With 2023 being the year of economic uncertainty, investors are rethinking what their retirement may look like. Some believe it’ll be a future of work.
New research by Nationwide Retirement Institute found 69% of investors believe they will have to work in retirement, with 44% who said they’ll need to work to support retirement savings.
Advisors and financial professionals who were surveyed are also noticing the same trend among workers. Seventy-eight percent of advisors revealed that their clients plan to or may work after retiring, whether it’s because of financial need or to stay physically and mentally active. According to the research, 60% of investors state working after retirement will keep them physically and mentally active, and 41% say continued employment will give them a “sense of purpose.”
“The idea we have of what retirement looks like has changed for many people, whether due to necessity or because they are looking to stay active and engaged,” said Rona Guymon, senior vice president of Nationwide Annuity Distribution, in a statement. “Regardless of the reason, now is the time for advisors and financial professionals to check in with clients who are approaching retirement to make sure they have a plan in place for their next steps, and to work together to ensure their path is one that will lead to a secure and happy retirement. It’s also a great opportunity to drive a conversation about what life may look like when they reach a point where they are unable to work, which could come sooner than some may expect.”
Other investors have different plans for their retirement. Some say they’ll have to move to a new city or region to adjust their cost-of-living priorities or be close to family. Forty percent of investors plan to move to a different city once retired, with 22% citing closeness to family among their top three reasons. Other incentives for moving include a lower cost of living (43%) and lower taxes (34%).
Calming nervous investors
In some surprising news coming out of the research, investors who work with an advisor or financial professional were less confident than those who do not work with one. Forty-nine percent of investors with an advisor said they are “very nervous” when it came to their retirement savings, compared to 32% of investors without an advisor.
Additionally, of those working with an advisor, only one in five said they are confident in their retirement savings, 20% are confident in their savings despite market volatility and 23% are taking steps to adjust their portfolios considering the market conditions.
These numbers increase for investors who do not work with an advisor, as 36% report being confident in their retirement savings, 35% are confident in their financial plans even with the volatility and 43% are taking measures in modifying their portfolios.
Guymon attributes this investor behavior to an unfamiliarity in market conditions among those who do not work with an advisor. “The confusing economic environment we’re living in could lead some self-guided investors to be more optimistic than their counterparts who work with financial advisors because they are less familiar with the financial risks they will face in retirement,” he said.
Instead, advisors should focus on easing investor anxieties over their retirement savings and the market, Guymon adds. “This data shows that there is an opportunity for advisors to help calm nervous clients by reconfirming the importance of following their financial plan. And I would guess that many of those without an advisor could have some blind spots that a financial professional could help address before it’s too late,” he said.
Refining outlooks with tools
To reduce investor concerns and provide a brighter outlook on retirement, advisors are turning to industry products, finds Nationwide. Seventy-one percent of advisors say annuities are their top choice to protect client assets against market risk, while 63% report diversification/non-correlated assets as their leading strategy. Forty-two percent are moving cash on the sidelines for future buying opportunities, and 41% are implementing hedging strategies.
SEE ALSO:
- Most Americans Coping with Inflation By Cutting or Halting Retirement Contributions
- Inflation, Market Uncertainty Could Trigger a 2023 Recession
- Despite Remaining Optimistic, Advisors Report Fears Over Inflation and Investment Returns
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
