Here are a few facts that should be top-of-mind for every successful financial advisor. Today, there are about 47 million retired Americans controlling approximately $10.7 trillion in retirement account assets. Seventy-six million baby boomers are moving into retirement at the rate of 4-6% per year. With the generational transfer of wealth, it is estimated that this group will control more than $40 trillion in assets over the course of their retirement years.
Add this to the fact that Americans are living longer retirement lives and the role of providing retirement income assistance by government and employers is shrinking, and you have the largest market opportunity blip ever seen on the professional financial advisors radar screen.
But hold on. Before you launch that new marketing campaign, you need to make a strategic decision or two built on a quantitative understanding of retirees savings, spending and investment behaviors.
Listen and Learn
This need to understand recent retiree attitudes concerning savings and investments led us at Prudential Annuities to conduct a nationwide survey. We learned a lot, including that we cannot assume that we know their issues. Three messages resonated loudly above the others:
Fear of outliving their nest egg prompts retirees to “make do” on a limited income.
Instead of making their assets work for them, more than half of those polled “hoard” their savings and rely on Social Security and pension benefits to live (see Charts A and B).
Desire for independence during retirement drives lifestyle decisions of retirees.
Even though retirees cherish maintaining a comfortable living standard and financial independence, overwhelmingly most would compromise their standard of living in retirement rather than risk becoming a financial burden to loved ones (see Chart C).
Retirement does not always happen as planned for many of todays retirees.
Even among more affluent retirees, many of those surveyed were forced to retire before they were financially and emotionally prepared due to involuntary reasons such as health problems or layoffs (see Chart D).
Retirees Need to Know
Our research also led to an obvious conclusion: the need for education. Education for both investors and advisors.