6 Ways to Help Clients Retiring With $1M or Less: Advisor’s Advice

Recent research published by Fidelity Investments shows the rocky markets of 2022 and early 2023 have led to a reduction in average individual retirement account and workplace retirement plan balances.

The Fidelity data shows average retirement account balances decreased for the third consecutive quarter during Q3 2022, with the average IRA balance settling at $101,900. This marks a 24.9% decrease from Q3 2021, an 8% decrease from the prior quarter.

The average 401(k) balance dropped below the six-figure mark to $97,200 during the third quarter of 2022, down 22.9% from a year ago and 6% from Q2 2022.

While many working Americans have other sources of wealth they can potentially tap for retirement, from home equity to an anticipated inheritance, the Fidelity data shows many people will be approaching retirement with a net worth well south of $1 million — an informal figure often cited as a savings goal.

While consistent savers are ahead of the game, according to an analysis published by the Employee Benefit Research Institute, even this group falls well below the $1 million mark on average. The simple truth is that many Americans will enter retirement with only a modest amount of accrued wealth.

Fortunately, according to financial advisors serving middle-class and mass-affluent clients, there are a variety of planning steps that can be implemented to help ensure this group achieves a successful retirement. From optimizing Social Security to relocating to a less expensive region of the country, there are a lot of levers to pull when the retirement budget is tight.

See the slideshow for insights from six financial advisors who have helped clients of more modest means navigate the retirement journey.

(Image: Adobe Stock)