The third greatest threat to a client ’ s retirement , in advisors ’ minds , will be their need to support adult children and other family members , a problem named by 35.37 % of advisors . ( They say this risk is something only a tiny percentage of clients recognize .)
Coming in fourth is whether the clients will be able to generate a reliable income stream , something noted by 32.18 % of advisors , while 31.92 % say the biggest risk is when a stock market crash happens early in the client ’ s retirement . ( The surveyed advisors could choose multiple threats .)
“ I ’ ve been doing this 24 years , and I don ’ t think the fears have changed at all ,” says Ryan Williamson , a financial consultant at Horizon Wealth Management in Chicago . “ So much of it is psychological , where people are changing their headspace from W-2 income to solely relying upon all the work they ’ ve done in saving .”
To add another layer of angst , Williamson says , new retirees often dwell on how they compare to their neighbors and social circle . “ A lot of people have the anxiety , too , of , ‘ Well , shoot , I see my neighbors and they have a boat , they ’ re traveling all the time . I don ’ t feel like I have enough .’”
The Details Of Decumulation
Advisors are fairly evenly split when it comes to the best way for clients to start withdrawing their assets , with no one approach getting more votes than others . For example , 36.44 % of advisors say they recommend their clients begin with a starting point between 4 % and 5 % of their portfolio , and then adjust annually for inflation .
Following that , 27.66 % recommend their clients start off a little more modestly , pulling out between 3 % and 4 % in the first few years of retirement . Another 27.13 % say they adjust the withdrawal rate every year , depending on several factors .
When asked the question himself , Williamson wrote “ other .” He instead barbells his clients ’ withdrawals ( having them take more earlier and later in retirement , and take less in mid-retirement , to better align with the ways their anticipated expenses will be distributed across their retirement timelines ). He says he keeps in mind the three phases often referred to as “ Go-go , slow-go and no-go .”
“ Nobody knows what tomorrow is going to bring . We ’ re not promised anything . So I encourage [ clients to ] do their traveling , do all the stuff that ’ s physical , and so expenses typically are higher earlier on ,” he says . After that , the expenses will decline in their middle retirement years . “ Then in the third phase , where the only priority is making sure healthcare is
The advisors in the survey say that an average of 62.88 % of their clients 55 and older intend to work to 65 and beyond . taken care of , expenses pop back up .”
Many clients seem to have unrealistic expectations for when they would have to stop work . The advisors in the survey say that an average of 62.88 % of their clients 55 and older intend to work to 65 and beyond . Yet only 29.89 % of their clients who are 65 and older are actually still working .
Those who are still working aren ’ t necessarily miserable . Their advisors say 91.2 % of them enjoy it . But keep in mind that 48.27 % also feel their savings isn ’ t enough to live on and 41.6 % need the health insurance , according to their advisors .
All that said , 44.68 % of clients are putting away 10 % to 15 % of their income toward retirement and 27.13 % are saving 15 % to 20 %, the survey respondents say . And advisors say 73.95 % of their clients between 50 and 65 are on financial track to reach their retirement goals .
Among your retired clients , what is their top concern ?
Outliving their assets 38.03 % Generating a reliable income stream 31.92 % A future stock market crash 12.5 % Healthcare costs 8.51 % Supporting adult children or family members 2.93 % Finding a desirable retirement community 0 % Other 6.12 %
Based on 376 respondents .
In general , what kind of withdrawal rate do you recommend for your retired clients ?
A starting point between 4 % and 5 % of their portfolio , adjusted annually for inflation 36.44 % More than 5 % of the portfolio ’ s annual value 2.93 % Between 3 % and 4 % in the first few years of retirement 27.13 % We adjust the withdrawal rate every year , depending on several factors . 27.66 % Other 5.85 %
Based on 376 respondents .
If clients are working past 65 , why ?
They feel their savings are not enough to retire on . 48.27 % They enjoy working . 91.2 % They have a business or professional practice they cannot sell . 34.4 % They need health insurance . 41.6 % Other 5.6 %
Based on 376 respondents .
46 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2024 WWW . FA-MAG . COM