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Depending on the study or survey in question, Americans’ feelings about their retirement savings are positive, negative or somewhere in between. The split decision makes sense because while high interest rates and inflation affect all investors, those with substantial assets and those that made big strides in terms of bolstering retirement savings in recent years are likely more optimistic.
Those divergences are evident in CNBC’s new retirement survey, which indicates 44% of workers are “cautiously optimistic” regarding meeting retirement goals. Alone, that’s encouraging and it’s important news for advisors. As is the point that 27% respondents say they operating in the sphere of realism, implying they’re not getting too emotional one way or the other about their retirement trajectories.
Keeping an even keel is important in all pursuits, including anything involving investing. Markets don’t move up in straight line fashion nor do they stay mired in bearish condition into perpetuity. Point is it’s positive that folks are realistic about their retirement situations and advisors can leverage those pragmatic views for improved success.
Keeping emotion out of the investment/retirement equations and maintaining proper perspective are integral at a time when retirement optimism is being met with some ominous points.
Advisors Are as Important as Ever
While it’s clear some folks are content and/or optimistic about their retirement situations, there’s still a clear need for advisors. In fact, when it comes to retirement, a strong case can be made that advisors are as important as they’ve ever been. As the CNBC survey notes, 21% of respondents have no retirement savings, confirming a need to change that right away and consider working with an advisor.
“One in three (36%) retirees have nothing saved or less than $50,000 saved for retirement: 21% have no savings or did not save for retirement, while 15% have less than $50,000 saved,” according to the poll. “Black and Hispanic retirees are much more likely than white retirees to have nothing saved for retirement (35% and 29% vs. 18%, respectively) or have less than $50,000 saved (28% and 19% vs. 14%). Nearly four in ten (37%) had at least $250,000 saved up for retirement, compared with 20% who had between $50,000 and $250,000.”
For folks reading this article that aren’t yet clients of an advisor and those feeling blue about their current retirement situations, rest assure it’s possible to correct that scenario and accomplish many of your retirement goals.
“Despite feelings of inadequate savings, only one in ten (8%) say they retired at an age later than they wanted: 49% say they retired at the age that they wanted, while 42% say they were able to retire earlier than expected,” adds CNBC.
The survey didn’t mention how many of the folks in those groups work or don’t work with advisors, but there’s a good chance that those that were once in less-than-desirable retirement savings positions ultimately hired an advisor to get them to where they wanted to be.
Social Security Should Be Helper, Not Full Retirement Strategy
Obviously, Social Security is a retirement staple. Workers pay into the system and they deserve the benefits, but it should be additive to a broader retirement plan, not the entire plan itself.
Eighty percent of those polled by CNBC said they rely on Social Security in retirement, but there’s a big difference regarding the extent of that reliance between folks that prepared for retirement and those that didn’t. Put simply, those in the former group aren’t heavily dependent on Social Security while those in the latter cohort are and that’s a point for advisors to broach with clients.
“Higher savers are also more reliant on their personal savings, workplace retirement plans, pension plans, and passive income,” noted the survey. “Nearly 3 in 5 (59%) of retirees who saved up more than $1 million have some sort of passive income from assets, compared with 36% of those who saved between $250,000 and $1,000,000, and 18% of those who saved between $50,000 and $250,000.”
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