The Continued Importance of Financial Advice
When IRI first started surveying Baby Boomers in 2011, 79 percent of respondents felt satisfied with how their lives were progressing economically. In just five years that number has dropped to a meager 43 percent—less than half of this age cohort. What could have caused this dramatic drop in economic satisfaction? Baby Boomers’ grim financial legacy might be to blame.
Boomers have worked many years to care of their families, put their children through college and care for their own aging parents. Now in retirement they will struggle financially, exhaust their financial resources, and collect a Social Security benefit that will hardly cover their medical costs. While living longer is a positive thought for many, it also adds the unexpected burden of financing a longer retirement.
Despite dwindling confidence and savings, Baby Boomers have continually proven the importance of financial advice by demonstrating the correlation between leveraging the knowledge of a financial advisor and improved retirement readiness. Nine in ten Boomers who have worked with an advisor have retirement savings, a statistic that has remained constant each year this study has been conducted. Additionally, more than 8 in ten Boomers who work with an advisor believe they are better prepared for retirement as a result.
When Boomers who are not confident they have done a good job preparing for retirement were asked what they would have done differently, 68 percent said they would have saved more and 67 percent said they would have started saving earlier, two basic issues an advisor addresses with a client.
Unfortunately for those Boomers who have not saved adequately, they will face tough choices in the years to come. Their best bet is to maintain a healthy lifestyle in order to continue working past full retirement age while continuing to save. It will be up to financial professionals to come up with interesting and creative solutions that cater to each individual client in this scenario.
Those with moderate savings will also need increased financial advice to ensure their limited savings last through their 30 year (or longer) retirement. Those on the younger end of the Boomer generation should be prepared to tighten budgets, save as much as possible, and tap into resources that can steer them towards a secure retirement.
Despite the bleak forecast for the Baby Boomer generation, the continued importance of financial advice is increasingly apparent with each year IRI conducts this study. As we begin another National Retirement Planning Week, we must be sure to continuously educate our clients and ourselves with each new financial product, economic trend, and demographic shift that occurs. We hold National Retirement Planning Week with the purpose of educating Americans of all life-stages of the importance of retirement planning and seeking financial advice to navigate this difficult road.
This week, please take the time to access the IRI and NRPC-sponsored resources, and continue to engage with your clients in a productive way to ensure that future generations are able to secure a safe and dignified retirement.