Outliving retirement savings is the top worry of financial advisors’ clients, according to a new report.
Principal Financial Group discloses this finding in its 2nd quarter 2013 edition of the “Principal Financial Well-Being Index: Advisors.” The study examines the challenges facing financial professionals and identifies advisors’ recommendations for overcoming obstacles and achieving client financial success.
When asked about the retirement worries that keep their clients up at night, 85 percent of the more than 600 group benefit, group retirement and individual retail advisors surveyed by Principal Financial identify outliving their savings. This is down slightly from the 87 percent recorded in 2011 but 7 points above the 78 percent posted in 2010.
Among the other top worries identified in the Principal survey:
● 76 percent: Being able to enjoy the same quality of life that clients live now or lived before;
● 70 percent: Being able to afford good medical care;
● 54 percent: Being able to pay for assisted living/long-term care; and
● 41 percent: Rising cost of inflation reducing purchasing power.
The report adds that “living beyond their means” (24 percent) and “not saving enough” (15 percent) are the top financial blunders of clients. Others include “not starting retirement savings early in one’s career” (9 percent), “putting off creating a financial plan" (9 percent) and "reluctance to take financial action" (9 percent).
Additionally, clients most often call their advisors for hand-holding when there are dynamic market swings (75 percent) and a financial crisis (71 percent). Those who contact their advisors to seek “hot investment tips” dipped to 16 percent this year from 22 percent in 2011.
The report notes that nearly half of advisors (47 percent) believe their clients should save between 15 percent and 20 percent of pay to have enough income in retirement. However, most advisors (56 percent) indicate that no more than one in four of their clients begin saving enough in their career to achieve the recommended level of retirement savings.