Financial advisors across the industry reported that 40% of their retiree clients were forced into retirement, according to a recent survey by Edward Jones.
Almost all of the advisors who were surveyed (97%) agreed that retirement involves more surprises and challenges than their clients expected, while an equal number (98%) agreed that preparation, flexibility, and willingness to adapt are key to success in retirement.
Advisors also said that cost of living increases (29%), financial assistance for family or friends (26%) and the declining value of investments (26%) are the most impactful financial shocks for retirees. And in preparing for retirement financially, clients struggle the most with developing an income withdrawal strategy (35%) and determining the optimal timing for claiming Social Security benefits (35%).
“Early retirement can disrupt the financial stability of clients,” said Jennifer Schoonmaker-Dasch, a financial advisor at Edward Jones, in discussing the impact that being forced into retirement early can have on clients. In certain situations, their savings will need to be stretched further and may involve completely revising their aspirational goals for when they retire. These include travel plans and vacations. “Financial advisors can step in to provide clear recommendations and help steer their clients toward accomplishing their financial goals,” she said.
The advisor as accountability partner
The survey also pointed out that advisors can serve as advocates and accountability partners for their clients – helping to keep them on track with a financial strategy and a budget designed to reduce expenses and pay down debt. In this capacity, Schoonmaker-Dasch said, advisors can:
Discuss factors such as family/personal relationships, health, finances, and work, and how they will affect the long-term financial goals of their clients.
Devise tailored strategies and align on what adjustments can be made to support their retirement status. These adjustments include obtaining supplemental health insurance or adopting a more frugal lifestyle for financial stability. “Understanding how your clients want to navigate the new chapter of their lives will help financial advisors provide strategic guidance,” Schoonmaker-Dasch said.
In addition, most of the advisors surveyed recommended that clients:
Secure long-term care insurance (48%).
Adopt a more frugal lifestyle (48%) for financial stability.
Holistic retirement planning
In the survey, advisors almost universally agreed (99%) that clients want to work with a financial advisor who prepares them holistically for retirement. Part of this holistic approach may include plans for clients to work in retirement, the survey said.
Ninety-four percent of financial advisors said they have discussed or would like to discuss deciding how or if their clients should return to work after retiring, or being forced into retirement. Staying mentally active (99%), earning health insurance benefits (99%) and feeling a sense of purpose (97%) are the most important benefits of working in retirement, according to the financial advisors who took part in the survey.
The most common counsel that advisors offer clients regarding work in retirement is to embrace an open-minded approach (36%). This was followed closely by networking for new opportunities (31%) and being willing to work for someone younger than they are (30%).
“More and more, we are having conversations with our clients about whether working in retirement might be right for them,” added Schoonmaker-Dasch. “Working in retirement may look different for individuals than it did in the peak of their careers, but the right employment opportunity can help provide financial stability and give retirees a sense of purpose.”
The survey was conducted by global data intelligence company Morning Consult among a national sample of 200 financial advisors from May 4 – 10, 2023.
Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at amseka@INNfeedback.com.
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