As Americans grapple with the current economic instability, a new survey finds that financial planning with the assistance of a professional is helping them feel more confident about the future.
According to Allianz Life’s 2022 Retirement Risk Readiness Study, more than 9 in 10 respondents (93%) said setting financial goals and developing a plan to achieve them is important to helping them support their future ambitions, with another 86% citing the benefits of working with a financial professional.
Accordingly, those who are already working with a financial professional are feeling significantly more prepared to manage a number of potential risks to their retirement, including saving enough, having a plan for retirement income and addressing the rising cost of living.
|
|
Working with financial pro |
Never had financial pro |
|
Saving enough in a retirement account |
74% |
51% |
|
Finding a balance between saving for retirement and spending to enjoy life now |
67% |
47% |
|
Having a plan for taking income in retirement |
65% |
52% |
|
Having a plan to address the rising cost of living |
60% |
40% |
|
Diversifying retirement savings to protect a nest egg |
59% |
29% |
|
Making investments less risky |
57% |
25% |
|
Researching expenses and risks associated with retirement |
53% |
26% |
|
Purchasing a financial product that provides a guaranteed source of retirement income |
49% |
15% |
Life Stage Planning
To get different perspectives on retirement planning priorities, the firm surveyed three categories of Americans: pre-retirees (those 10 years or more from retirement); near-retirees (those within 10 years of retirement); and those who are already retired.
Allianz Life found that, regardless of life stage, people want to make sure they have enough money to last their lifetime. More than 4 in 10 (44%) respondents said making sure they have enough money is one of the most important things financial professionals can do to help. Still, the 2022 study identified several areas where these different groups are looking for specific assistance based on their proximity to retirement.
Retirees are focused on having their financial professional:
- maximize investment return (56% versus 38% for near-retirees and 43% for pre-retirees);
- protect investments from market loss (45% versus 39% for near-retirees and 32% for pre-retirees); and
- minimize tax burden (43% versus 36% for near-retirees and 31% for pre-retirees).
In comparison, near-retirees are most interested in getting help with:
- maximizing their Social Security benefit in retirement (34% versus 27% for pre-retirees and 25% for retirees); and
- making the best decisions about Medicare and health insurance (30% versus 23% for pre-retirees and 22% for retirees).
Pre-retirees are more likely than others to want their financial professional’s assistance in:
- securing their children’s financial future (35% versus 23% for near-retirees and 13% for retirees);
- balancing their budget to save for later while enjoying life now (33% versus 25% for near-retirees and 26% for retirees); and
- paying down debt (27% versus 19% for near-retirees and 16% for retirees).
Pre-retirees also expect a different level of engagement with their financial professional, in terms of both service and strategy. For example, a higher percentage of pre-retirees expect their financial professional to be tech savvy, offering interactive tools to understand finances under a variety of scenarios (58% versus 48% near-retirees and 37% retirees) and being flexible with meeting options, including virtual meetings (50% versus 43% near-retirees and 48% retirees).
“The pandemic changed a lot of expectations around finances and creating a retirement strategy, so now is the right time for financial professionals to understand, adapt and meet clients where they are.” says Kelly LaVigne, Vice President of Consumer Insights at Allianz Life.
Social Security Misconceptions
Meanwhile, the survey also found that Americans continue to struggle with their Social Security strategy. While most think they have a good plan for when they’ll start taking Social Security benefits and a clear understanding of the role it will play in their overall retirement finances, the findings show that expectations are different from reality.
Nearly 6 in 10 (59%) near-retirees say they are planning to work past the current Social Security retirement age, yet only 11% of current retirees actually did so. Moreover, 57% of near-retirees expect to take benefits at full retirement age or defer to a later age, while only 46% of retirees do. Additionally, more near retirees (40%) and pre-retirees (35%) believe that people will get enough from Social Security to meet their needs in retirement; only 10% of retirees said this is true.
Allianz Life’s survey was conducted in February 2022 among a nationally representative sample of 1,000 individuals aged 25 or older in the contiguous U.S. with an annual household income of $50,000 or more, or investable assets of $150,000.
