America’s retirement challenges are “eminently solvable” as workers are reporting more confidence in both the economy and their sense of job security, according to findings from the Lifetime Income Score report released by Empower Retirement, the retirement provider arm of Great-West Financial.
Though more confident, respondents’ median lifetime income score dipped slightly from last year. The average LIS, or the percentage of income projected to be replaced in retirement, is 58, down from an LIS of 61 last year.
The LIS combines expected Social Security benefits, savings from workplace retirement plans, personal savings, home equity and business ownership to project a retirement readiness score.
Underscoring previous findings, this year’s study of 4,000 respondents proved the power working with an advisor has on retirement readiness.
“People who work with a paid advisor have a nearly 30 percent point advantage in LIS over those not currently receiving professional advice,” wrote. W. Van Harlow, director of research at the Empower Institute, the new retirement research arm of Empower that was launched in accord with their year’s study.
Those working with an advisor are on track to replace 82 percent of current income in retirement, compared to 55 percent of income for those without an advisor.
Only 19 percent of respondents report working with a professional advisor.
“There is no substitute for the role advisors play in driving LIS,” Harlow wrote.
The most prodigious savers — those who can expect to replace 100 percent or more of their income in retirement — are three times more likely to work with an advisor than those savers expected to replace less than half of their income, according to the report.
“Making professional advice more widely available, regardless of historical perceptions related to socio-economic status, is an important next step,” Harlow added. “Retirement service providers and advisors should be connected at the hip.”