The S&P 500 is up about 73% for the three years ending July 18 and as of that date, the benchmark domestic equity gauge was hovering near all-time highs. Obviously, that’s good news for equity investors, many of whom are market participants by way of employer-sponsored plans.
In theory, appreciating equity prices should be just what the doctor ordered in terms of shoring up retirement outlooks, but the stock market isn’t the economy nor is it the entirety of a retirement plan. So it’s not surprising that even amid a bull market for stocks, many workers are postponing retirement.
In this case, “many” means a staggering 70%, according to a recent study by F&G Annuities & Life. The company polled pre-retirees 50 years old and up, so the point that seven in 10 are delaying departing the workforce is arguably staggering. In what represents a clear call for pre-retirees to consider working with advisors, nearly half of those queried by F&G are putting of retirement for fear of inadequate savings. Indeed, there are compelling reasons for advisors and pre-retirees to come together and do so sooner than later.
“Financial professionals have an opportunity to help more Americans aim for an ‘A’ in retirement by guiding them to align their financial plans with the kind of life they truly want in their later years,” notes F&G CEO Chris Blunt.
Delayed Retirement Isn’t Always Bad News
As is the case with other elements of the broader retirement equation, pushing off retirement isn’t always bad news. Forty-two percent of pre-retirees polled by F&G said they want expanded options and a bigger safety net before leaving the workforce while just over a third said they simply like their jobs – two valid reasons for not rushing into retirement.
Then there are the retirees that opt to return, plenty of whom do so not for financial reasons, but because they’re bored or feel they still have contributions to make. Advisors should note demographic factors at play in the “unretired” movement as Gen X is twice as likely as are boomers to reenter the workforce after retiring, according to F&G.
Gen X’s willingness to unretire or postpone doing so is understandable and not all of it boils down to slack retirement savings, though that is part of it.
Gen X’s status as “the bridge generation” often goes overlooked by society at large and the financial planning community. In this context, bridge generation means many Gen Xers are still young enough to have one or both parents alive and old enough to have families of their own. Said another way, it’s not uncommon for some Gen Xers to be contending with financial burdens pertaining to their parents and their children.
Pre-Retirees Need to Hire Advisors
This isn’t a shill for the wealth management industry, but the stark reality is many Americans aren’t working with advisors and that percentage is above-average in Gen X – a demographic that’s chock full of folks that are close to knocking on retirement’s door.
“However, 47% of Americans - and 54% of Generation X respondents - are not using the services of a financial professional. Engaging with a financial professional can help people navigate the challenges of planning and achieve lasting peace of mind in their retirement years,” observes F&G.
Gen X should be motivated to work with advisors because 64% told F&G they’re worried about macroeconomic factors and that’s on top of that generation being the first to be largely short-changed on defined benefit pensions.
