401k plan participants are generally clueless about the amount of money they’ll need to retire comfortably, and advisors want to fill them in.
In a recent poll by The American College of Financial Services, advisors were asked what one thing they wish clients understood better about planning for the cost of retirement. Respondents said consumers typically underestimate the amount of savings they should have stashed away in 401k or other retirement accounts—by a lot.
The poll surveyed a panel of Retirement Income Certified Professionals and found advisors agree knowledge is lacking in several other areas, as well.
For instance, those surveyed believe clients need to acknowledge the importance of comprehensive retirement income planning, “including scope, the need to start planning early and the importance of continuing to plan through retirement.”
Creating a detailed strategy should be a priority for consumers. They need to know it can improve retirement security, according to advisors.
Clients largely overlook retirement risks, too. Many would benefit from considering risks such as “longevity risk, long-term care risk, health expense risk and inflation risk.” Advisors say it is an essential component to success for retirement savers to identify potential unexpected expenses and design methods of dealing with each before it occurs.
Among those surveyed, many advisors also felt “[c]onsumers should know more about specific retirement strategies—such as Social Security claiming, home equity and withdrawal strategies” and the way in which they can impact income during retirement.
A final theme that emerged from the poll: advisors wish retirement savers better understood the importance of getting advice from professionals.
“When asked what areas of comprehensive retirement income planning they perform that improve clients’ financial situations most, the majority of advisors answered: 1) choosing a retirement income strategy; 2) making better Social Security claiming decisions; and 3) ensuring that their plan addresses market volatility,”The American College said in its report.