More than twice as many retirees this year as compared to 2008 say they are worried about their financial security. But with the concern comes an increase in the number of retirees who say they are seeking help from financial advisors.
A new report from LIMRA, the Society of Actuaries (SOA) and the International Foundation for Retirement Education (InFRE) found 49 percent of retirees said they felt less secure than when they first entered retirement, compared with 20 percent who said so last year.
The report titled “What a Difference a Year Makes” gauged changes in retirees’ attitudes about retirement from 2008 to 2009. The report highlights a survey of retirees aged 56 to 77 with $100,000 or more in investable household assets.
Forty-three percent of the retirees surveyed said their tolerance for investment risk has gone down since last year, and many were concerned about the possibility of inflation, LIMRA said.
The retirees whose investment risk tolerance declined in the past year gave the following main reasons:
- Concern about the economy, 79 percent of respondents
- Concern about future inflation, 45 percent of respondents
- Not enough time to recover from the economic downturn, 39 percent of respondents
- Change in house value, 28 percent of respondents
LIMRA experts say gaps in retirement planning still exist, despite concern. The organization is encouraging retirees to spend more time examining long term retirement risks.
“Retirees are definitely feeling the effects of the 2008 financial crisis, and have begun changing their behavior,” said Sally A. Bryck, LIMRA associate research director, who led the research project. “While seven in 10 respondents said they can still cover their basic expenses and afford a few extras, the number who said they spend money on whatever they want dropped sharply from 38 percent in 2008 to 22 percent in 2009.”
The concern is driving retirees to take action. “We also see an increase in the number of retirees who have personal financial advisors,” Bryck added. “Today 61 percent say they have a personal financial advisor compared to 56 percent in 2008. Seeking professional help shows how severely things have changed and how unsure retirees are about doing things themselves.”
The report estimates only one in four retirees is confident they have saved enough, a 12 percentage point drop year over year.