Young woman surveying older woman

A person’s outlook on retirement is shaped by more than common data points. Psychology and personality play a big role, too.

A new survey by a nonprofit Washington, D.C., research firm identifies the emotional and behavioral patterns of Americans as they plan their financial futures.

The goal? To help financial professionals gain a deeper understanding of the clients they serve.

The Alliance for Lifetime Income’s 2020 Protected Lifetime Income Survey pinpoints five distinct profile types, from purposeful planners to optimistic dreamers.

The online study, conducted in August 2020, used a census-balanced sample of 3,036 American adults between the ages of 25 and 74.

Traditional data — such as age, gender, income, race, education and location — are taken into consideration. But so are personality traits and a respondent’s outlook on life.

The retirement profiles consider many factors, including

  • What a person values most (e.g., health, security, success, leisure)
  • Concerns about retirement
  • How a person makes financial decisions
  • Risk tolerance
  • A person’s general outlook on life>
  • Personality type

“We think it would help tremendously for financial professionals to start thinking about those folks (clients) in a very different way,” Cyrus Bamji, Alliance for Lifetime Income’s communications director, told RetireGuide. “We think the survey is a great value add and there’s a lot of data behind it.”

By gathering insight on people’s dreams and hopes for retirement, their approach to financial decisions and the actions they take to achieve their goals, Bamji said, financial professionals can tailor and personalize the services they offer.

According to the survey, more than half of all people fall into two categories — uncertain strugglers and ambitious risk-takers.

At 29 percent, uncertain strugglers are the most common segment. These people often expect the worst and hold low expectations for retirement.

This group tends to base decisions on instinct or recommendations from family and friends. They usually don’t know much about retirement planning and seldom have a plan in place.

Uncertain strugglers plan to rely on Social Security benefits more than other sources of retirement income, such as 401(k) plans or savings, and they have a median household income of $43,000 a year.

On the flip side, the second most popular retirement profile is ambitious risk-takers, who make up 28 percent of respondents.

This group is much more optimistic about retirement and the future in general, according to the study. These people often plan for the best and are open to new and different opportunities.

Ambitious risk-takers tend to be better educated, have higher incomes and spend more time conducting research on retirement planning. They also plan to utilize 401(k) accounts and savings during retirement more than uncertain strugglers.


Five Retirement Profiles Identified in the 2020 Protected Lifetime Income Survey

Optimistic DreamersAbout 13 percent of respondents. Creative and open-minded, these individuals are hopeful about enjoying retirement. However, they are uncertain about how to financially prepare for it. They are demographically diverse but skew younger. Many are less educated and tend to have lower average incomes.
Cautious PreparersAbout 17 percent of respondents. These individuals stick to tried-and-true practices. However, this group is still concerned about the risk of expensive surprises in the future. They are moderately educated, have a median household income of $88,000, tend to be older and are more often retired than other segments.
Uncertain StrugglersAbout 29 percent of respondents. This group wants to gain control over the direction of their lives but expects to take things “as they come” in retirement. They often don’t have a financial plan. They are the least educated group, concentrated in the middle age ranges with lower income and asset levels.
Purposeful PlannersAbout 12 percent of respondents. These individuals enjoy leading well-rounded lives. People in this group spend considerable time and energy ensuring they can afford the lifestyle they want in retirement. They are well-educated, concentrated in age groups close to retirement with median household incomes of $125,000.
Ambitious Risk-TakersAbout 28 percent of respondents. Optimistic in their outlook on life, this group wants to achieve great things for themselves and others. These people are confident in their ability to plan for retirement. They skew younger and are the most educated group. Many have higher incomes but moderate assets.

The goal of the survey, according to Bamji, isn’t to encourage financial planners and advisors to court one profile type over another, but instead, help them understand the special needs of all clients.

“Every one of these categories are worthy clients for a financial professional,” Bamji said. “Each and every one of them. Yes, some of them have lower assets in terms of what they’ve saved. But are they bad potential clients? No.”

While each retirement profile is different, surveyors found that all segments display some level of anxiety that their savings may not generate enough money in retirement.

That uneasy feeling is supported by other recent research, including John Hancock’s seventh annual financial stress survey.

That study of retirement plan participants found a sharp rise in stressed-out workers. About 62 percent said they are experiencing financial stress, up from 39 percent before the pandemic.