Pre-retirees who work with an advisor feel better prepared financially

By The IJ Staff | April 28 2017 11:44AM

Photo: Freepik

Forty-three per cent of U.S. pre-retirees working with an advisor say they feel prepared for retirement, says a recent LIMRA Secure Retirement Institute study. This number drops to 21 per cent for those who do not work with an advisor.

The study of pre-retirees, ages 50 to 75, found they are worried about the possibility of running out of money. Pre-retirees working with an advisor say minimizing this risk, as well as protecting principal portfolio, are the most valuable services offered by their advisor.

A formal written retirement plan

Another way for pre-retirees to feel prepared for retirement is to have a formal written retirement plan. Sixty-seven per cent of pre-retirees with a formal written plan say they feel prepared for retirement.

“Our research demonstrates the value of working with an advisor and having a retirement income plan,” says Jafor Iqbal, assistant vice president, LIMRA Secure Retirement Institute. “In an environment with greater emphasis on client-interest-first and transparency, advisors need to shift their focus to providing retirement planning activities, which will validate their product recommendations.”

A specific plan for generating income

The Institute found only 27 per cent of pre-retirees have a specific plan for generating income from their retirement savings, and that 31 per cent have calculated how long their assets and investments will last once they are retired. Sixty per cent determined what their Social Security benefits would be at different ages, and 49 per cent have estimated what their income would be in retirement.

“Our study found that three in four pre-retirees find many planning activities somewhat or very complex,” says Iqbal. “These activities are critical for assessing what they will be able to afford in their retirement. Consistently, our research has shown that those who work with an advisor are more likely to have a plan, have a better grasp of their financial situation and generally feel more confident in their retirement security.”

LIMRA’s findings are based on an online survey of 1,050 U.S. adults, aged 50-75, who are employed full-time or part-time.  

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