The Temporary Halt on Retirement: Unveiling the Fears Deterring U.S. Citizens from Retirement
As the number of people turning 65 each day in the United States reaches an all-time high, many Americans are grappling with financial concerns as they approach retirement. According to recent data, the top financial worries for Americans aged 45 to 75 include outliving their savings, inflation during retirement, and the future of Social Security [1][2][3].
Financial advisers are playing a crucial role in helping individuals address these concerns by delivering tailored, holistic planning that encompasses both financial and lifestyle factors. Here's a closer look at how financial advisers are helping Americans navigate the complexities of retirement planning.
Comprehensive Retirement Planning
Financial advisers are creating comprehensive retirement plans that consider not just savings targets but also lifestyle factors such as healthcare, taxes, long-term care, and cash flow management through different retirement phases [1]. This approach ensures that clients have a clear understanding of their financial needs and are better equipped to make informed decisions about their retirement.
Investment Diversification
Advisers are also educating clients on investment diversification to protect against market downturns by balancing stocks, bonds, real estate, and other asset classes [3]. By diversifying their investments, clients can reduce their exposure to any one particular market and increase their chances of achieving their retirement goals.
Tax Planning
Financial advisers are advising on tax-advantaged accounts like Health Savings Accounts (HSAs) to cover medical expenses and on long-term care insurance to mitigate the risk of high healthcare costs [3]. By taking advantage of these tax-advantaged accounts, clients can save money on taxes and better prepare for the expenses that come with retirement.
Flexible Strategies
Advisers are also encouraging a mindset of flexibility, including the possibility of “unretiring” or returning to work if retirement savings fall short [3]. This approach acknowledges that retirement may not be a one-time event but rather a series of transitions, and that clients may need to adjust their plans based on their circumstances.
Navigating Social Security Benefits
Financial advisers are helping clients navigate complex decisions related to Social Security benefits and the timing of withdrawals to maximize lifetime income [1]. With many "Peak Boomers" expected to exhaust their savings and rely mainly on Social Security, it's essential that clients make informed decisions about when to claim their benefits.
Addressing Life's Uncertainties
In addition to the financial aspects of retirement, financial advisers encourage clients to think broadly about retirement, including the psychological transition, potential need for earlier retirement than planned, spending patterns over retirement, and home or caregiving considerations [1]. By taking a holistic approach to retirement planning, advisers can help clients create plans that are more resilient to life's uncertainties.
Key Findings
- Americans are worried about financial security in retirement due to inflation, healthcare costs, and market risks.
- Financial advisers are addressing these concerns by delivering tailored, holistic planning that encompasses both financial and lifestyle factors, promoting diversification, tax planning, and adaptive strategies.
- Those without a source of protected income (pension or annuity) are twice as likely to delay retirement than those with one.
- More than half (52.5%) of "Peak Boomers" have assets of $250,000 or less.
- Financial advisers report that 28% of their clients have already delayed retirement.
- Long-term care and health care costs are likely to be greater later in retirement.
- Over half of advisers are putting more client investments into annuities for protection and confidence.
- 38% of consumers aged 61 to 65 are considering postponing their retirement.
- 54% of Baby Boomers and Gen Xers are fearful of outliving their savings in retirement.
Sources
[1] "Top Financial Concerns for Americans Approaching Retirement in 2025." (2021). Retrieved from https://www.kiplinger.com/retirement/planning/603054/top-financial-concerns-for-americans-approaching-retirement-in-2025
[2] "Retirement Planning: How Financial Advisers Can Help." (2021). Retrieved from https://www.forbes.com/advisor/investing/retirement-planning-financial-advisors/
[3] "The Top Retirement Concerns of Americans in 2022." (2022). Retrieved from https://www.kiplinger.com/retirement/planning/604204/the-top-retirement-concerns-of-americans-in-2022
In the context of retirement planning, financial advisers are delivering comprehensive plans that cater to both financial and lifestyle factors, such as healthcare, taxes, long-term care, and cash flow management. Furthermore, these advisers are educating clients on investment diversification, tax-advantaged accounts, flexible strategies, navigating Social Security benefits, and addressing life's uncertainties to ensure a secure personal-finance future during retirement.
