transition Boomers –
those ages 55 to 65 who are less than 10 years away – reported being unsure of
how much money will be needed to cover basic living expenses in retirement,
according to the Transition Boomers and Retirement Income Survey* from Allianz
Life Insurance Company of North America (Allianz Life®). Conducted exclusively
with more than 1,000 baby boomers ages 55 to 65, the survey also found that
one-quarter appear to be uninformed about the effects of inflation and more
than 40% may not have a realistic idea of when retirement planning should

“It’s alarming that so many boomers on the cusp of retirement are still
unclear about the basic factors which determine their ability to fund their
lifestyle once they stop working,” said Allianz Life President and CEO Walter
White. “When you consider rising healthcare costs and the devastating effects
of inflation on purchasing power, the fact that so many Transition Boomers are
still confused about retirement income planning is a significant issue which
urgently demands more education. Allianz Life developed a new planning
framework, the 4 C’s of Successful Retirement Income Strategies, specifically
to help boomers tackle these challenges.”

Of the one-third of Transition Boomers who indicated uncertainty about their
retirement income needs, 64% were ages 55 to 60 and more than one-third (36%)
were between 61 and 65. When asked about their biggest concerns in retirement,
28% of Transition Boomers noted “not being able to cover basic living

Transition Boomers Underestimate Inflation and Taxes
Transition Boomers also significantly underestimate the impact inflation and
taxes will have in retirement. While healthcare costs ranked as the biggest
retirement concern at 32%, only 10% picked keeping up with inflation and only
6% identified taxes in retirement as a top concern. In terms of inflation,
respondents were asked to predict the cost of a loaf of bread in 2022 (based
on today’s average price of $2.50). While 75% predicted the cost would double
to $5.00 in 10 years, a full 25% showed unfamiliarity with inflation and the
effect it can have on purchasing power in retirement.

The Transition Boomers and Retirement Income Survey also found concerning
responses about expected sources of income in retirement. The majority of
Transition Boomers (94%) said they expect Social Security to play a role in
their retirement income, followed by pension plans (46%), defined contribution
plans such as 401(k)/403/457 plans (43%) and “other investments” (30%) – all
sources that make up a well-rounded retirement income portfolio. However, 30%
indicated they expect some retirement income from part-time work and 20%
anticipate income from either an inheritance (9%) or “other sources” (11%).

“Although many boomers say they’ll work in retirement, studies show that many
may have difficulty doing so due to layoffs, health issues, or the need to
care for other family members,” said Allianz Life Vice President of Consumer
Insights Katie Libbe. “When only 14 percent say they can count on guaranteed
income from an annuity and 20 percent expect an inheritance or income from
‘other sources,’ it’s crucial for Transition Boomers to start thinking and
talking about retirement income issues as soon as possible. The 4 C’s is
designed to help start those conversations.”

Planning Begins Too Late
Unfortunately, starting the retirement income planning process in a timely
manner remains a major issue with many Transition Boomers. According to the
survey, 43% say they will not focus on retirement income strategies until they
are less than five years from the start of retirement, with an astounding 16%
waiting until six months to one year prior. This means most Transition Boomers
may not start planning far enough ahead to be able to make strategic choices
about retirement income, Libbe explained.

Some Transition Boomers, however, are doing parts of the planning process
well. Of the 43% that indicated they will use income from a defined
contribution savings account (e.g. a 401(k), 403b or 457 plan), the majority
(57%) said they have spoken to someone about what to do with that money once
they retire. Of those, nearly three-quarters (71%) said the conversation was
with a financial professional (advisor, attorney, etc.).

*The Allianz Life Transition Boomers and Retirement Income Survey (+/- 3%
margin of error) was conducted by Ipsos U.S. eNation online from June 6-8,
2012, with 1,095 respondents age 55-65, and was commissioned by Allianz Life
Insurance Company of North America.

About Allianz Life
Allianz Life Insurance Company of North America, one of FORTUNE’s 100 Best
Companies to Work For in 2012, has been keeping its promises since 1896.
Today, it carries on that tradition, helping Americans achieve their
retirement income and protection goals with a variety of annuities and life
insurance products. As a leading provider of fixed index annuities, Allianz
Life is part of Allianz SE, a global leader in the financial services industry
with 142,000 employees worldwide. More than 78 million private and corporate
customers rely on Allianz knowledge, global reach, and capital strength to
help them make the most of financial opportunities.

Allianz Life Insurance Company of North America offers insurance and annuities
in all states except New York. In New York, products are issued by Allianz
Life Insurance Company of New York.

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Allianz Life Insurance Company of North America
Sara Thurin Rollin, 763-765-6703
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