Using SOA Research Institute Consumer Research and Consumer Resources: Part 3—Key Resources: Summaries of 25 Years of Research and Consumer Resources

By Anna Rappaport

Building on the research done by the Committee on Post Retirement Needs and Risk, which started in 2002, the SOA Research Institute Aging and Retirement Strategic Research program has conducted a variety of consumer research projects to learn what consumers know and how they plan for and manage retirement planning. This article is the third in a series of three articles that offer insight into where consumers are today. This series identifies gaps in understanding, planning, and managing retirement issues. It helps us understand how consumers act at various life stages, highlights consumer information collected by the SOA Research Institute and provides some recommendations for working with different stakeholders to improve retirement planning. Part 1 identified the components of the research and provides a summary of major findings with regard to gaps in knowledge and planning. Part 2 discussed key findings with regard to individual actions at different life cycle stages. This article, Part 3, will provide an inventory of consumer information and discuss reports that summarize 25 years of research by topic. It will also propose ideas for moving into the future.

Reports on Key Topics: Issue-based Summaries of 25 Years of Research

There are nine reports in a series titled “Understanding and Managing Post-Retirement Risks.” Each of these reports takes a topic area that has been the focus of multiple SOA Aging and Retirement research projects over the years. The reports summarize the research and provide a reference list of topics. The materials covered by the reports include the surveys and focus groups as well as essays and other research reports.

One of the summary reports, “The Journey through Retirement” highlights report, focuses on key findings that have surfaced repeatedly in the surveys and focus groups targeted at different times during the retirement period. It provides insights about how people are planning for retirement at different times and what changes during retirement. It is a very good place to start for an overview of the consumer research findings.

The full list of reports is as follows:

• “Post-Retirement Risks and Related Decisions”
• “Shocks and the Unexpected: An Important Factor in Retirement”
• “How People Plan for Retirement”
• “Women and Post-Retirement Risks”
• “Retirement Experiences of People Age 85 and Over”
• “Family is Important to Retirement Security”
• “The Journey Through Retirement”
• “COVID Aging and Retirement Research: What’s Been Done and What’s to Come”
• “Long-Term Care, Caregiving and Related Housing Issues: The Perspective of the Individual”

Consumer Resources from the Society of Actuaries

The Society of Actuaries has completed several projects to provide information for the general public. These resources are suitable for use by consumers directly, and they are also generally suitable for employers to reference and share with their employees. They do not recommend specific approaches or products, and they provide information about alternative approaches and considerations. They are helpful for individuals who have advisors and who wish to get more familiar with the issues before they meet with their advisors. Note that there is a special webpage on consumer resources within the Society of Actuaries Aging and Retirement Website. The following are key examples.

Thinking Ahead: Informing the Design of a Roadmap for Keeping Your Money Safe as You Age

A report summarizing the research of a multi-phase project led to publication of a conversation guide to help people plan for changes in financial capacity and decision-making. This has been followed up with a webpage offering the conversation guide and a variety of tip sheets. The SOA sponsored the underlying research in collaboration with the Stanford Center on Longevity and the University of Minnesota. The AARP is a main sponsor of the consumer webpage.

Managing Post–Retirement Risks: Strategies for a Secure Retirement (Risk Chart)
The fourth edition of the retirement risk chart was issued in 2020. This chart provides information for consumers and other audiences on retirement risks and strategies for managing these risks. It is particularly useful since many of these risks are often not considered.

Managing Retirement Decisions
This is a series of 12 briefs that include the issues surrounding a variety of retirement decisions with a discussion of the issues, practical considerations and reference material. They are designed to cover decisions that are made as one is nearing retirement or in retirement and offer unique insights.

Retirement Literacy
The Society of Actuaries Committee on Post-Retirement Needs and Risks in collaboration with Financial Finesse created a series of four briefs focused on retirement literacy issues. There are four publications in this series:

• “Retirement Health & Happiness”—provides an overview of considerations in retirement planning beyond money. It includes helpful resources that can be particularly valuable for people over age 50.
• “Retirement Planning From Start to Finish”—provides an overview of the retirement planning process.
• “A Spending Plan for Retirement: Estimating Expenses”—provides information to help individuals think about their likely expenses in retirement and managing them. Expense management is a major way retirees manage money when they have limited income.
• “Retirement Planning Tools”—there are a large number of retirement planning tools available from many different sources. The consumer looking for tools may easily be overwhelmed by the many options. This resource provides an overview of different types of tools, what to expect, and information about how to select a tool that will fit individual needs.

Actuaries Longevity Illustrator—this is a joint project of the Society of Actuaries and the American Academy of Actuaries. It allows a customized calculation of expected longevity based on a personalized questionnaire requiring minimal input and provides educational materials about longevity to the user.

Age Wise
A series of infographics on how life expectancy can impact retirement planning.

Using the Research and Moving Ahead

This research and the consumer resources are very important for those building retirement planning systems and financial products, as well as for individual planning. Most retirement professionals have some definite ideas about the proper way to plan and think about retirement planning. What the SOA research has repeatedly demonstrated is that the way consumers plan for retirement and manage their money in retirement does not fit the expectations set forth in many of the models. This research is very valuable in understanding what average middle-income people do and how they make decisions about retirement planning. Actuaries can help a wide range of stakeholders improve the retirement system. The research should be particularly valuable in evaluating how consumers will likely react to DC plan structures. Areas of particular interest today include the payout phase of retirement and the sources of retirement income, late in life issues and individuals without access to employer plans. The SOA research related to consumer interest in creating retirement income is summarized in the essay “Thinking About Using Assets During Retirement.”

Additional tips for moving ahead:

Financial fragility is a major barrier to saving for retirement. The path to saving for the financially fragile is to get stabilized first.

Households’ ability to save for retirement varies greatly through the life cycle, particularly since many younger and mid-life individuals are focused on getting established by paying off student loans, buying a house and getting married.

The situation also varies depending on the household composition. Those households with children often focus first on the expenses of raising the children and saving for college.

It is important to consider how the environment has changed and is continuing to change since much of this consumer research was completed. Planning for the future needs to be focused on the likely environment of the future. The most sensible way to think about the future for this purpose is to look at a combination of past experiences, where we are today and what is emerging.

Some of the areas of emerging change include:

• The development of many forms of AI and the potential that AI can help to streamline the planning process. However, care must be taken because AI can also lead to incorrect answers and moving down a wrong path. The use of AI requires management and oversight, as well as governance.
• Increasingly severe climate events with the possibility that some areas may become uninhabitable. Climate change is also one of several factors leading to big increases in insurance costs for homeowners, and the possibility that some homes will become uninsurable.
• Growing workplace flexibility including remote work. Growing interest in working on a limited basis as part of retirement, but with little growth in opportunities.
• Federal policy that has raised interest rates after many years of artificially lowering them. Homeowners with low interest rate mortgages generally will not pay the mortgages off and often that’s a barrier to selling houses.
• Housing shortages complicating retirement planning and the ability to live where people want to live and should be able to afford to live.
• More solo agers today and the prediction that the number will continue to grow.
• COVID and long-COVID have disrupted many lives and effects may still be felt in work disruption and financial challenges.
• Increased levels of inflation during the pandemic followed by some moderation.

To respond well to this changing environment, it is important to meet people where they are. The SOA research can be helpful in identifying issues and understanding where people are, and the consumer education can be helpful in scoping out the situation and defining what issues need to be addressed for individual households.

Statements of fact and opinions expressed herein are those of the individual authors and are not necessarily those of the Society of Actuaries, the newsletter editors, or the respective authors’ employers.

Anna M. Rappaport, FSA, serves as chairperson of the Committee on Post-Retirement Needs and Risks. She can be reached at anna.rappaport@gmail.com.