Consumers have different priorities when it comes to choosing retirement income products. This shouldn't surprise anyone with more than one client. But using traditional demographics, like income levels or age, to profile clients doesn't actually work. 
That finding emerged from a recent online LIMRA survey of over 1000 retirement-aged consumers, ages 55-75, of varying wealth. The purpose was to find out what appealed to these consumers when selecting a retirement income product. With only 20% of retired and pre-retired (those hoping to retire within 10 years) consumers saying they were optimistic about their financial future, the researchers wanted to find out what matters most in terms of retirement income features, like guaranteed income, costs or liquidity.
Overwhelmingly, participants indicated they are more willing to trade off their target annual payout amount, lifetime guaranteed income, liquidity, and investment and income volatility in order to preserve their retirement money at a low cost.
One would expect that preferences would vary by household investable assets. Surprisingly, all 3 consumer groups, defined by combined household investable assets, agreed on all 7 product feature preferences, as shown in the chart. (The groups were: mass market, $100,000-$250,000; mass affluent, $250,000-$500,000; and affluent, $500,000+)
However, from a needs-based analysis perspective, the consumers fell into 4 distinct segments that are driven toward different product features. Here is a snapshot of each segment and its preferences:
Preservers. These consumers place a high priority on investment preservation with less importance on minimizing fees and expenses. They also are most likely to look for death benefits and have a preference to use certificate of deposit ladders for retirement income.
Products: While variable annuity withdrawal benefits don't attract preservers, VAs with a stronger death benefit may be effective. Managed payout funds will not be successful with this group, unless the funds have a strong principal preservation strategy.
Resisters. These consumers are not willing to give up anything for better income and prefer unbundled solutions for retirement income. They highly value investment preservation and low fees.
