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It’s no big surprise that half of Americans say retirement planning is a top priority. How do you explain that 58% of Americans do not have a formal retirement plan in place? That’s just one of the conflicting findings in the Deloitte report, Meeting the Retirement Challenge. The report also contains reassurance for people like you, who help clients prepare for retirement. You should be collectively proud that 66% of Americans who consult with a professional have a formal retirement plan. Among people who do not work with a retirement professional, a mere 28% of people have a formal plan.
Barriers to Retirement Planning
The report goes on to explore five barriers to retirement planning and discusses what might whittle down those barriers:
- Difficulty balancing retirement saving with other financial priorities. Over the course of a lifetime, paying off student loans, buying a house, then financing the kids’ education all compete with retirement saving. Try: Taking a holistic approach to financial planning with your clients from the very beginning. Explore ways to incorporate retirement saving—even in small amounts—while they manage other expenses.
- Poor communication about retirement saving from financial institutions. Many who responded to the Deloitte survey said they had no communication about their retirement savings in the previous two years from their financial institution. Try: Reaching out to your clients on a regular basis.
- Lack of awareness of retirement products. The majority of survey respondents had never heard of basic retirement savings vehicles like target date mutual funds and annuities. Try: Reminding your clients of these vehicles when you do that regular communication we recommend in #2.
- Mistrust of financial institutions. The most trusted source of advice cited in the survey (27) is family and friends. The good news is that 15% said their most-trusted resource is a financial advisor. Try: Asking your current clients to recommend you as a retirement professional. That trusted recommendation could get the relationship off to a good start.
- A do-it-yourself mentality. Among survey respondent who don’t use a financial professional, 57% said they “felt comfortable handling my own retirement planning.” Try: reassuring DIYers that working with a retirement professional doesn’t mean giving up all control. They remain the decision-maker.
The Risks Retirement Professionals Find Hardest to Manage
Investment News and the American College surveyed retirement professionals about their work with clients. The top five risks they find most difficult to manage in their clients’ retirement income plans were:
- Market volatility (32.5%)
- Longevity (27.2%)
- Health care costs (18.8%)
- Inflation (9%)
- Long-term care (8.6%)
What Retirement Professionals Think About Their Own Level of Knowledge and Where They Go to Learn
The same survey revealed that 34% of respondents believe that “most advisers/wealth managers” need to know more about retirement income planning. That being said, they admitted that their top three ways of gaining knowledge were:
- On-the-job (31%)
- Independent education (24%)
- Formal course (24%)
For more educational resources for retirement professionals, please visit out Entrust Learning Center.