While many retirees are happier than their counterparts who are working, few who have retired have actually formulated a financial plan for their retirement years.
According to "Outlook in Retirement: New Insights on Planning and Personality," which was released late last month by AllianceBernstein Investments Inc. of New York, 77% of retirees said they felt comfortable with life in general, and 54% said that they felt comfortable with their financial situation.
Meanwhile, 70% of pre-retirees said they felt comfortable with life in general, and 34% said they were comfortable with their financial situation.
However, when asked how well prepared they were for their retirement years, 26% of retirees said that they worked with a financial adviser, 29% said they had created a financial plan, and 17% said that they didn't plan at all.
On the other hand, 15% of pre-retirees said that they worked with a financial adviser, 21% said they had created a financial plan, and 11% said that they had not begun planning for their retirement yet.
"Retirement is a lot more real when you are a retiree," said the report's author, John D. Curry, managing director, individual retirement services, at AllianceBernstein.
"One big takeaway from the study is that planning comes in many forms and that there is a very quantifiable value in formal written financial plans."
Clients who are comfortable going into retirement have pensions, Social Security and part-time work, and their portfolio plays a smaller role in their retirement planning, said Michael A. Dubis, president of an eponymous financial planning firm in Madison, Wis.
"There is never going to be that level of comfort or true relaxation once someone is fully retired," he said.
"Those folks not working with an adviser need to work on a plan, and I wouldn't take the risk as an adviser and let them work on their own."
Noting the recent market volatility and steep drops due to the subprime-mortgage crisis and credit crunch, Scott Oeth, principal of Midwest Investment Advisors Inc., an Edina, Minn., firm with $125 million in assets under management, said that going through the planning process helps people deal with uncertainty.
"I think that creating a plan helps folks feel relieved of the nagging retirement questions that have bothered them for quite a while," he said. "Working with an adviser helps a lot when dealing with market volatility."
Financial advisers need to make a greater effort to tailor their messages to different types of clients rather than taking a one-size-fits-all approach, Mr. Curry said.
Some clients want to be contacted on a more regular basis and have more of an active engagement over time, Mr. Curry said, but most want to speak with their adviser once per quarter. Communication that is more personalized can have a stronger impact, he added.
However, sometimes the first communication with an adviser may be initiated too late.
"The horse is out of the barn for clients who come to us and have done no planning before," said Ian Weinberg, chief executive of Family Wealth and Pension Management LLC, a Woodbury, N.Y., firm that manages $100 million.
The online survey, conducted in February, collected responses from a sample of 1,043 retirees and 1,004 pre-retirees who worked for a business that offered a 401(k) plan.
Aaron Siegel can be reached at [email protected].
