Image credit: © Olivier Le Moal | Dreamstime
Faced with market fluctuations and rising everyday costs, participants and retirees alike are expressing concern about their retirement goals, leaving more retirees feeling anxious about the long term.
A new Advisor Authority survey from the National Retirement Institute found that 31% of retirees are more worried about retirement than their older counterparts, a sentiment compounded by 22% of investors worrying about making monthly payments and 25% still paying off credit card debt.
Having enough money to live everyday life while also enjoying retirement is proving to be a tricky balance for some retirees: 39% of retirees say they've had to cut back on entertainment expenses to meet financial obligations, and 34% have cut back on travel and vacations.
According to the Nationwide survey, some are compromising their longevity strategies by withdrawing additional funds from their retirement accounts. Sixty-three percent say they have a retirement strategy to protect their assets against market risk, but these plans differ from previous generations. A few are abandoning the rule of thumb that retirees should have at least 70% to 80% of their pre-retirement income available in retirement, and 11% are abandoning the traditional 4% rule.
“As financial stressors continue to weigh on retirement investors, the picture of retirement is shifting for many,” said Mike Morrone, vice president of business development at Nationwide Annuities. “Now is the time for advisors and financial professionals to reach out to their clients to help them stay calm, agile and informed in the face of continued economic headwinds, and ensure the plans they have in place continue to provide the foundation for a secure retirement.”
Advisors surveyed said they advise clients on generating a guaranteed income (23 percent), prioritizing retirement wants and needs (21 percent), and supplementing income when needed (16 percent). Other advisors are helping retirees consider long-term financial commitments, such as paying off a mortgage. Nationwide said 26 percent of retirees surveyed make monthly mortgage payments, but advisors said 34 percent of their clients continue to pay off debt in retirement.
As a massive wealth transfer kicks off, with heirs set to receive $90 trillion in assets over the next 20 years, more advisors are starting to help families prepare: More than half of advisors (59%) have discussed beneficiary designations with their clients, 54% have reviewed or created estate planning documents, and 44% are working with their clients to improve their financial confidence and knowledge.
How advisors strategize with their clients is also fundamental to estate planning. A recent survey by Escalent prompted professionals to understand the different mediums that clients and prospective heirs choose to communicate through. For example, early retirees prefer to communicate with their advisors via email and phone, while younger investors prefer to consult with advisors through websites.
“Advisors know and appreciate investors' desire to avoid making mistakes when it comes to retirement,” said Nationwide's Morrone. “By understanding their clients' goals and fears and highlighting the value of different retirement solutions and products, such as annuities, advisors can help clients feel more confident in their retirement planning by helping them protect their savings and plan for income that will last a lifetime.”
Amanda Umpierrez is the Editor-in-Chief of 401(k) Specialist magazine. She has over six years of experience as a financial services reporter and is passionate about telling stories and reporting the news. Amanda holds degrees in Journalism and Government & Politics from St. John's University. Originally from Queens, New York, Amanda currently lives in Denver, Colorado with her partner. In her free time, she enjoys running, cooking, and catching up on the latest drama shows.
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