Delayed: 25% of pre-retirees push back retirement, 15% unsure if they’ll ever retire
The majority of pre-retirees said inflation poses the greatest immediate challenge to their portfolio over the next year, while a recession is also a factor that poses immediate challenges, according to the Nationwide Retirement Institute.
As more workers delay retirement plans because of an uncertain economy, advisors have an opportunity to help them recalibrate their financial plans.
“For 88% of pre-retirees, having a plan for retirement helps them feel more in control of their financial future,” according to new report from Nationwide Retirement Institute. “By helping their clients make the right moves as they near retirement, financial professionals can help pre-retirees predict and plan for lifelong expenses and feel more confident about their financial future.”
Research found that one-fourth of pre-retirees (defined as non-retired investors aged 55 to 65) plan to retire later than expected, and another 15% are unsure if they will ever retire. Although a number of factors contribute to their decision to delay retirement, the majority said inflation poses the greatest immediate challenge to their portfolio over the next 12 months. A recession (46%), market volatility (36%) and taxes (23%) also are factors that pose immediate challenges.
“With economic stressors continuing to weigh on the minds of investors, working with an advisor has never been more important to achieving security in retirement,” said Eric Henderson, president of Nationwide Annuity. “Because the trajectory of the markets and the economy looks uncertain in the short term, an advisor can help investors who are nearing retirement age remain calm, nimble and informed when it comes to adjusting their plans.”
More than half of pre-retirees are concerned about the long-term viability of Social Security, indicating fears that these benefits no will longer be available to them in retirement. More than one in four believe Social Security will run out of funds in their lifetime, with a similar percentage believing funds will run out after they have entered retirement.
Related: Retirement delay? 4 out of 10 workers hitting a snag due to inflation
Investors increasingly are turning to financial professionals for retirement guidance, and of the 49% of pre-retirees who currently work with an advisor or financial professional, 40% began working with one over the last 12 months. Pre-retirees said the reasons most likely to compel them to work with a financial professional or that influenced them to work with their advisor include years of experience (37%); recent or current market conditions (17%); personalized advice for a holistic financial picture (16%); and the prospect of an economic recession (16%).
“Advisors recognize investors’ desire to make the right moves as they near retirement,” Henderson said. “They can start driving positive conversations with these clients by understanding their retirement goals; helping them predict and plan for fixed expenses; and determining the right time to claim Social Security.”