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Do your clients need a retirement risk reality check?

Many Americans expect a long retirement, but most are unprepared for when and how it will happen.

As a financial professional, you’ve been tasked with helping your clients plan for retirement. But what happens when the start of that retirement is unplanned? According to our new Allianz 2020 Retirement Risk Readiness Study, half of Americans said they retired earlier than expected. And the vast majority reported doing so for reasons outside of their control, including unanticipated job loss (34%) and healthcare issues (25%).

In these cases, clients are starting retirement before they are truly “ready,” and they are faced with spending more time (in some cases a lot more time) in retirement than their original financial strategy had accounted for.

Beyond that, an unexpected start to retirement may change how they expect to be spending their golden years. Nearly two-thirds (65%) of non-retirees think it is likely they will work at least part time in retirement, but only 7% of retirees are currently working at least part time.

In fact, the closer people are to retirement, the less enthusiastic they are about the idea of extending their employment. When asked if they would rather retire at age 55 and have their basic expenses covered in retirement or work until age 75 and live more extravagantly in retirement, less than a quarter (23%) of retirees said they would prefer to work longer (versus 33% of near-retirees and 48% of pre-retirees).

So how can you help clients who may be facing a longer-than-expected retirement and are likely not going to be working in retirement?

It all starts with making a plan for income in retirement that is flexible enough to adapt when a client’s life scenario changes. Having a financial product that can provide guaranteed income in retirement can be an important part of this strategy.

Yet, for most people, incorporating financial products that offer guaranteed retirement income isn’t top of mind as a potential solution.

Less than one-third (30%) of non-retirees say they currently have a source of guaranteed income in their portfolio to help them meet retirement goals. While nearly four in 10 (39%) say they plan to purchase a guaranteed income product in the future, only 3% view it as a top priority.

If you’re appointed with us, you can log in to access income planning materials and resources to help clients make flexible retirement strategies that fit their needs.

*Allianz Life conducted an online survey, the 2020 Allianz 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.

Guarantees are backed by the financial strength and claims-paying ability of Allianz Life Insurance Company of North America.