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Want to Boost Your Lifetime Income Score? Hire an Advisor.

American retirement savers looking for an edge in achieving lifetime income security would be well advised to seek out an advisor, according to a new report.




The report, published by Empower Institute Research, notes that people who work with a paid advisor have a nearly 30 percentage point advantage in their “lifetime income score” (LIS) over those not currently receiving professional advice. Additionally, people with an LIS of 100 or more are three times more likely to be working with an advisor than those with an LIS less than 45.




The report, based on a survey of more than 4,000 respondents conducted in conjunction with Brightwork Partners, also found that with a formal, written action plan in place, LIS results improve significantly. The data show that people with a documented strategy are on track for a much higher LIS, and clearly advisors also play a key role in the development of a retirement planning strategy.




In the absence of a professional financial advisor or income planning tools, the media — and increasingly, social media — shape people’s financial thoughts and beliefs. The 2015 LIS report seems to reflect the idea that those mediums do contribute to people’s perceptions related to topics such as Social Security. Indeed, the report’s authors note that this year’s report shows the widest gap in the past five years in terms of income expected from Social Security in comparison to income expected from workplace savings plans.




All that said, the report acknowledges that savings rates influence LIS results more than any other element of a person’s retirement strategy, and that access to a payroll deduction savings plan is the most critical variable in securing retirement readiness. 




Beyond simply having a plan at work, that plan’s design and the savings rate it leads to are the next most critical drivers of success, with features like automatic enrollment, annual re-enrollment, automatic savings escalation, and the attainment of savings rates of 10% or more improving the odds of success.



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