Amid blinding economic sandstorm, just two-fifths of investors have a retirement target

Amid blinding economic sandstorm, just two-fifths of investors have a retirement target
Survey reveals three-quarters of investors bracing for recession, with 83 percent of older respondents worried about basic living needs.
MAY 13, 2024

A recent survey by Nationwide reveals that economic uncertainty has significantly impacted American investors' retirement expectations, with many altering or abandoning their retirement savings targets.

The findings come from Nationwide's annual Advisor Authority survey which examines the financial outlook and planning strategies of US investors.

According to the survey, over the past five years, 61 percent of investors have shifted their retirement expectations considerably in the face of fluctuating economic conditions. That has left only 38 percent of respondents with a set retirement savings target, a stark indicator of the growing apprehension among investors about their financial future.

"Americans believe they will need over $1 million to retire comfortably – a figure that could be discouraging for even the most committed retirement savers," Rona Guymon, senior vice president of annuity distribution at Nationwide, said in a statement.

While everyone might have a “magic number” to shoot for depending on spending habits, debt levels, health, and other factors, Guymon advocates for holistic financial planning as a more reliable approach to a comfortable retirement.

The survey also highlighted that investors are increasingly concerned about affording basic needs in their retirement years. Among those aged 55 and older, an 83 percent majority said they are worried about covering fundamental living expenses, while 58 percent are anxious about healthcare costs, and 39 percent about supplemental health insurance.

The thought of a US economic recession is casting a psychological pall over three-quarters of investors, including 81 percent of non-retired 18- to 54-year-olds.

That has caused nearly a third of non-retired investors to see a downturn in the economy as the most immediate challenge to their retirement nest egg in the next 12 months. On the other hand, more than half of non-retired investors are bracing themselves for a rate hike 12 months from now, and 19 percent are expecting to retire later than planned because of inflation.

"It's important for investors to focus on what they can control in today's economic environment," said Mark Hackett, chief of investment research at Nationwide.

Despite the apparent absence of harmony in the economic tea leaves, he remains optimistic, citing Nationwide’s expectations of no recession in 2024 and rate cuts later this year.

Still, non-retired investors remain concerned, including 27 percent who worry inadequate savings might force them back into work if they retired within the next year.

These trepidations are mirrored among the advisors Nationwide surveyed, with 34 percent indicating their clients are drawing more funds from retirement accounts to meet financial needs, and almost a quarter (23 percent) seeing their clients liquidate assets.

Far from standing still, advisors say they’re taking a variety of actions to help protect their clients against market risks, including using annuities (cited by 79 percent of advisors), diversifying with non-correlated assets (77 percent), and leveraging liquid alternatives such as mutual bonds or ETFs (58 percent).

Latest News

Northern Trust names new West Region president for wealth
Northern Trust names new West Region president for wealth

The new regional leader brings nearly 25 years of experience as the firm seeks to tap a complex and evolving market.

Capital Group extends retirement plan services further with a focus on advisors
Capital Group extends retirement plan services further with a focus on advisors

The latest updates to its recordkeeping platform, including a solution originally developed for one large 20,000-advisor client, take aim at the small to medium-sized business space.

Why RIAs are the next growth frontier for annuities
Why RIAs are the next growth frontier for annuities

David Lau, founder and CEO of DPL Financial Partners, explains how the RIA boom and product innovation has fueled a slow-burn growth story in annuities.

Supreme Court slaps down challenge to IRS summons for Coinbase user data
Supreme Court slaps down challenge to IRS summons for Coinbase user data

Crypto investor argues the federal agency's probe, upheld by a federal appeals court, would "strip millions of Americans of meaningful privacy protections."

Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director
Houston-based RIA Americana Partners adds $1B+ with former Morgan Stanley director

Meanwhile in Chicago, the wirehouse also lost another $454 million team as a group of defectors moved to Wells Fargo.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.