While plan participants think they’re ready for retirement, their advisors aren’t so sure.
A new Allspring Global Investments’ retirement survey finds a disconnect between both parties, noting that 64% of retirees and near-retirees believe they are ready for retirement, while only 40% of advisors say their clients are.
This divide is even greater when it comes to retirement themes. According to the findings, 44% of near-retirees and 50% of retirees believe they understand enough about Social Security during retirement, while only 11% of advisors say they do.
The same sentiments apply to Medicare, too—30% of near-retirees and 46% of retirees think they know enough about the federal health insurance, but just 8% of advisors trust that investors do.
The gap between both parties offers new opportunities for advisors to prepare participants for the long-term, says Allspring.
“Advisors believe investors know less than they think they do about Social Security, Medicare planning, and general financial planning,” said Allspring’s head of Retirement Nate Miles. “Advisors have the experience and tools to help those in or nearing retirement get a clearer picture of what it will take to achieve financial security.”
The findings show that currently, six in 10 employees know that their workplace plan offers advisory services, and 47% of near-retirees are equally likely to work with the financial professional associated with their plan.
“This report suggests investors are entering retirement less prepared than they think they are,” added Ron Cohen, Allspring’s head of Defined Contribution Investment Only Distribution. “However, only about half of near-retirees have used a paid financial advisor to help plan their retirement journey.”
‘Unretirees’ head back to work
Allspring’s research touches on a new phenomenon among retirees affected by high inflation, depleting retirement accounts, or boredom during retirement. Former retirees are “unretiring” by going back to work, whether part-time or full-time.
While the research notes that only one in eight of near-retirees are “unretirees” who returned to work after they retired, 83% say they returned by choice, not necessity.
“It’s not a job enough to retire ‘from’ a job; nowadays, need to determine what we are retiring ‘to,'” said one respondent who returned to work after retiring.
Still, unretirees tend to have lower household incomes, reduced household investable assets, and lower expected retirement income needed compared to near-retirees, finds Allspring.
The research warns advisors to look out for signs of rapidly depleted retirement savings. “Advisors can adress this risk by applying guardrails early on and course correcting when necessary so that unretirees are truly continuing to work on their own terms,” Allspring writes in its research.
SEE ALSO:
- Employees See 401(k) Plans as Prerequisite Instead of Perk
- 401(k) Savings Incentives Seriously Amplify Wealth Gaps: MIT Paper
- 401(k) Managed Account Users Out-Saving TDF Participants
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.
