Background: The Allianz Center for the Future of Retirement, part of Allianz Life Insurance Company of North America, recently released a new report that delves into participant preferences for guaranteed lifetime income. In this Research Minute, we will focus on generational differences uncovered by this report.

Findings: Significantly fewer Millennials (44%) envision relying on Social Security in retirement compared to 69% of Gen X and 84% of Baby Boomers. While, this perception may be influenced by media coverage, it highlights a genuine concern among younger generations who are also less likely to anticipate relying on a defined benefit (DB) plan. As a result, there are strong preferences for both guaranteed lifetime income solutions, such as annuities, and personalized advice among younger generations.

While retirement may be distant for Millennials, this shows that future generations, grappling with longer lifespans and the challenges of increasingly self-funded retirements, are interested in solutions that provide steady income during retirement. These products are generally allocated around 10-15 years before retirement. However, the availability of these benefits can be appealing even to individuals who are not yet contributing. In fact, younger generations are more likely to view these options as proof of their employers' commitment to their well-being, and they believe such options would strengthen their loyalty to the company.

When it comes to positioning these products, it is important to note that different generations express differing outlooks on spending and saving. For example, Millennials tend to favor financial freedom more than older generations. Over a third (34%) ofMillennials desire a “sense of freedom” from their retirement income strategy, compared to 27% of Gen X and just 22% of Baby Boomers.

Bottom line: The growing interest in guaranteed lifetime income among Gen X and Millennials indicates that these products represent a forward-looking trend in retirement planning. As a result, it is important to understand how different generations approach spending and saving, and the type of support they seek to enhance their retirement readiness.

Insights shared by guest contributors are their own and do not represent the views of DCIIA or the RRC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Source: The State of Lifetime Income: Participant Survey, conducted by the Allianz Center for the Future of Retirement in November 2024 with a nationally representative sample of 2,488 respondents aged 18+ who are currently contributing to an employer-sponsored retirement plan.

The Allianz Center for the Future of Retirement produces insights and research as part of Allianz Life Insurance Company of North America (Allianz).

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