Data & Research September 1, 2015

DC Participant Clients Likely Unable to Retire at 65

Six in 10 workers are not on track to meet their needs in retirement at age 65, according to a recent analysis.
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An analysis from Aon Hewitt reveals that most workers will likely need to work longer to save enough to maintain their standard of living in retirement.

Aon Hewitt’s analysis of 77 large U.S. employers, representing 2.1 million employees, projects the average worker will need to save 11 times their final pay at retirement (age 65) to keep their preretirement lifestyle. However, most workers are coming up short.

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Only one in five are on track to meet or exceed their needs in retirement at age 65. An additional 20% may be close to having reasonably adequate savings with some lifestyle adjustments. This leaves 60% of workers unable to afford to retire at age 65.

Aon Hewitt projects that age 68 is the median age U.S. workers will be able to retire with sound financial security, while 16% are not expected to have enough to retire even by age 75. Aon Hewitt notes that exact income replacement depends on the unique situation of each worker including age, income, anticipated retirement age and Social Security.

“The benefits landscape has changed over time and U.S. workers are now accountable for a greater portion of their financial needs in retirement,” says Rob Reiskytl, partner at Aon Hewitt. “Unfortunately, most are under-prepared. The most important thing they can do is to establish goals for the kind of retirement they want and determine a savings plan to meet those needs and desires. This might mean starting to save more now, delaying retirement by a few years, or making a conscious choice to retire with a lower living standard.”

A separate Aon Hewitt survey found that just more than half of workers (54%) have estimated their retirement needs, determined savings requirements or forecasted how much income they’ll need in retirement. Only 40% of workers have created a financial plan to achieve their retirement goals.

Highlights of Aon Hewitt’s sixth installment of The Real Deal Study can be downloaded from here.

Data & Research September 1, 2015

Investors Have High Expectations of Their Advisers

Their biggest demand is that advisers help them take a long-term view.
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Investors expect a lot of their advisers, a survey by the Investment Management Consultants Association (IMCA) found.

First and foremost, 92% think it is important that their adviser helps them maintain a long-term investing approach. In line with that, 83% say it is important for their adviser to help them remain calm when the market drops.

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For those investors with more than $1 million in investable assets, 80% want their adviser to keep them up to date on tax law changes. Among all investors, 77% want their adviser to keep them apprised of tax law changes; however, only 53% say that their adviser does so.

Sixty-three percent of investors believe it is important or critical for their adviser to give them access to cutting-edge investment strategies. Sixty percent say that investment management expertise is the most important competency they pay their adviser for.

According to the survey, among investors with more than $1 million in investable assets, 69% think it is important for their adviser to have additional credentials above and beyond what is required of them. Eighty-two percent believe that the certification requirements of their adviser should be rigorous, issued by an objective certifier (72%) and be ongoing (84%). Eighty-five percent believe that if their adviser failed to meet ethical standards, they should lose their credentials.

If Not Now Research, Inc. conducted the survey for IMCA among 1,041 investors with between $50,000 and more than $1 million in investable assets.

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