SAN MATEO, Calif., April 30, 2019 (GLOBE NEWSWIRE) -- Franklin Templeton today announced the release of its eighth annual Retirement Income Strategies and Expectations (RISE) survey, which highlighted how saving early for healthcare expenses can better position individuals to achieve their retirement goals.

The survey aims to equip clients with a heightened level of insight into what’s driving individuals’ attitudes and behavior around planning for and living in retirement. The study also examines a variety of perceptions and concerns about retirement saving strategies. 

Health-related worries are top concern
Health issues are the number one retirement-related concern for adults over 65 years old (36 percent), as compared to running out of money (16 percent) and lifestyle (12 percent). Regarding financial concerns, paying for health expenses in retirement is the top expense concern among Americans (41 percent), regardless of age, as compared to paying off debt (16 percent) and lifestyle (15 percent). While Americans are concerned about paying for health expenses, almost half (48 percent) don’t know how they’ll pay for their healthcare costs in retirement.

“In order to address the top retirement concerns so many Americans are facing, it’s imperative to incorporate healthcare expense planning as part of a holistic retirement savings strategy,” said Kevin Murphy, SVP, Head of Strategic Accounts for Franklin Templeton’s Defined Contribution Division – US, who also leads the firm’s HSA strategy. “Health Savings Accounts (HSAs) are a great example of one of the most efficient vehicles to save for medical expenses in retirement that can complement long-term retirement saving strategies. Educating individuals on the benefits of utilizing HSAs for retirement savings should be a key component of conversations between financial advisors and their clients.”

In fact, 75 percent of respondents who have a high deductible health plan (HDHP)—a requirement to contribute to an HSA—indicate that they use an HSA to save for medical expenses in retirement. Further, 75 percent of people with HSAs indicated they know how they will pay for retirement medical expenses, compared to 36 percent of respondents who are not using an HSA to save for medical expenses in retirement. While HSAs can be a strong retirement savings tool, and the trend is moving toward more employers offering an HDHP as an option within their benefits package1, right now only 31 percent of those surveyed have access to an HDHP.

“While it’s important for individuals who do have access to an HSA to understand the benefits and leverage them appropriately, the need to prepare for this large liability in retirement is critical to address regardless of access to this option,” Murphy added.

More individuals are leaning towards goals-based investing
The majority of Americans (68 percent) prefer to measure their investments against their goals rather than a benchmark. The desire to “achieve a goal” especially resonates with pre-retirees, which is why it is important to help investors think about their future retirement-related liabilities, health-related expenses being one portion, and determine the best strategy for preparing for each specific expense bucket.

“This year’s RISE survey findings highlight a shift in the mindset of Americans when it comes to how they are investing,” said Michael Doshier, vice president of Retirement Marketing at Franklin Templeton. “The drive towards goals-based investing shows that individuals are aligning their investment strategies with various goals they have for their savings. As retirement savings is such a significant goal for many, it is crucial for individuals to determine what tools and vehicles they’re using and what their risk tolerance is in order to achieve their desired outcomes. Of equal importance is reviewing their portfolio with their advisor on a regular basis and making adjustments aligned with achieving those outcomes.”

While retirement savings is a top goal for many individuals, 66 percent of pre-retirees admit to being behind on saving for retirement. Fewer than half (46 percent) of respondents indicate that they have a strategy in place to generate retirement income that could last 30 years or more. Likewise, 46 percent of respondents are worried about managing their retirement income to meet their retirement expenses.

Additional RISE survey highlights:

  • Americans remain confident in Social Security. Seventy one percent believe they will receive benefits. In fact, almost half (45 percent) are confident that they know how much of their retirement income will be replaced by Social Security.
  • Only 33 percent of respondents work with a financial advisor, yet 60 percent of respondents consider a financial advisor important to retirement planning.
  • More than half of respondents (54 percent) do not have a plan in place in the event they are no longer able to manage their own finances.
  • Sixty percent of respondents are willing to pay for insurance that would guarantee a stream of income for as long as one lives or protects one’s retirement assets from dropping below a certain threshold.

Franklin Templeton is a leader in providing retirement income insights and resources to financial advisors and plan sponsors as they help individuals prepare for their post-working years. Additional survey information and retirement planning resources can be found on Franklin Templeton’s website.

Methodology
The Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey was conducted online among a sample of 2,002 adults comprising 1,000 men and 1,002 women 18 years of age or older. The survey was administered between January 17 and 28, 2019, by Engine’s Online CARAVAN®, which is not affiliated with Franklin Templeton. Data is weighted to gender, age, geographic region, education and race. The custom-designed weighting program assigns a weighting factor to the data based on current population statistics from the U.S. Census Bureau.

About Franklin Templeton
Franklin Resources, Inc. [NYSE:BEN] is a global investment management organization operating as Franklin Templeton. Franklin Templeton’s goal is to deliver better outcomes by providing global and domestic investment management to retail, institutional and sovereign wealth clients in over 170 countries. Through specialized teams, the Company has expertise across all asset classes, including equity, fixed income, alternatives and custom multi-asset solutions. The Company’s more than 600 investment professionals are supported by its integrated, worldwide team of risk management professionals and global trading desk network. With employees in over 30 countries, the California-based company has more than 70 years of investment experience and over $712 billion in assets under management as of March 31, 2019. For more information, please visit franklintempleton.com. 

All financial decisions and investments involve risk, including possible loss of principal.

  1. Source: Fronstin, Paul, Ph. D. Employee Benefit Research Institute Issue Brief, “Trends in Health Savings Account Balances, Contributions, Distributions, and Investments, 2011-2016: Statistics from the EBRI HAS Database.” July 11, 2017, No. 434. Source: Mercer’s National Survey of Employer-Sponsored Health Plans http://www.mercer.com/newsroom/national-survey-of-employer-sponsored-health-plans-2016.html.

From:   Franklin Templeton
Corporate Communications:  Rebecca Radosevich, (212) 632-3207, rebecca.radosevich@franklintempleton.com
Prosek Partners: Cary Ruterman, (857) 302-3712, cruterman@prosek.com

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