As part of its stated mission to “empower consumers to take more control over their financial lives,” the Consumer Financial Protection Bureau has issued a report, titled “Consumer insights on managing funds at the time of retirement.” As the June 2017 report explains, the CFPB commissioned research to better understand solutions to some of the challenges that consumers face in planning for their retirement and in spending their funds during those retirement years. In reporting the results of its research, the CFPB aims to “help consumers more effectively plan for retirement and manage personal retirement accounts.”
In her blog post about the research study, the CFPB’s Irene Skricki notes that the bureau recognizes that when people approach retirement age, “they have to make many difficult, often irreversible choices.” Accordingly, the CFPB “tested ways to help people better visualize the results of their retirement choices and plan ahead for significant decisions.”
Report highlights. According to the CFPB’s report:
- 40 percent of “late baby boomers” are approaching retirement with limited or no savings and “are projected to face a savings shortfall;”
- more than 50 percent of consumers have indicated that they “worry about running out of money” in retirement;
- about 62 percent of workers between the ages of 55 and 64 have accumulated, during the course of their working lives, less than one year’s worth of income in retirement savings;
- when making decisions about retirement at or before age 55, consumers generally reported an interest in “an advance planning tool;” and
- when making decisions about retirement after age 55, consumers generally reported a preference for receiving information about retirement accounts, including “simplified forms” for managing the accounts.
In addition to the research results, the CFPB’s report promotes “optimal choices” for consumers through two approaches: simplification and pre-commitment. The report encourages consumers to overcome “common biases and challenges in the decision context.” Further, the CFPB indicates that its research findings “can be used by a wide variety of participants in retirement financial decisions, services, and products, including employers, retirement plan administrators, financial educators, and others who help consumers with retirement choices.”
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