There apparently is a “disconnect” between financial advisors and their retiree- and near-retiree clients on their retirement readiness, according to the results of a new survey.
The survey, conducted by Escalent on behalf of Allspring Global Investments—which for the first time included advisors—found that advisors’ perceptions of their clients’ retirement preparedness reflected far less confidence than did those of retired or near-retired respondents.
While nearly two-thirds (64%) of retirees and near-retirees see themselves as ready for retirement, advisor respondents believe that only 40% of their clients are ready. The disparity is significantly sharper regarding specific retirement topics, Allspring further observes.
For example, when asked if they know enough about Social Security to be prepared for retirement, 44% of near-retirees and over 50% of retirees say they do. Only 11% of advisors agree. Similarly, a third of near-retirees and nearly half of retirees say they know enough about Medicare planning. Yet only 8% of advisors think investors do. So what gives?
“Advisors believe investors know less than they think they do about Social Security, Medicare planning, and general financial planning,” said Nate Miles, Allspring's Head of Retirement. “Advisors have the experience and tools to help those in or nearing retirement get a clearer picture of what it will take to achieve financial security.”
To that point, particularly when it comes to engaging younger investors, the survey also found that 6 in 10 near-retirees know that their 401(k) or 403(b) plan offers advisory services through the plan. In addition, 47% of near-retirees are equally likely to work with the advisor associated with their plan as with any other advisor, the results show.
Deciding When to Retire
Of course, deciding when to retire is a highly personalized choice that depends on many factors, including financial resources, health and job satisfaction, the report emphasizes. While the average age of retirement among survey respondents was 62, the survey found that retirees had mixed opinions and expectations of the right time to stop work. In this case:
- 37% of retired respondents said they retired sooner than expected, while 6% said they retired later than expected; and
- 39% said they retired too late and wish they had more time to enjoy retirement.
Meanwhile, a sizable number of respondents decided to “unretire” and return to work. Compared with other retirees, this group is older and less educated, and had lower household income and total savings, as well as lower expected retirement income, the survey found. At the same time, however, many returned by choice.
- One in eight near-retirees are un-retirees.
- 83% of un-retirees returned by choice, not necessity.
- Two in five un-retirees went back within the past year.
Additional findings show that near-retirees believe they will need $1.6 million in expected retirement savings, while retirees believe they will need $1.1 million. Investment choice was also found to be important among this cohort, as 52% of near-retirees indicated that they prefer a menu of fund options, as opposed to a professionally managed account or target date fund.
The survey was conducted from Sept. 5–28, 2023, among 1,515 adults who reside in the U.S. and are primary or joint household financial decision-makers. The sample consisted of 752 near-retirees (average age of 61) and 763 retirees (average age of 70) (both with at least $200,000 in investable assets), and 320 advisors (with at least $5 million in assets under management).
Allspring’s survey report can be found here.
