Greenwald & Associates, The Diversified Services Group and Jackson® recently surveyed consumers to see what people are thinking, feeling, and doing when it comes to their finances. Allow me to break down a few of the more interesting results for you.

Good news! People like their advisors.

I’m always an advocate for letting the professionals handle something as important as my money, so I’m pleased to see that the study shows positive reviews for one’s own advisor. Fifty-four percent of pre-retirees feel strongly they are being understood by their advisors, while 73 percent of retirees rate their advisor as a nine or 10 out of 10. In addition, consumers are relatively satisfied with their advisor’s fees, with only one out of six rating fees as a detractor on this issue.

Robo-advisors didn’t fare as well. A robo-advisor is an online service some companies offer that give advice or suggest investment models based on financial information provided by the client. Seventy percent of retirees and 65 percent of pre-retirees found the concept of a robo-advisor to be not too appealing or not at all appealing. Although usually less expensive than a flesh-and-blood advisor, it’s understandable that people don’t want to trust their financial futures to an algorithm with no ability to understand their hopes, dreams, and desires—or meet for a cup of coffee.

We all have a little “control freak” in us.

Worrying about issues that are beyond our control is a trait many of us share. I sometimes worry that the earth will break out of its orbit and hurdle us all toward the sun, but I digress. We’re not talking about me, here. We’re talking about retirees and pre-retirees with more legitimate “beyond-our-control” worries.

Both groups show a high degree of concern about economic and political events that could impact their retirement. Things such as cuts to Medicare, Social Security, a world crisis, or stock market decline rank high on the list. These groups show less concern for things within their control such as poor planning or spending more than they should. Ironically, when neglected, the things within our control can often cause the most damage.

Everything in moderation.

That’s usually good advice, especially at an all-you-can-eat sushi bar, but possibly even more so for pre-retirees and retirees trying to end up with enough money to retire. The relatively low level of risk often taken by these segments makes sense given the danger that an investment loss of 10 to 20 percent could pose to their financial security. Sixty percent view their investment risk as moderate and and nearly everyone (93 percent) in the study said they are satisfied with the risk they take. However, a low-risk strategy can contradict the need for continued growth of one’s money to cover inflation, the potential of living a long life, and other factors. One way investors can take on more risk while still protecting future income is by purchasing an annuity and an add-on benefit.‡ Definitely something to ask your advisor about if you’re afraid to take the risks you may need to provide the potential for income you want.

Calling all advisors—expand your focus.

Pre-retirees and retirees say their greatest financial risk concerns are long-term care and health risks. Unfortunately, these are also the risks that advisors seem to be the least helpful with. While more than 55 percent of respondents in both groups say their advisors are extremely or very helpful in guiding them on issues such as investment, volatility, longevity and legacy risk, a much smaller percentage say their advisors are extremely or very helpful in guiding them on the issues about which they are most concerned—long-term care and health risk. 

People think building funds is easier than managing how to take income from them.

Of retirees already drawing income from their savings and who see a difference between managing investments while working and managing investments in retirement, 44 percent say that it’s easier to manage investments during the phase of accumulating money. Forty-five percent said both are equally difficult and only 12 percent think it’s easier to manage investments while in retirement. Those figures don’t surprise me. Many advisors focus their clients’ financial plans on accumulating as much money as possible for retirement, but often, it can be even more important to develop a strategic plan for taking income from those investments in the most efficient way. Making the money you’ve saved last as long as possible (hopefully for your lifetime) is a critical part of a comprehensive plan, and if you’re advisor hasn’t addressed this with you, it’s time to bring it up.

"Making the money you’ve saved last as long as possible (hopefully for your lifetime) is a critical part of a comprehensive plan... if you’re advisor hasn’t addressed this with you, it’s time to bring it up."

Lifetime income can be a strategic component of a retirement plan.

Along with high percentages for diversifying investments, investing more conservatively, and reducing spending, sixty-seven percent of both retiree and pre-retirees see the strategy of investing in products that offer guaranteed lifetime income as a good idea for managing money in retirement. While not for everybody, it’s probably a good idea to consider these products, especially in these times of disappearing pensions and Social Security uncertainty. Often, the money we need to live well in retirement and the money we’ve saved leave a concerning income gap. An annuity with the purchase of a living benefit can give you the confidence of knowing you’ll have income that lasts a lifetime—and it’s the only investment product that can offer that guarantee. That’s powerful. Keep in mind, that while the income is guaranteed, the value of the underlying investments held within the variable annuity contract may fluctuate in value and may be subject to loss of principal. Consult your financial advisor if you believe a lifetime income product could be right for you. 

Now is the time.

Even though the survey shows retirees are lacking in their preparations for retirement, a large majority do think these steps should be taken at least five to 10 years prior to retirement. Kind of a “do as I say, not as I do” scenario. In fact, fewer than half say they waited until five years before retirement to calculate the savings they’d need and only a quarter had selected a target age for retiring.

I can’t stress enough how important it is to start thinking now about the income you’ll need later. Whether you’re 35 or 65, waiting one more day puts you farther behind. Instead, consult with an advisor now and create a plan that allows you to take the amount of risk you need (and are comfortable with) and that includes a strategy to provide you with income to last your lifetime. With all the advancements in health and medicine—that could be a long time. And, if you’re like me, you’ll want to make sure you have a little fun money to spend on your 105th birthday.

Greenwald and Associates and The Diversified Services Group, "Retiree Insights 2017 Survey of Consumers," 2017.


What is an annuity:

An annuity is a long-term, tax-deferred vehicles designed for retirement. Variable annuities may involve investment risk and may lose value. Earnings are taxable as ordinary income when distributed and may be subject to a 10% additional tax if withdrawn before age 59½.

† Guarantees are backed by the claims paying ability of the issuing insurance company. 

‡ Optional benefits are available for an extra charge in addition to the ongoing fees and expenses of the variable annuity.

Investing involves risk, including possible loss of principal.

The opinions and forecasts expressed are those of the author and individuals quoted and should not be construed as a recommendation or as complete.