Retirement Worries Trending Up Nationwide: Survey

Investors’ stated concerns about preparing adequately for retirement have increased substantially over the past six months, according to new survey data published by State Street Global Advisors.

According to SSGA, a majority of investors now voice concern with meeting their retirement savings needs, with 52% indicating concern about saving enough for retirement versus the 45% measured in June 2022. Similarly, 50% fear running out of money in retirement, up from 46% in June.

“Helping clients remain confident and committed during times of volatility can be a challenge for advisors whose clients may have a kneejerk reaction to abandon their investment strategy if markets get choppy,” warns Brie Williams, head of practice management at State Street Global Advisors, in a press release accompanying the new data.

According to Williams, SSGA’s survey suggests advisors have broadly helped their clients remain confident during the current period of rising inflation and market volatility, but the lingering market challenges are starting to take a toll. As such, advisors will have to work even harder throughout 2023 to keep their clients feeling confident and on track, and there is a growing risk that clients’ fears could get the better of them in the months ahead.

Confidence Remains High for the Short Term

According to SSGA, a sizable 81% majority of U.S. investors who are working with a financial advisor still say their financial advisor has helped them remain confident about their individual outlook, but this figure has slipped from 86% in June.

A similar majority of 83% indicates that their financial advisor has effectively informed them about how market volatility will impact their long-term financial goals, while the percentage of U.S. investors indicating they value their financial advisors’ knowledge and guidance even more during uncertain times held mostly steady at 89% compared to June, when it was 91%.

Importantly, the data suggests investors are getting the message about sticking to their long-term investment strategy. The survey shows even with volatility in the market, 57% of U.S. investors plan to keep their money “as is” and stick to their long-term strategy. Another 17% plan to leave their money as is, but opportunistically invest more if market conditions permit, while 18% indicate they will move money to other investments to reduce the risk of loss.

According to SSGA, a “mere 8%” plan to retreat to cash to avoid potential loss this year.

Since last June, general concern over market volatility has actually declined 11 percentage points to 46%. Similarly, at 56%, the percentage of those concerned about the value of their actual investments eroding has ticked down since June, when it was at 59%.

More Pessimism in Long-Term Outlooks

The survey found 71% of US investors are “optimistic” or “very optimistic” about their own financial future over the next 12 months. This number may seem high, but it is significantly lower than pre-pandemic levels. For example, in 2019, it was 88%, when investors were still riding high on the close of a decade-long bull market.

Today, nearly three-quarters of investors are worried about inflation, according to SSGA, and although inflation concerns have actually waned slightly since June, they are still relatively high when compared to the pre-pandemic levels.

The marquee finding, however, shows that a majority of investors now voice concern with meeting their retirement savings needs. As noted, a majority of 52% now indicates concern about saving enough for retirement, up 7% from June of 2022. Similarly, 50% fear running out of money in retirement, up from 46% in June.

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