The shorter, cooler days of October welcome personal reflections on abundance and the changing of seasons. Maybe that’s what makes the month an ideal time for National Retirement Security Week, when Americans are encouraged to reflect on their individual retirement goals and explore whether they’re on track to achieve them.
First established in 2006 by a Senate resolution and called “National Save for Retirement Week,”1 National Retirement Security Week offers an opportunity for advisors to amplify messages and increase public understanding of the importance of saving early and preparing in advance for retirement.
With that in mind, here are five facts you can reflect on that offer insights into clients’ needs when it comes to saving and planning for retirement — and which you can use as conversation starters to help get clients thinking about saving, investing and planning for the retirement they envision.
Fact: The average American 65 and older spent $50,220 in 2019.2
It can be difficult to plan for a reality that lies far in the future, and it can be even harder to save money for retirement without an idea of what will be needed to cover expenses. So, how much do retirees spend on the basics of living?
According to the U.S. Bureau of Labor Statistics, the average American 65 and older saw an annual income of $49,445, and expenditures of $50,220. Their average spending on food, housing, healthcare, transportation, and utilities added up to $42,206 of that total.2
It may be valuable to use averages as a starting point for a conversation about retirement savings goals, and how your clients plan to pay for basic living expenses.
Fact: The average monthly Social Security retirement benefit in December 2020 was $1,544.3
That adds up to just $18,528 per year, which doesn’t even come close to the average annual expenditures of Americans 65 and over. What’s more, that’s an average. If your clients don’t have a clear idea of their estimated monthly Social Security income, it’s tough to expect them to have a solid retirement savings goal.
Fortunately, the Social Security Administration makes it quick and simple to calculate an estimate of future monthly payments to serve as a starting point for understanding when it may be prudent to begin receiving benefits, and how much savings will be needed to bridge the gap between Social Security and living expenses.
It’s important to keep in mind that the online tool is intended only as an estimate. You can encourage clients to log into their Social Security account for more accurate information about their retirement benefits. Even with more precise numbers, it should be easy to see the gap between the lifetime retirement income of Social Security benefits payments and your clients’ anticipated expenses of day-to-day living in retirement.
Fact: Among workers saving for retirement, 67% regret not starting sooner.4
That sense of regret spikes as high as 79% among workers ages 51-55 — and considering that more than half of American workers have saved less than $50,000 for retirement, that regret may be for good reason.4
Because even when clients can only set aside a little each month, it may still be possible to meet retirement savings objectives if they begin saving earlier in their careers. Time can be an important factor in maximizing retirement savings by making the most of compounding and earning interest over the course of more decades, rather than fewer.
Fact: Saving for retirement is a top financial priority for the next 12 months among 39% of Americans.5
The only priority that ranked higher was paying expenses and bills; other significant priorities include paying off debt, taking care of family and investing.5 These are all objectives that a financial advisor can help clients clarify, prioritize and achieve.
A conversation about financial priorities can be especially helpful to establish a foundation of understanding your clients needs, as well as their values.
Don’t be afraid to ask clients clarifying questions about what’s most important to them, today and in the future. Our behavioral finance tools can help you and clients go deeper to understand core values, as well as the ways emotions can affect financial decisions.
Fact: In 2021, American adults listed financial advisors as their most trusted source of financial guidance.5
When surveyed just one year prior, respondents listed themselves as their most trusted source.5 Needless to say, a lot can happen in a year’s time. Recent events have had a tremendous impact on employment, income, housing costs and more.
In fact, 38% of Americans reported working with a financial advisor in 2021, up from 29% a year before. Interest in working with a financial professional is even more evident among Gen Z and Millennials than other generations.5 As a financial professional, you can embrace this fresh appreciation for the knowledge you bring to the table, and establish client relationships that last a lifetime.
Making sure clients know where and how to access and use free tools like Social Security calculators and compound interest calculators demonstrates your commitment to financial education and long-term financial wellness.
You also have a unique opportunity to help clients explore the value of guaranteed lifetime income in retirement. As you develop individualized retirement planning strategies with clients, you can help them understand, for example, that delaying Social Security benefits doesn’t have to mean delaying retirement.
You can encourage clients to explore deferred income or immediate annuities as a way to convert a lump sum from their retirement savings into guaranteed income that may help them bridge the gap between their Social Security benefits and their retirement income needs.
National Retirement Security Week offers financial professionals an opportunity to drive awareness of your practice and the ways you can help clients achieve retirement security. Tap into our ElevateTM Advanced Planning Resources to help address clients’ questions about income planning, rollover opportunities, legacy planning and more — get appointed to access our full library of advisor tools, resources and support.
1Senate Resolution 550, Resolution Designating October 22 through October 28, 2006, as “National Save for Retirement Week,” 2006.
2Bureau of Labor Statistics, Table 1300. Age of reference person: Annual expenditure means, shares, standard errors, and coefficients of variation, Consumer Expenditure Survey, 2019.
3Social Security Administration, Fact Sheet, 2021.
4Insured Retirement Institute, Retirement Readiness Among Older Workers 2021. Copyright © 2021 by the Insured Retirement Institute (IRI), 1100 Vermont Avenue NW, 10th Floor, Washington, DC 20005. All rights reserved. This use of this copyrighted material by CUNA Mutual Group has been specifically authorized by IRI for educational purposes only. This copyrighted material may not be otherwise used, published, distributed, reproduced, or shared, in whole or in part, without the express written consent of IRI.
5Northwestern Mutual, 2021 Planning & Progress Study: Advisors.