Pre-retirees still anxious despite bull run

The S&P 500 is up more than 23 percent over the past year. Inflation is on its way down. And the benchmark 10-Year Treasury yield is over 4 percent, a more than reasonable rate for savers. Put it all together and even goldilocks couldn’t complain about such a benevolent economic environment.

So why are pre-retirees over 50 still so anxious about their financial futures?

According to an F&G Annuities & Life survey released yesterday, 68 percent of pre-retirees are considering pushing back their retirement, up from 64 percent last year, despite all the positive market tailwinds. The study showed Generation X appears especially concerned as 71 percent of those respondents are considering or have pushed back their planned retirement date, up from 65% last year.

Digging deeper into the results, almost half (49 percent) of pre-retirees over 50 that are either considering or have pushed their retirement back are doing so because of inflation worries. And 44 percent of retirees and those who have considered rejoining the workforce cite inflation as a reason, the survey said.

The survey polled over 2,000 Americans over age 50.

“This remains a challenging macroeconomic environment to navigate for those close to or in retirement,” said Chris Blunt, CEO of F&G in a statement. “As our survey shows, Americans are still reconsidering what retirement means to them, and that may look different from previous generations. We believe taking a proactive approach in financial planning can help mitigate some of the economic risks, allowing people to focus on their own personalized roadmap of how and when to retire.”

Will Hackler, director of retirement plans at Integrated Partners, points out that the growth of the market helps to varying degrees, but not necessarily enough to overcome the perceived increase in annual spending. Couple that with historical poor savings rates of prior generations who may have been trying to ‘catch up’ and the result is higher anxiety, and a desire or perceived need to keep working.

For those seeking to catch up when it comes to retirement saving, even after this market run-up, Hackler says the equation is simple: save as much as possible and spend as little as possible until they feel comfortable.

“This isn’t necessarily what they want to hear, but it is what we need to say to them and most should seek the guidance of a professional financial planner who can guide them through,” said Hackler.

Michelle Cannan, head of company retirement plan services at Modern Wealth Management, said some pre-retirees experience anxiety due to the fear of future unknowns. Investment allocations can be controlled, but market volatility, interest rates, inflation and tax rate hikes can be unpredictable.

“Pre-retirees may be in a better position now than they were before due to positive market performance, but uncertainty is impacting their confidence about retirement goals,” said Cannan.

Cannan says pre-retirees who feel they are behind should work with a Certified Financial Planner that they trust to outline their goals, review expenses and model different retirement outcomes.

“It’s important not to let emotions drive decision-making, and instead make informed choices based upon a forward-looking financial plan,” said Cannan.

Elsewhere, the report showed a third of people who are either considering or have pushed back their retirement say they are doing so because they love what they do for work. The same percentage enjoy the intellectual challenge and stimulation from working, the study said.

Finally, for retirees and those considering coming out of retirement, 45 percent of respondents say they enjoy “the challenge from working,” while just over a quarter (27 percent) say they “loved what they did for work.”