Retirees are abandoning common practices
traditionally seen in retirement
COLUMBUS, Ohio, July 8, 2024
/PRNewswire/ -- As perceptions of what retirement should look like
continue to evolve, retirees are reevaluating their financial
approaches and lifestyles.
Nearly one-third (31%) of retirees expect to be less secure in
their retirement than their parents and grandparents were,
according to Nationwide's ninth annual Advisor Authority
study, powered by the Nationwide Retirement
Institute®.
This feeling of uncertainty among retirees is compounded by the
fact that everyday financial obligations remain a concern – more
than one in five (22%) retired investors worry about affording
their monthly bills.
Retirees Reevaluate Financial Commitments
The transition to life after retirement demands crucial shifts,
including the prioritization of financial commitments. In addition
to short-term financial obligations like basic living expenses,
long-term debt continues to weigh on retirees, with 26% of retired
investors continuing to pay off their mortgage, and 25% still
paying down credit card debt.
While most American savers dream of a retirement of leisure and
travel, retired investors are adjusting their priorities to make
ends meet in the wake of economic constraints. Nearly four in ten
(39%) retired investors are spending less on entertainment to meet
financial commitments in today's economic environment, and more
than a third (34%) are taking fewer trips or vacations.
To compensate further, 22% of retired investors are drawing more
funds from retirement accounts, intensifying the traditional
decumulation stage.
"The picture of life after retirement has changed for many
people as economic stressors continue to weigh on retired
investors," said Mike Morrone, Vice
President of Nationwide Annuity Business Development. "Now is the
time for advisors and financial professionals to check in with
their clients and help them remain calm, nimble and informed in the
face of continued economic headwinds, ensuring the plan they have
in place continues to position them for a secure retirement."
Strategies Vary for Investors Already in Retirement
To account for financial headwinds, retirees are bolstering
their plans. Nearly two in three (63%) retired investors have a
strategy in place to protect their assets against market risk, up
from 54% last summer.
However, these retirement plans look radically different from
the plans of generations past. Some retirees (12%) are abandoning
the 70-80% spending rule (i.e., ensuring they have 70-80% of their
pre-retirement income per year in retirement) and 11% are casting
aside the 4% rule (i.e., withdrawing 4% of their retirement
portfolio each year when retired).
Retired investors are also initiating conversations about legacy
planning and wealth transfer with their heirs. Nearly a third (32%)
of retirees are discussing wishes for end of life (long-term care
expenses, funeral preferences, etc.), and 34% are discussing
financial details of their estate with heirs.
Financial Advisors Guide Clients Toward Retirement
Security
Advisors are supplying their clients with the guidance needed to
help achieve financial security in retirement, counseling their
retired clients on how to generate guaranteed income (23%),
prioritizing wants vs. needs (21%) and supplementing income out of
necessity (16%).
Advisors are also helping investors plan for lingering financial
commitments, such as mortgage repayments, which more than a third
(34%) of advisors say their clients are planning to continue paying
in retirement.
With the Great Wealth Transfer underway, advisors are helping
clients – and their heirs – prepare. More than half (59%) of
advisors say their clients are confirming beneficiary designations
to prepare their heirs for the transfer and management of wealth.
Another 54% say their clients are reviewing or creating estate
planning documents, and 44% are building financial confidence and
knowledge.
"Advisors are recognizing and acknowledging investors' desire to
avoid making the wrong moves in retirement," Morrone said. "They
can help clients feel more confident about their retirement plans
by understanding their goals and anxieties, and helping them
protect their savings and plan for income they won't outlive by
reinforcing the value of different retirement solutions and
products, like annuities."
For additional insights on this survey data, see our
infographic.
Nationwide's ninth annual Advisor Authority study powered
by the Nationwide Retirement Institute® explores
critical issues confronting advisors, financial professionals and
individual investors—and the innovative techniques that they need
to succeed in today's complex market.
About Advisor Authority: Methodology
The research was conducted online within the U.S. by The Harris
Poll on behalf of Nationwide from January
8-23, 2024, among 518 advisors and financial professionals
and 2,346 investors ages 18+ with investable assets (IA) of $10K+.
Investors included a subset of 391 "pre-retirees" age 55-65 who are
not retired, and subsets of 346 single women and 726 married
women.
Weighting: Raw data from advisors were not weighted
and are therefore only representative of the individuals who
completed the survey. Investor data are weighted where necessary by
education, age by gender, race/ethnicity, region, marital status,
household size, employment, household income, investable assets,
and propensity to be online to bring them in line with their actual
proportions in the population. To ensure the investor sample was
representative, the data were initially weighted separately for
those with investable assets of $10K
to less than $100K and those with
$100K+ and then post-weighted/combined into a total investor group.
Data for the subset of pre-retirees age 55-65 who are not retired
were weighted separately as needed by education, age by gender,
race/ethnicity, region, marital status, household size, employment,
household income and investable assets.
Respondents for this survey were selected from among those who
have agreed to participate in our surveys. The sampling precision
of Harris online polls is measured by using a Bayesian credible
interval. For this study, the sample data is accurate to within +
2.8 percentage points using a 95% confidence level. This credible
interval will be wider among subsets of the surveyed population of
interest. The sample data for the subset of pre-retirees age 55-65
who are not retired is accurate to within + 6.2 percentage points
using a 95% confidence level.
All sample surveys and polls, whether or not they use
probability sampling, are subject to other multiple sources of
error which are most often not possible to quantify or estimate,
including, but not limited to coverage error, error associated with
nonresponse, error associated with question wording and response
options, and post-survey weighting and adjustments.
About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S.
tracking public opinion, motivations and social sentiment since
1963 that is now part of Harris Insights & Analytics, a global
consulting and market research firm that delivers social
intelligence for transformational times. We work with clients in
three primary areas: building twenty-first-century corporate
reputation, crafting brand strategy and performance tracking, and
earning organic media through public relations research. Our
mission is to provide insights and advisory to help leaders make
the best decisions possible. To learn more, please
visit www.theharrispoll.com.
About Nationwide
Nationwide, a Fortune 100 company
based in Columbus, Ohio, is one of
the largest and strongest diversified insurance and financial
services organizations in the United
States. Nationwide is rated A+ by Standard & Poor's. An
industry leader in driving customer-focused innovation, Nationwide
provides a full range of insurance and financial services products
including auto, business, homeowners, farm and life insurance;
public and private sector retirement plans, annuities and mutual
funds; excess & surplus, specialty and surety; and pet,
motorcycle and boat insurance.
For more information, visit www.nationwide.com.
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This material is not a recommendation to buy or sell a financial
product or to adopt an investment strategy. Investors should
discuss their specific situation with their financial
professional.
Nationwide Investment Services Corporation (NISC), member FINRA,
Columbus, OH. Nationwide
Retirement Institute is a division of NISC.
Nationwide, the Nationwide N and Eagle, Nationwide is on your
side and Nationwide Retirement Institute are service marks of
Nationwide Mutual Insurance Company © 2024 Nationwide.
NFM-24057AO
Contact: Alessandra Mohr
The Bliss Group
212-840-1661
amohr@theblissgrp.com
Kristen Vasas-Samson
Nationwide
614-435-5716
vasask@nationwide.com
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