It’s an alarming statistic: nearly 70% of Americans at or near retirement age have less than $250,000 in savings, according to a recent survey by Schroders, the Amsterdam-based asset manager. London with nearly $1 trillion in assets under management.
“We’re going through a really tough time,” said Joel Schiffman, North America midstream distribution manager at Schroders. Intel RIA. “Clearly there is still work to be done to bridge the gap between saving and having enough for retirement, let alone comfort.”
Formalized financial plans would help people save more for retirement. But 76% of Americans say they feel overwhelmed by the idea of creating one and 56% say life is too uncertain for a plan to have any value, according to a February survey of 1,000 investors across the United States aged 45-75 by Schroders and 8 Acre Perspective. The median household income of respondents was $75,000 per year.
Unsurprisingly, less than a quarter (23%) of Americans have a written retirement plan, 40% have made a plan but have no formal plan, and 37% have made no plan at all.
“The idea that so little [people] on a relative basis, having a plan continues to underscore the need that it’s never too late to start a plan,” Schiffman said.
About a third of investors don’t have a financial plan when they become clients of Sage Wealth Planning, an RIA in Austin, Texas, which charges 75 clients a flat annual fee between $5,000 and $15,000 depending on their needs and manages $52 million in assets. But almost all new clients receive a financial plan and benefit from it, said Ethan Kok, co-owner and financial planner of Sage Wealth Planning. Intel RIA.
The results of the Schroders investigation came as no surprise to Kok, and he agreed with Schiffman that it’s never too late to create a financial plan.
“If you’re one of those people who have less than $250,000 set aside for retirement and you really feel like you need at least $1.1 million. Well, I think now is the perfect time to contact a financial adviser,” Kok said.
A financial plan also helps a client determine how much they really need to save. Maybe they don’t need $1.1 million like they think. This information is valuable no matter how close someone is to retirement or if they’re already retired, Kok said.
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“I would much rather know at 60 that I need to work until 70 to retire than to continue from 60 without really knowing when I’m going to retire,” he said. declared. Investors, especially those who already have a plan, would agree – 91% of investors surveyed by Schroders who had a retirement plan said the plan was helpful and 33% said putting them in place was essential. on a better path to retirement.
Few Americans nearing retirement believe they have enough money to retire. Only 22% surveyed in February felt they had saved enough for their retirement, compared to 26% last year. Schroders has conducted the same retirement survey each of the past three years.
Americans are mostly worried about inflation and rising health care costs that are impacting their retirement.
Many people worried about expenses probably don’t need an ongoing financial advisor, but they could benefit significantly from a one-time financial plan, Kok said. His company makes about 10 one-time plans for people every year, a sort of diagnostic test of their finances.
“There’s this notion that in order to have a savings plan or an asset accumulation plan or even a payout plan, you have to have this endless close-up, but it doesn’t have to be like that. . I think there’s something lost here about needing something really deep for a plan as opposed to [just] have a plan,” Schiffman said.
Holly Deaton (@HollyLDeaton) is a writer at RIA Intel and based in New York.
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