Pre-retirees to pull 10% from accounts

Nearly half of pre-retirees believe they can withdraw 10% annually from their retirement savings, according to New York-based MetLife’s Mature Market Institute survey. Forty-three per cent of 1,216 individuals 56 to 65 believed they could pull at least 10% from their savings and still preserve their principal, even though most advisers recommend no more than a 4% withdrawal each year. MetLife Mature Market Institute is New York-based MetLife Inc.’s center on aging and the 50-and-over market. Only 31% of the individuals polled knew that 4% was the safe zone for withdrawals. Pre-retirees also tend to underestimate their life expectancy. When asked about the likelihood that a 65-year-old could live beyond 85, 39% said the chances were one in four. About one-fifth of the participants answered one in 10. Actually, there is a 50% chance that a 65-year-old could live past 85. Additionally, pre-retirees are confused about income annuities. Only 33% knew that these always provide guaranteed income and cannot be outlived. Suggesting a high level of misunderstanding among those polled, the respondents, on average, answered only 6.41 multiple choice questions out of 15 correctly, according to MetLife. Nevertheless, 56% knew that longevity was the greatest risk in retirement, while 62% had a good understanding of how long-term care expenses are paid.