Pre-retirees Who Work with An Advisor Are Twice as Likely To Feel Prepared For Retirement

WINDSOR, Conn. — A new LIMRA Secure Retirement Institute study finds 43 percent of U.S. pre-retirees (ages 50-75) who work with an advisor feel well prepared for retirement, compared with just 21 percent of pre-retirees who do not work with an advisor.

The study, Dear Advisor…, revealed that fear of running out of money in retirement is a top concern for pre-retirees. When asked, pre-retirees who work with an advisor ranked minimizing risk of running out of money and protecting portfolio principal as the top two most valuable services their advisors offer (chart).

In addition to working with an advisor, having a formal written retirement plan plays a significant role in helping pre-retirees feel well prepared for retirement. Nearly 7 in 10 pre-retirees (67 percent) who have a formal written retirement plan said they felt well prepared, compared with just a third (34 percent) of those who did not have a formal written plan.

“Our research demonstrates the value of working with an advisor and having a retirement income plan,” said 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.”

The Institute explored the types of planning activities pre-retirees have completed. Only one quarter (27 percent) of pre-retirees have developed a specific plan for generating income from their retirement savings while just under a third (31 percent) have estimated how many years their assets and investments will last in retirement. Pre-retirees were most likely to have determined what their Social Security benefits would be at different ages (60 percent) and what their income would be in retirement (49 percent). One in five pre-retirees have not completed any retirement planning activities.

“Our study found that three in four pre-retirees find many planning activities somewhat or very complex,” noted 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.”

The study found that the majority pre-retirees with an advisor have worked with them for more than 10 years. The findings are based on an online survey of 1,050 U.S. adults aged 50-75 who were working full-time or part-time and were involved in household financial decisions.