Current economic conditions have muddied the picture of what retirement should look like for many Americans. According to the ninth annual Nationwide Retirement Institute’s Advisor Authority study, nearly one-third (31%) of retirees expect to be less secure in their retirement than their parents and grandparents were.
This feeling of uncertainty among retirees is compounded by the fact that everyday financial obligations remain a concern. More than one-in-five (22%) retired investors worry about affording their monthly bills.
The transition into retirement is no cakewalk, though, demanding crucial shifts in the prioritization of financial commitments. On top of short-term obligations like basic living expenses, long-term debt continues to weigh on retirees. The report shows that 26% of retired investors continue to pay off their mortgage, and 25% are still paying down credit card debt.
Many Americans who saved for retirement likely looked forward to a time of leisure and travel, yet retired investors are adjusting their priorities to make ends meet in the wake of economic constraints. Nearly four-in-10 (39%) retired investors are spending less on entertainment to meet financial commitments in today's economic environment, and more than a third (34%) are taking fewer trips or vacations.
To compensate further, 22% of retired investors are drawing more funds from retirement accounts, intensifying the traditional decumulation stage.
"The picture of life after retirement has changed for many people as economic stressors continue to weigh on retired investors," said Mike Morrone, vice president of Nationwide Annuity Business Development. "Now is the time for advisors and financial professionals to check in with their clients and help them remain calm, nimble and informed in the face of continued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement."
Retired investors are also initiating conversations about legacy planning and wealth transfer with their heirs. Nearly a third (32%) of retirees are discussing end-of-life wishes (long-term care expenses, funeral preferences, etc.), and 34% are discussing financial details of their estate with heirs.
More than half (59%) of advisors say their clients are confirming beneficiary designations to prepare their heirs for the transfer and management of wealth. Another 54% say their clients are reviewing or creating estate planning documents, and 44% are building financial confidence and knowledge.
"Advisors are recognizing and acknowledging investors' desires to avoid making the wrong moves in retirement," Morrone said. "They can help clients feel more confident about their retirement plans by understanding their goals and anxieties, and helping them protect their savings and plan for income they won't outlive by reinforcing the value of different retirement solutions and products, like annuities."
