New research finds link between inheritances and retirement preparedness

Transfer of wealth through life insurance can improve next
generations’ retirement prospects

NEWARK, N.J.–(BUSINESS WIRE)–New research funded by Prudential Financial, Inc. (NYSE:PRU) showed
although inheritances do not have a significant impact on the overall
retirement picture, they may help to improve
retirement preparedness
at the individual household level. According
to the research,
conducted by Boston College’s Center for Retirement Research (CRR), 52
percent of U.S. households are at risk of not having enough money to
maintain their preretirement lifestyles.

“It’s pretty clear people need to be saving more, and regulations have
got to make it easier for them,” said Mark Hug, executive vice
president, product and marketing, Prudential Individual Insurance.
“Traditional pension plans that provide monthly payments for a lifetime
are largely a thing of the past, so people need access to other avenues
that will provide guarantees of retirement security.”

According to the index, among all households that received one, the
median inheritance was $50,000, and the percentage at risk improved from
45 percent to 40 percent. “We’re encouraged by this improvement, and
urge more Americans to consider even a relatively modest life insurance
death benefit, as it can have a meaningful impact on improving the
retirement security of the next generation,” said Hug.

An inheritance can be made in many different forms, including a house or
financial assets. The death benefits from life insurance can function
similarly to an inheritance, enhancing the retirement prospects of a
household. Even if households receiving an inheritance are still at
risk, the research indicates families are in a much improved position.

The report found when inheritances are included the overall NRRI dropped
to 51.6 percent from 52.4 percent. This means that 51.6 percent of U.S.
households are at risk of not having enough money in retirement even
with inheritances factored in. The CRR says the reasons for this include
the fact that only about 20 percent of households have received an
inheritance; those that have, received a relatively small amount, and
most households receiving an inheritance were not at risk.

There are ways to improve the retirement prospects of Americans,

  • Making sure individuals save enough for retirement.
  • Making sure individuals have access to a workplace retirement plan.
  • Making sure individuals can convert their retirement savings to
    retirement income.
  • Protecting existing and future financial assets with insurance.
  • Adding guaranteed income features to defined contribution retirement
    plans like 401(k)s.

“As you work toward retirement, you need to consider how much you will
save as well as how much you have already saved,” said Hug. “If
something happens to you, the income that would have been generated can
be replaced by proceeds from life insurance, which can close the gap
between what you have and what you need.”

In addition, 2014 retirement
by CFO Research and Prudential has shown corporate
executives believe 401(k)s and other defined contribution plans will
make it easier to help reduce risks by adding features that
automatically enroll employees and investment options that provide
guaranteed lifetime income. These features help American workers
increase the likelihood of a more secure retirement, according to Jamie
McInnes, senior vice president, Total Retirement Solutions at Prudential

“Americans are risk averse, particularly with money they are investing
for retirement,” said McInnes. “Retirement plans that offer a guaranteed
lifetime income option, and features including auto enrollment and auto
escalation, are encouraging Americans to start saving more, and
earlier,” says McInnes.

Prudential Financial, Inc. (NYSE: PRU), a financial services leader, has
operations in the United States, Asia, Europe, and Latin America.
Prudential’s diverse and talented employees are committed to helping
individual and institutional customers grow and protect their wealth
through a variety of products and services, including life insurance,
annuities, retirement-related services, mutual funds and investment
management. In the U.S., Prudential’s iconic Rock symbol has stood for
strength, stability, expertise and innovation for more than a century.
For more information, please visit

The Prudential Insurance Company of America, Newark, NJ and its
affiliates. Insurance policies contain exclusions, limitations,
reductions of benefits, and terms for keeping them in force. Your
financial professional can provide you with costs and complete details.


Prudential Financial, Inc.
Sheila Bridgeforth, 973-802-6852
Stoffregen, 973-802-3996