AARP: Most Near-Retirees Have No Retirement Income Plan

Saving for retirement and planning for retirement income are two different things. A new survey from the AARP Public Policy Institute finds that most people approaching retirement have done the first but not the second — and that the gap between accumulation and distribution remains one of the most consequential blind spots in retirement planning today.

The study sampled 1,422 adults between the ages of 50 and 70, all of whom were participants in employer-sponsored defined contribution plans and not yet retired. It examined how near-retirees think about turning their savings into income, which strategies they prefer, and what they know — and do not know — about the options available to them.

Most Have No Specific Plan

The headline finding is sobering. Most respondents did not have a specific plan for avoiding running out of money in retirement. Having saved consistently through a workplace plan is not the same as knowing how to draw down those savings in a way that lasts — and for most people in the study, that conversion strategy had not yet been worked out.

This finding reflects a structural reality of the defined contribution system. DC plans are designed around accumulation: automatic enrollment, contribution matching, and investment menus all orient participants toward building a balance. The spending phase — how to turn that balance into reliable monthly income — receives far less systematic support, and most participants are left to figure it out on their own.

Control Matters More Than Optimization

When asked about drawdown strategies, respondents showed a clear preference for approaches that preserve control over their assets. The most popular method was an automatic distribution — also known as a systematic withdrawal plan — which provides scheduled withdrawals while keeping the underlying assets accessible. Twelve percent said they were very likely to use this method, and 49% said somewhat likely, making it by far the most favored approach.

Managed withdrawals, immediate annuities, and deferred annuities were all less popular. The reasons cited were consistent: concern about fees and, particularly for annuities, a reluctance to give up control over savings.

This preference for control is psychologically understandable. For most workers, a retirement account represents decades of disciplined saving — money they have watched grow and managed carefully. The idea of handing a portion of it over in exchange for a guaranteed income stream feels like a loss of agency, even when the financial logic points the other way.

The Annuity Knowledge Gap

One of the more significant findings involves what near-retirees actually know about annuities. Most respondents knew very little. That baseline unfamiliarity has important implications for how the conversation about guaranteed income products needs to be structured.

The survey found that support for guaranteed income products was relatively high when the question was framed broadly — when details were vague, the concept of a product that guarantees income for life was appealing to many respondents. But that support collapsed when the potential downsides were spelled out: the loss of liquidity, the irreversibility of the purchase, and the fees involved.

This pattern — broad appeal followed by sharp decline once specifics are introduced — suggests that the challenge for guaranteed income is not simply awareness. It is education. Respondents who do not understand how annuities work cannot weigh their benefits against their limitations in an informed way. The result is that the decision often defaults to inaction or to the more familiar, more controllable withdrawal strategy.

Drawdown Strategy	Very Likely	Somewhat Likely
Automatic distribution / systematic withdrawal	12%	49%
Managed withdrawal	Lower	Lower
Immediate annuity	Lower	Lower
Deferred annuity	Lower	Lower

Why Framing Matters

The sensitivity of annuity support to how questions are phrased is not a new finding — it has appeared in other retirement research as well — but the AARP survey reinforces it with fresh data. Guaranteed income is appealing in the abstract. The mechanics of how annuities actually work, when explained without context or guidance, can feel unfamiliar and off-putting.

This points to a practical implication for retirement income conversations. The way guaranteed income is introduced — the language used, the order in which benefits and trade-offs are presented, the context in which the concept is framed — shapes whether people engage with it seriously or dismiss it. Education and guidance are not supplementary to the decision. They are central to it.

Research consistently shows that individuals who work through retirement income decisions with a financial professional are more likely to understand their options, more likely to consider a range of strategies, and more likely to arrive at a plan that actually serves their needs. The AARP findings suggest that without that guidance, many near-retirees will default to familiar withdrawal strategies — not because those strategies are necessarily the best fit, but because they are the ones people understand and feel comfortable with.

The Accumulation-to-Income Gap

The deeper issue the AARP survey surfaces is structural. The defined contribution system has done a reasonably good job of helping workers save. Auto-enrollment has increased participation. Auto-escalation has increased contribution rates. Target-date funds have simplified the investment decision for millions of participants.

But the distribution phase — the point at which savings need to become sustainable income — has not received the same systematic attention. Most DC plans do not provide meaningful guidance on decumulation. Most participants arrive at retirement with a balance and no clear framework for converting it into a paycheck that lasts.

The survey’s finding that most near-retirees lack a specific plan for avoiding running out of money is a direct consequence of this gap. The tools exist — annuities, managed withdrawal strategies, Social Security optimization, phased retirement approaches — but access to guidance on how to use them remains uneven.

What This Means for Near-Retirees

The AARP findings serve as a useful reminder that retirement planning does not end with saving. The income phase requires its own set of decisions — about timing, about structure, about which assets to draw down first and in what order — and those decisions have long-term consequences that are difficult to reverse.

For individuals in their 50s and 60s who have been focused primarily on accumulation, the transition to income planning is one of the most important financial shifts they will make. Understanding the options — including guaranteed income solutions — before retirement begins, rather than after, is what makes a coherent income plan possible.

Source: AARP Public Policy Institute. Read the original report.