While many Americans are feeling more worried about the health of their finances and retirement savings, most are reluctant to discuss these concerns with their financial professional, a new study suggests.
According to Allianz Life’s 2021 Retirement Risk Readiness Study, respondents to the firm’s survey reported increased worry in 2021 regarding a number of retirement risks, including:
- concerns about health care costs (71% versus 65% in 2020);
- the rising cost of living (67% versus 59% in 2020);
- the impact of a market downturn on retirement savings (66% versus 54% in 2020); and
- running out of money before they die (59% versus 56% in 2020).
However, among respondents who currently work with a financial professional, approximately two-thirds indicated they are not currently discussing these topics, but would welcome that conversation. The issues people are most interested in getting professional guidance on include:
- running out of money before they die (66%);
- the impact of a market downturn on savings (64%); and
- being too conservative in investments and missing out on market gains (63%).
In addition, more than half said they would like to discuss concerns about high health care costs (59%) and the rising cost of living (58%).
Opportunities with Recently Retired
Allianz Life’s survey examined three categories of Americans to get different perspectives on retirement: pre-retirees (those 10 years or more from retirement); near-retirees (those within 10 years of retirement); and those who are already retired. While the study found a clear opportunity for financial professionals to assist pre and near-retirees, retired respondents reported less anxiety about various risks to their retirement.
A closer analysis of the results reveals a distinct difference between those who are recently retired (less than 10 years into retirement) and retirement veterans (10 or more years in retirement) in terms of both their level of worry, as well as their willingness to get professional help. According to the findings, recently retired respondents reported feeling significantly more concerned about the majority of retirement risks when compared with those who have spent more time in retirement, including health care costs being too high (64% versus 40%), the rising cost of living (54% versus 27%), the impact of a market downturn on retirement savings (61% versus 39%) and running out of money before they die (46% versus 24%).
One bright spot is that recently retired Americans are more willing to discuss these topics with their financial professional, the study notes. For those who reported interest in discussing retirement risks, the most popular topics were the impact of a market downturn on retirement savings (54%), running out of money before they die (37%) and the rising cost of living (34%).
Protection Products
An additional finding reflects an apparent preference for protection products. When asked whether they would rather have financial products that have the potential for big gains, but also potential for big losses or products that protect from big losses, but come with smaller gains, nearly 7 in 10 (68%) said they would prefer the protection product.
“These findings point to a clear opportunity for financial professionals to be more proactive and initiate conversations that can help people feel more confident about their financial future,” says Kelly LaVigne, Vice President of Consumer Insights at Allianz Life. “Whether it’s someone who is several years from retirement and needs more information about how to mitigate various risks or a client early into retirement who is feeling anxious about market volatility and longevity risk, it’s important that open and honest conversations occur on a regular basis.”
The findings in the study are based on an online survey conducted in December 2020 with a nationally representative sample of 1,000 individuals aged 25 or older in the U.S. with either an annual household income of $50,000+ (single), $75,000+ (married/partnered) or investable assets of $150,000.
