retirement risk study wave 2

Difficult conversations: talking to clients about risks to their retirement strategy

It’s time to start talking about and planning for specific retirement risks, both as part of the COVID-19 pandemic and beyond.

Many Americans are still adjusting to their new normal as the effects of the COVID-19 pandemic reach into so many aspects of everyday life. No matter how the pandemic is impacting your clients, they are likely wondering how it may impact their financial situation, and in turn, their retirement strategy.

Now is the time to be discussing how certain risks can impact clients’ plans to retire. Things like the rising cost of living, market volatility, and longevity can all derail a savings strategy – and these conversations are important, perhaps now more than ever. But are financial professionals missing an opportunity to help prepare clients for protecting their retirement savings against specific retirement risks? The latest findings from the Retirement Risk Readiness Study* suggest that’s the case.

While some of these worries might be top of mind for clients, for whatever reason, they may not be bringing them up with you. Findings from the study show:

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Six in 10 non-retirees said running out of money before they die is one of their biggest concerns, but only 27% of non-retirees who work with a financial professional have discussed this aspect of longevity risk with them.

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55% of non-retirees said they are worried they won’t have enough saved for retirement, and nearly one-third (31%) say they are way too far behind on retirement goals to be able to catch up in time. But only 12% said setting long-term financial goals is their top priority, and merely 6% identified developing a formal plan with a financial professional as their top priority.

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Nearly half (49%) of all respondents identified a stock market drop as the greatest threat to their retirement income, but less than 30% of Americans who work with a financial professional said they had discussed this with their financial professional.

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While more than half (59%) also said they are worried that the rising cost of living will prevent them from enjoying their retirement, only around two in 10 are having discussions about the impact of inflation and how it can prevent them from enjoying their retirement.

As the impacts of the pandemic settle in, it may be helpful to move conversations about retirement beyond accumulation strategies to focus more on how to help a client protect their hard-earned savings from retirement risks that may jeopardize their financial future.

If you’re appointed with us, you can log in to access planning materials and resources to help clients start thinking about risks to their retirement security, and how you can help them create retirement strategies that fit their needs.

*Allianz Life conducted an online survey, the 2020 Retirement Risk Readiness Study, in January 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

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