The results of the 18th annual Retirement Confidence Survey, conducted by the nonprofit Employee Benefit Research Institute (EBRI), are less than encouraging when it comes to gauging the retirement savings habits of Americans today.
According to the study, just 18 percent of all workers were “very confident” about being able to afford a comfortable retirement, down from 27 percent in 2007. This represents the largest one-year drop in the history of the survey. Meanwhile, only 43 percent are “somewhat confident” that they’ll have enough money for retirement. And a full 25 percent believe they’ll need less than $250,000 for retirement, while another 16 percent believe they’ll need between $250,000 and $499,999. A retirement lasting 25 or 30 years can require a lot more than this.
Still, while these figures don’t bode well for those consumers trying to figure out the future, this presents an unprecedented opportunity for advisors interested in retirement income planning. With 78 million baby boomers heading into retirement, many of which are middle-income consumers, and the vanishing of defined benefit plans, the need has never been greater for agents to help clients plan for their financial future.
“This is the No. 1 need of the United States today,” said Larry Passaretti, managing partner of Professional Planning Services LLC Corp. “How do consumers work out a financial schematic? Many don’t have a blueprint for retirement, and they really need a relationship with a counselor rather than a salesperson.”
Passaretti pointed out that today, many consumers spend more time in retirement than they do working, and while many end up with second careers, they’re faced with an emotional and financial transition when they go from working 40 to 60 hours per week to a much more reduced schedule.
While the need appears to be a no-brainer, retirement income planning is far from simple. It requires the skill necessary for any niche, particularly one that serves such a far-reaching market, but with some work, it can prove to be both lucrative and satisfying.
First, as with any consultative approach, the compensation is not immediate or consistent.
“Retirement planning is not just about product sales, and agents aren’t compensated for the advice factor,” said Sally Bryck of LIMRA International. “People will need that type of service after the sale, but most people just don’t want to pay for advice. The question then becomes, how will companies compensate agents for servicing without product sales?”
Developing the right skill set, certification, and product portfolio is also essential for setting up a retirement planning practice, as is partnering with those knowledgeable in the field, such as estate planners, certified financial planners, and certified public accountants.