2017 Consumer Tax Study

Transcription

1 2017 Consumer Tax Study Study on consumer perception of tax planning Lincoln Financial Group is the marketing name for Lincoln National Corporation and its affiliates, including The Lincoln National Life Insurance Company, Fort Wayne, IN, and Lincoln Life & Annuity Company of New York, Syracuse, NY. Variable products distributed by broker-dealer/affiliate Lincoln Financial Distributors, Inc., Radnor, PA. Securities and investment advisory services offered through other affiliates. Affiliates are separately responsible for their own financial and contractual obligations. 1 of Lincoln National Corporation

2 Overview In October 2017, The Lincoln Financial Consumer Insights team completed a proprietary study with 508 consumers, to understand the perception of how tax planning is and/or should be considered when planning for their financial future. To participate in this study, consumers had to have a minimum of $250K of investable assets. 2 of 9

3 Demographics Total Sample Size: 508 Gender Age Employment Status Investable Assets Male 51% % Full time 56% $250k-$499k 42% Female 49% % Part time 5% $500k-$749k 20% % Self employed 4% $750k-$999k 14% % % % Unemployed looking for work 1% Homemaker 5% Retired 28% $1M-$2M 16% $2M+ 8% Student 0% Prefer not to answer 1% 3 of 9

4 Most consumers have or plan to write a financial plan but younger generations are more likely to do so 88% Already have or plan to set financial goals 78% Have written or plan to write a financial plan 86% Women are more likely to have or plan to write a financial plan than men (73%) Having a written or planning to write a financial plan is more likely with younger generations 65% 79% Ages % Ages Ages of 9

5 Most consumers are not fully prepared for the impact of taxes during retirement, despite feeling its important to plan for taxes to protect their wealth When thinking about protecting wealth, consumers say it is important (top 2) to plan for 1. Living to an old age (72%) 2. Medical expenses (67%) 3. Rising cost of living (65%) 4. Income taxes (57%) 5. Long-term care/elder care (55%) 6. Leaving a legacy (39%) 7. Estate taxes (37%) 8. Charitable gifting (24%) Not Prepared Somewhat Prepared Very Prepared 62% 58% 60% 60% 52% 51% 36% 32% 34% 32% 32% 25% 24% 16% 6% 6% 6% 8% TAX STAT! Of consumers with $250K investable assets Only 36% feel fully prepared for income taxes during retirement 1 of 6 do not feel prepared for estate taxes during retirement Income Taxes Rising cost of Living to an old Medical Estate Taxes LTC living age expenses 5 of 10

6 Consumers who use an advisor have taxes on their radar, but they aren t discussing it with their advisor DIY 8% Planning Approach Advisor presents options for me to choose from Full Service Advisor 54% say using a financial advisor to some degree describes their approach to financial planning TAX STAT! Of consumers with $250K+ of investable assets who use a financial advisor 4 in 10 say their financial plan does or will include tax planning for retirement but only 24% have discussed it with an advisor Consumers are more likely to include taxes (41%) in their financial plan than long-term care (28%) Those who use an advisor say their financial plan does or will include Income during retirement Growing my wealth Planning for death Increase in cost of living Taxes during retirement Transferring my estate Unforeseen medical expenses LTC Pre-retirement taxes Job protection loss Does/will include 64% 42% 58% 39% 23% 44% 24% 41% 24% 41% 18% 39% 16% 28% 18% 20% 12% 15% 7% Have discussed with advisor 6 of 10

7 Most consumers are concerned about taxes during retirement and are preparing or planning to prepare for it 3 in 4 people are concerned how changes in taxes could impact their retirement 88% 88% say they are preparing or plan to prepare for the impact of taxes on investments and retirement accounts (55% are preparing, 33% plan to prepare) I would be more prepared for my financial future if I wasn't limited by contribution and/or income limitations on the products I'm using. 7 of 10

8 1 in 4 are using or plan to use Life Insurance to offset the impact of taxes during retirement What types of products are you currently using or plan to use to offset the impact of taxes? 51% 48% 44% 39% 36% 32% 26% 21% Savings/Money market accounts 401(k)/403(b) Roth accounts Individual stocks/bonds Mutual funds/etfs IRA Life Insurance Annuity 68% Do not believe or are unsure if life insurance can be used as tool for tax planning Q19 - Do you believe life insurance can be used as a tool when planning for the impact of taxes? Consumers are unfamiliar with the tax benefits of life insurance and believe taxes apply to: 75% Dividend payouts (12% unsure) 70% Cash value withdrawals (12% unsure) 42% Death claims (13% unsure) 35% Loan availability (35% unsure) 8 of 10

9 2018 Tax reform makes some consumers feel worse about their future and likely to result in change to their financial plans Before today, were you aware of the details surrounding the 2018 tax reform? How do the details outlined of the 2018 tax reform make you feel about your financial future? 54% 26% Better 38% No Change 36% Worse Of the part(s) of the tax reform that could affect you, which are you most concerned about? TOP 3 1. Double the standard deduction and eliminate all itemized deductions with the exception of mortgages and charitable donations (27%) 2. Add tax to 50% of capital gains, dividends, and interest as ordinary income (27%) 3. Lower individual income tax brackets to 10%, 25% and 35% (26%) How likely are you to change how you prepare for your financial future based on the 2018 tax reform? 39% Likely Neither 14% Unlikely 9 of 10