Participants and retirees alike are voicing concerns over their retirement goals as many tackle market volatility and pricier day-to-day costs. As a result, a growing number of retirees say they feel insecure about the long-term.
A new Advisor Authority study by Nationwide Retirement Institute found that 31% of retirees are less assured about retirement compared to their elders. This feeling deepens as 22% of investors are concerned about affording their monthly bills, while 25% continue to pay down credit card debt.
Having enough money to afford everyday life while enjoying their retirement is proving to be a challenging balance for some retirees. Thirty-nine percent say they’ve had to cutdown on entertainment spending to meet financial commitments, and 34% are trimming back on trips and vacations.
Others are removing additional funds from their retirement accounts, compromising their longevity strategies, notes Nationwide in its research. While 63% say they have a retirement strategy to protect their assets against market risk, these plans are distinct compared to prior generations. A small portion are leaving behind a rule of thumb that ensures retirees have at least 70% to 80% of pre-retirement income to spend per year in retirement, and 11% are foregoing the traditional 4% rule.
“The picture of life after retirement has changed for many people as economic stressors continue to weigh on retired investors,” said Mike Morrone, vice president of Nationwide Annuity Business Development. “Now is the time for advisors and financial professionals to check in with their clients and help them remain calm, nimble and informed in the face of continued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement.”
Advisors surveyed say they are counseling clients on generating guaranteed income (23%), prioritizing their wants and needs in retirement (21%), and supplementing income out of necessity (16%). Others are helping retirees factor long-term financial commitments such as mortgage repayments. According to Nationwide, 26% of retirees in the survey are paying towards their mortgage every month, but advisors say 34% of their clients are continuing to pay down the debt in retirement.
As the Great Wealth Transfer begins, where expected inheritors will receive $90 trillion in assets over the next two decades, a growing number of advisors are starting to help families prepare. Over half (59%) of advisors are in talks with clients about beneficiary designations, 54% are reviewing or creating estate planning documents, and 44% are working with clients on financial confidence and knowledge.
How advisors strategize with clients will be fundamental to wealth planning, as well. A recent survey from Escalent urged professionals to understand the different mediums their clients and expected inheritors choose to communicate through. For example, while early retirees preferred to work with an advisor through email or phone calls, younger investors would rather consult an advisor through their website.
“Advisors are recognizing and acknowledging investors’ desire to avoid making the wrong moves in retirement,” Nationwide’s Morrone said. “They can help clients feel more confident about their retirement plans by understanding their goals and anxieties and helping them protect their savings and plan for income they won’t outlive by reinforcing the value of different retirement solutions and products, like annuities.”
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.