Advisers can stem growing retirement insecurity

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Working Americans are feeling insecure and anxious about how to pay for their golden years, according to the 2017 Retirement Confidence Survey (RCS) by the Employee Benefit Research Institute and Greenwald & Associates. Amid all the angst, however, advisers can play a pivotal role closing knowledge gaps and growing their book of business.

Roughly one-third of the respondents feel stressed about preparing for retirement, as well as worry about their personal finances while at work, while half believe they would be more productive if they didn’t spend time worrying. Now in its 27th year as the nation’s longest-running research of its kind, the RCS polled 1,082 workers and 589 retirees.

As many as 40% of working Americans say they haven’t saved for retirement, while just 41% have calculated how much money they will need in retirement. Even fewer have done the same in terms of estimating their monthly income in retirement or Social Security benefit (38% apiece), while only 34% have estimated their expenses in retirement.

Among the strategies respondents cited as helping alleviate their concerns: retirement planning (52%), financial planning (49%) and healthcare planning (47%).

It’s no surprise that people who have calculated how much they need to save for retirement are more confident than those who did not run the numbers, says Craig Copeland, an EBRI senior research associate and co-author of the report. “But what’s also interesting is that those who have done the calculations think they need more dollars than those that haven’t done the calculations,” he says. They’re not scared off by those bigger numbers and take comfort in knowing “at least they have some goal” in mind, he adds.

Since so many people lack the experience and knowledge needed to plan for retirement, Copeland believes brokers and advisers are positioned to help facilitate or offer such assistance. He says this could help boost their retirement confidence and lower stress levels.

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The RCS findings lend credence to the need for more financial wellness programs at work, Copeland says. He also has noticed more momentum gaining in support of the notion that working Americans need an emergency fund or “sidecar” savings vehicle to cover unexpected expenses without incurring early withdrawal penalties as they would with defined contribution plans or personal investments.

Informed decisions
The survey squares with what some industry producers have seen across the employee populations they serve. Frank Erstad, a registered investment adviser at Erstad and Company Inc., has noticed a lack of knowledge from both blue- and white-collar workers about not only their retirement savings options, but also how their plans even work.

“If we can provide employees with enough information and education to make an informed decision regarding their options, I think they’re much better served,” he says.

People tend to fall into three categories, according to Chad Schollaert, SVP of retirement plan services-client relations at the Trust Company. There are those who are doing a good job saving for retirement, those who know they’re lagging behind but continue to save and those who simply stick their heads in the sand. Of these groups, his firm has encountered many employees who lack confidence about their ability to retire.

“If you’re an adviser who really is interested in helping people achieve their goals, whether it’s at the plan sponsor or participant level, then it’s a great time to be in this business,” he says.

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