The fact that so many Americans are not adequately preparing for retirement has been widely documented. However, in considering potential solutions to meet this challenge, the role of life insurers, annuity companies and other financial institutions, along with their intermediaries, is often overlooked.
The financial services industry has certainly devoted considerable resources to this effort, spending billions to market a growing number of products and services designed to address retirement needs. Furthermore, there are thousands of professionals of various stripes — financial planners, advisors, brokers and insurance agents — ready, willing and able to help consumers put together a formal retirement savings and income plan.
So why have the industry’s efforts to crack the retirement market apparently fallen short, judging by the number of people who feel unprepared financially? And what can the industry do to more effectively reach and serve this growing segment of future retirees?
To help the industry come to grips with this conundrum, the Deloitte Center for Financial Services conducted a survey among nearly 4,500 consumers from a wide range of age and income groups. Our goal was to generate insights into how financial institutions might develop new approaches and solutions by better understanding the attitudinal and behavioral constraints preventing consumers from taking more firm control of their retirement destiny.
We did a deep dive into the problems facing the majority of respondents — 5 8 percent — who do not have a formal retirement savings and income plan in place. This planning gap widened the further the respondent was from their expected retirement date — rising to 70 percent among those who don’t expect to leave the work force for 15 years or more.
The survey found that planning makes a big difference in the confidence level of consumers, as respondents with a formal plan to generate retirement savings and income were four times more likely to feel very secure (52 percent) about their post-working lives compared to those without a formal plan (only 13 percent).
In addition, Deloitte’s survey suggests that there is a relationship between the use of professional advisors and feelings about retirement security. Indeed, the survey found that 40 percent of those using financial advisors felt very secure about their retirement, versus only 22 percent of those who do not seek professional advice. A big reason why is that 66 percent of respondents with a financial advisor had a formal plan for retirement savings and income, versus only 28 percent of those without an advisor.