by Ryan W. Smith
Franklin Templeton investments has publicly released its fifth annual Retirement Income Strategies and Expectations survey, often referred to as the RISE survey. Each January for the last half decade the firm has interviewed about 2,000 adults about retirement savings.
This year’s results reinforce a trend the firm’s research has shown each year: retirement savings are down while concerns are rising. Fewer people, in fact, are saving any money at all for retirement.
The survey’s data shows a real disconnect between concerns that people have about their retirement savings and action taken to alleviate, or reduce, those concerns. For example, of the survey respondents, 41% said they did not save anything towards retirement in 2016, compared to roughly 38% in 2015 and 35% in 2014.
Meanwhile, for the first time, over 50% of the respondents are very, or somewhat, concerned that they will outlive their assets or will be forced to make significant sacrifices during retirement. For the past few years, that number has hovered around 47%.
Not of all of the survey data is negative, however. For younger workers, the Millennial generation, attitudes towards retirement savings are generally positive since 69% are confident that their 401(k) accounts will provide them adequate income in retirement. However, 57% have not started saving for retirement and only 35% expect their retirement will be better than previous generations. One additional positive note for Millennials is that only 32% believe that running out of money will be their top concern during retirement.
Baby Boomers, somewhat surprisingly, are also generally positive about their retirement savings, with 70% feeling confident that Social Security will fully provide their expected income during retirement. They also feel healthy, with only 29% expecting medical and health issues to be a top concern during retirement.
A troubling aspect of the results was that 30% of those Boomers already retired entered retirement due to circumstances beyond their control. With the oldest members of that generation only approaching 70, and with 10,000 new retirees turning 65 each day, these forced early retirements could hit numbers never seen before in the United States putting additional strain on Medicare, Medicaid and Social Security.
Several aspects of the survey lead to a conclusion that some of the worry individuals currently face can be remedied with financial advisors providing a key link. According to the numbers regarding the survey respondents, there are openings for prudent financial advisors to find new clients. For example, Baby Boomers were just under a third, 616 out of 2,019, of the respondents. Of those, only 198 are currently working with a financial advisor while 104 do not have an advisor currently but have had one in the past.
Generation X comprised 528 of the 2,019 respondents. Of those only 93 have a financial advisor and another 100 don’t currently have a financial advisor but did in the past. For Millennials who responded to the survey, the trend continued. The youngest working generation comprised 641 of the 2,019 respondents, but only 90 currently have a financial advisor while 120 had one in the past.
For all generations, 1,182 of the 2,019 respondents never had a financial advisor, while another 371 had professional financial advisors in the past but currently do not have one.
Essentially 2 of every 3 survey respondents do not currently have a financial advisor.
This number, perhaps the real reason Franklin Templeton does this yearly survey, suggest that financial advisors have available openings to ease the overall worry that this survey also found. Perhaps the survey’s best follow-up question would be to ask about the best ways financial advisors could successfully reach out to this two-thirds?