American investors are getting the jitters about retirement. More than half say they might need to work during retirement. Close to half say they’ll need to work during retirement. And another large contingent say they’ll need to move someplace cheaper with lower taxes. Let’s take a look at why Americans think they will need to work longer than expected.
A financial advisor can help you create a financial plan for your retirement needs and goals.
Almost 7 in 10 Investors Could Work in Retirement
The eighth annual Advisory Authority Survey found that 69% of non-retired investors are either considering or planning to work during their retirement, with 44% saying that keeping a job during retirement will be necessary to stretch their savings and pay their bills. The financial advisors surveyed agreed, with 80% saying their clients would work during retirement.
The survey was conducted online by the Harris Poll and sponsored by Nationwide Advisory Solutions. Pollsters surveyed 506 financial advisors and 521 investors during July and August 2022, shortly after inflation peaked at 9.1% in June, stocks had swooned by nearly 25% and gas prices had jumped to more than $4.50 a gallon.
“Americans are rethinking what life in retirement looks like because of economic uncertainty, opting to adjust their personal priorities with financial stability in mind,” wrote Rona Guymon, senior vice president for annuity distribution for Nationwide Annuities.
Non-financial considerations were also a factor, with 60% of non-retired investors saying they want to continue working because it allows them to stay physically or mentally active, while 41% said they’d continue working because it gives them a sense of purpose.
When it comes to choosing where to live in retirement, the survey respondents also prioritized financial concerns. While 40% of non-retired investors said they’d be relocating to retire, only 22% said the reason was that they wanted to be closer to family members. Instead, the top concern was finding a region with a lower cost of living (43%) with the second-largest motivation being moving somewhere with lower tax rates (34%).
Opportunity to Help Investors Manage Expectations
This economic anxiety wasn’t any better for investors working with their own professional financial advisors – in fact, it was worse. While 49% of non-retired investors with a financial advisor reported feeling “very nervous” about spending down their retirement savings, only 32% of DIY investors reported the same qualms.
“The confusing economic environment we’re living in could lead some self-guided investors to be more optimistic than their counterparts who work with financial advisors because they are less familiar with the financial risks they will face in retirement,” said Guymon.
And that lack of confidence showed up in the results measuring the survey participant’s confidence in their ability to retire securely.
When working with an advisor, 20% said they felt confident, 20% felt confident despite market turmoil and 23% are rethinking their investments and making adjustments. Of the survey participants without an advisor, 36% said they felt confident about their financial futures, 35% felt confident despite market volatility and 43% said they were adjusting their investments.
While this data could indicate that ignorance is bliss for self-guided investors, Nationwide also notes that this optimism needs to be checked against the financial risks that they could face in retirement. And in this case, financial advisors can help clients expose financial blind spots before they could derail retirement expectations and adjust retirement plan goals to stay on track with retirement needs.
“The idea we have of what retirement looks like has changed for many people, whether due to necessity or because they are looking to stay active and engaged,” Guymon said. “Regardless of the reason, now is the time for advisors and financial professionals to check in with clients who are approaching retirement to make sure they have a plan in place for their next steps, and to work together to ensure their path is one that will lead to a secure and happy retirement.
Bottom Line
Almost seven in 10 investors told Nationwide Advisory Solutions that they expect to work in retirement. And while self-guided investors said they were more confident in their retirement plans than those working with a financial advisor, the study also shows that advisors have an opportunity to help investors manage expectations by exposing blind spots before they become big enough to derail retirement plans and adjust financial plans to prepare for future expenses in retirement.
Tips to Invest for Retirement
- A financial advisor can help you avoid hidden fees and create a financial plan to help your investments grow. SmartAsset’s free tool matches you with up to three financial advisors who serve in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- There are many ways to invest in your portfolio. While robo-advisors are low-cost compared with traditional advisors, other options are also inexpensive. Target-date funds offer diversification and balancing similar to robo-advisors while charging significantly fewer and lower fees.
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