As Congressional Republicans and the Obama White House lock horns over plans to confront the nation’s looming deficits, with the rating firm S&P weighing in with a warning of a possible downgrade of the nation’s AAA credit rating, LIMRA found that more more than half of retirees surveyed fear changes to Medicare and Social Security, as well as tax increases, threaten their retirement. 

The survey, led by LIMRA Corporate VP and executive director for retirement Marie Rice, surveyed people 55-79 in retired families who were getting by on income of $35,000 or more.

She says the results showed that 85% of those in the survey group were receiving significant retirement income from Social Security, with 76% also saying they were receiving income from a traditional defined benefit pension. Only 18% were receiving income from a defined contribution retirement fund.  “This is something that will shift as you look at younger retirees,” says Rice, noting that those in their 70s retired when many employers were still offering defined benefit pension plans.

One interesting finding for advisors, and particularly those who are working in the bank channel, is that fewer than half of current retirees said they were working with a financial professional to handle their retirement assets. Only one in five reported having a written plan for retirement.

“There is certainly a major opportunity for bank reps to expand their market,” said Rice, particularly with half of the respondents saying that they were putting their money “in the bank” and another 30% saying they had assets in a credit union.

“Banks are by far in the forefront,” says Rice. “Everyone currently works with banks to save--it’s part of their learned behavior for saving-- and people are most comfortable with the bank channel.

The other takeaway from the study, Rice said, given the threats of inflation, higher taxes, and possible cuts in Medicare and Social Security being discussed in Washington, especially for younger Americans, as well continuing disappearance of traditional pensions, is that these younger people need to focus on saving more for retirement. 

“For future retirees who will likely not have a pension plan to rely on, it will be important that they increase their current savings patterns and think about retirement income solutions including guarantee investments that will adjust for inflation,” she says.