Americans remain confident about their retirement prospects

Survey shows majority of advisory clients still plan to retire on time

The global coronavirus pandemic may have stymied the economy, triggered a historic spike in unemployment and caused massive stock market volatility, but a new survey of financial advisers found they expect the majority of their clients can still afford to retire on time.

Eight out of 10 advisers (83%) in the Wealthramp network, an online financial adviser referral service, report that more than 75% of their clients will still be able to retire on time despite the economic turmoil caused by COVID-19. The survey by Wealthramp, which matches consumers with independent, fee-only advisers, polled more than 100 fee-only advisers.

For clients who do need to adjust their retirement horizons, 63% of advisers in the survey recommend that they delay their planned retirement date by just one or two years.

In addition, the survey found that nearly two-thirds of advisers (63%) say a quarter of their clients are looking to invest new money into the market right now. Nearly half (47%) say their clients are most focused on rebalancing and making adjustments to their investment portfolios. A quarter of advisers (23%) said they are working with clients to ensure they have enough cash cushion throughout the crisis and just under 10% of advisers said they are most focused on harvesting tax losses.

“Now is the time for advisers to earn their keep,” said Pam Krueger, founder and CEO of Wealthramp.

“A true fiduciary will position investors for both downside protection and upside success,” Krueger said. “In this current COVID-19 environment, it is more important than ever that Americans know who they can turn to for financial advice that is personalized and conflict-free.”

Separately, a new Gallup poll of nonretired Americans found most still expect to retire at 66, in line with the average expected age of retirement recorded each year since 2009. Prior to 2009, the figure was typically below age 65, in part reflecting the lower age at which Americans were eligible for their full Social Security benefits. The age of eligibility increased to 66 for those born from 1943 through 1954 and will continue to gradually increase to 67 for people born in 1960 and later.

Despite the coronavirus pandemic and economic upheaval, nonretired Americans’ expectations about their future retirement income sources are broadly similar to a year ago, according to the Gallup poll. Most say they will rely on Social Security (88%), up from 83% in 2019, and 80% said they will rely on their retirement savings accounts, the same percentage as last year, according to the poll that was conducted among more than 1,000 adults between April 1-14.

However, there was a slight uptick — from 64% in 2019 to 70% in 2020 — in the portion of nonretired Americans who expect to rely on part-time work as a source of income in retirement. Typically, though, the portion of pre-retirees reporting that they plan to work in retirement is higher than the portion of current retirees who are working.

In general, older Americans are working longer now than in the past as the age at which they can claim full Social Security benefits has risen. Earnings restrictions, which can reduce Social Security benefits if an individual claims benefits before full retirement while continuing to work, disappear upon reaching full retirement age. From 1980 through 2018, the labor force participation rate for individuals age 65 through 69 rose from 29% to 38% for men and from 15% to 29% for women, according to the Social Security Administration.

Confidence among current retirees is likely tied to their reliance on multiple guaranteed sources of income, such as Social Security and pensions. Although future retirees will also receive Social Security, they are less likely to have an employer-provided pension. The 2020 Retirement Confidence Survey fielded in January, before the coronavirus crisis began, found 77% of retirees are confident in their ability to live comfortably through retirement, down slightly from 82% in 2019. Despite the subsequent pandemic, that number barely changed when a supplementary survey was fielded in late March, inching down to 76% from 77% in January, according to the Employee Benefits Research Institute.

The level of confidence expressed by those already in retirement continues to be greater than those yet to retire. EBRI’s survey found that 69% of American workers feel confident in their ability to retire comfortably, based on initial survey results collected in January 2020, before the pandemic began. It was the first time that worker confidence had rebounded to levels similar to those measured in 2007 before the financial crisis of 2008. Since then, retirement confidence among American workers declined slightly to 63% when a supplementary survey was conducted in March.

EBRI’s annual retirement confidence survey, now in its 30^th year, is the longest running survey of its kind, measuring worker and retiree confidence about retirement.