Financial Advisers Less Optimistic Than Clients on Retirement Readiness

As the retirement industry prepares for increased demand for individual retirement planning amid Peak 65, it may find some confident clients on the other side of the table, according to a new survey of consumers and financial advisers.

In Allspring Global Investments’ 21st annual retirement survey, the asset management firm found that 65% of near-retirees and retirees with at least $200,00 in investable assets believe they are on track for retirement. That is more optimistic than surveying Allspring did among financial advisers, 40% of whom believe their clients are ready for a secure post-work life.

In surveying conducted by Escalent for Allspring, the researchers found disconnect between savers and advisers even greater when it came to specific areas of retirement readiness, including Social Security, Medicare and general financial planning:

• In terms of Social Security, 44% of near-retirees and more than 50% of retirees say they know enough about it; only 11% of advisers agreed with that sentiment.
• When it came to Medicare planning, 30% of near-retirees and 46% of retirees said they know enough; only 8% of advisers agreed.
• Finally, 65% of retirees and 54% of near-retirees are confident in their personal finance knowledge; 14% of advisers gave them that credit.

“This report suggests investors are entering retirement less prepared than they think they are,” said Ron Cohen, Allspring’s head of defined contribution investment only distribution, in a statement.

Allspring also noted via email response that 53% of near-retirees have used a financial adviser, which was about flat to last year’s figure; the firm expects that percentage to remain steady.

The survey did, however, find potential for retirement participants to seek individual services through their employer. Six out of 10 near-retirees said they know an adviser service is available through their 401(k) or 403(b) workplace plan. Meanwhile, 47% are equally as likely to work with an adviser associated with their workplace plan as to go outside for advice.

“This finding is in line with findings from prior surveys that employees implicitly trust their employer as it pertains to their retirement needs,” an Allspring spokesperson wrote via email. “Employers have a unique opportunity to raise employee awareness of consequential retirement decisions like when to start Social Security payments, Medicare planning, lifetime income, etc.”     

Allspring also looked at when people retired and how they felt about it, reporting that:

• 37% of retired respondents said they retired sooner than expected;
• 6% said they retired later than expected;
• 39% said they retired too late and wish they had more time to enjoy retirement; and
• 18% felt they retired on time.

Overall, near-retirees expect they need at least $1.6 million in retirement savings to be comfortable, and retirees said they need $1.1 million.

Escalent conducted the surveying on behalf of Allspring from September 5 through September 28, 2023. The survey included 752 near-retirees (average age of 61), 763 retirees (average age of 70), and 320 advisers (with at least $5 million in assets under management).