Saturday, October 23, 2021

Retirees Expect More Than Investment Advice, Says Edward Jones Study

They want advisors to consider at least four elements they believe are important for a successful retirement.

American retirees expect more than investment advice, according to a new report. And when it comes to finances, they are worried most about outliving their money and not being able to afford the cost of long-term health care.

“Pre-retirees are even more concerned about the cost of long-term care,’’ said Maddy Dychtwald.
And more retirees than ever are worrying they will contract Alzheimer’s disease, she said.

Dychtwald, an author and co-founder of Age Wave, discussed the findings of the new report, “The Four Pillars of the New Retirement: What a Difference a Year Makes,’’ an online study conducted for Edward Jones and Age Wave by the Harris Poll from May 2020 to March 2021, during and after the onset of the worldwide COVID-19 pandemic.

About 2,000 adults 18 and older participated in the study — including 616 retirees and 335 pre-retirees, age 50 and older — which was a follow-up to a similar 2020 study. The four pillars are family, health, purpose and finances.

Joining Dycthwald was Ken Cella, Edward Jones client services group principal; Kerry Hannon moderated the event.

The Biggest Surprise

“What finding surprised you the most?’’ Hannon asked.

“When financial advisors interact with clients, clients expect their advisors to give them a complete picture of their wellness. As advisors, we hadn’t found that before the four pillars emerged,’’ Cella said.

Retirees told pollsters that wellness of health, purpose, family and finances are the elements of a successful retirement. Cella said the report’s findings are an important tool for advisors.

Despite the pandemic’s “unprecedented volatility (affecting) economic markets, physical and mental health and social justice issues,’’ 76% of respondents said that enduring the pandemic had helped them “refocus on what’s most important in life.’’ About 63% gave themselves grades of “A” or “B” on “spending their time in purposeful ways,” compared to only 55% in May 2020.

Retirees generally reported much higher levels of contentment and happiness than non-retired Americans, as they feel greater freedom from responsibilities and stressors and freedom to pursue their own interests and purpose, the report says.

“Most surprising to me was that young people are having a harder time coping than older people, especially after COVID. Older people have developed the muscle of resilience.’’
— Maddy Dychtwald, Age Wave

“Most surprising to me was that young people are having a harder time coping than older people, especially after COVID. Older people have developed the muscle of resilience,’’ Dychtwald said.

The report found that 44% of Gen Z and 35% of millennials said they experienced a negative financial impact because of the pandemic. Only 20% of post-baby boomers said they felt a negative financial impact.

More than 30% percent of respondents said they plan to retire earlier because of the pandemic, and 11% said they will retire later. More than half, or 56% of respondents, define retirement as “a new chapter in life.’’

Relationships Are Top Priority

About 80% of all respondents said relationships with family and friends are the most important pillar of the four pillars, while 61% of retirees agreed with that. A purposeful life was identified by 92% of retirees as crucial to well being, with 67% saying spending time with loved ones was the greatest source of finding purpose, meaning and fulfillment. Only 16% of retirees rated being financially wealthy as a top source of fulfillment.

The gender gap in retirement expectations troubled Dycthwald, who referred to the pandemic year as a “She-cession”: 56% of male respondents are confident about a successful retirement, while only 40% of women feel that way.

Dychtwald said the report showed that women’s retirement account balances are 67% of male’s account balances, and that during the pandemic, 41% of women said they were able to save for retirement as compared to 58% of men.

That adds up to real money, Dytchwald said. Over a lifetime, because of pay inequity and career disruptions to give birth and be a caregiver, women lag behind men to the tune of an earnings gap of $1.1 million, the report found.

Women are hit harder by aging, said Dychtwald, 71, because of lower incomes and an extension of ageism, which she called “lookism”: A greater need for women, rather than men, in the workplace to have a youthful appearance, or run the peril of being ignored, isolated, or not hired.

The report was a call to action, Cella said, for financial advisors to pay attention to their clients’ retirement needs. Sixty-one percent of retirees said they wish they had done better at planning for the financial aspects of retirement, and 54% wish they had done a better job planning for the non-financial aspects or retirement —such as where they will live, how to make new friends, how to manage time, and how to manage a healthy life.

In May 2020, 32% of retirees said their most feared condition in later life was Alzheimer’s disease; in December 2020, that number had risen to 41%.

Greatest Financial Fear

Respondents’ greatest financial fear in retirement — health care costs — rose from 52% in May 2020 to 58% in March 2021. The percentage worrying about outliving their savings rose from 35% to 38% in the same period.

The report found that 70% of those surveyed are now paying more attention to long-term finances because of the pandemic. And 77% of those planning to retire said they wish there were more resources to help them plan for their ideal retirement.

Cella said that advisors must develop an “EQ’’ — an empathy quotient — to effectively coach clients during their accumulation period and in their retirement.

“We need to help them discover what their retirement goals are; get a conversation going, ask good questions and talk about trust and caringness,’’ he said.

More information is available at www.edwardjones.com/newretirement.

n a four-decade career in journalism, Eleanor O’Sullivan has reviewed many books on best practices for financial advisors, has written for Financial Advisor and the USA Today network, and was movie critic for the Asbury Park Press.

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