Data & Research September 26, 2023

As Many Retirees Plan to Work for Fulfillment as for Money, Empower Finds

Personalized advisement remains key for working retirees no matter their circumstances, says a financial adviser with the recordkeeper.

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About as many people who plan to work in retirement want to do so for personal reasons as opposed to strictly financial ones, according to a recent report from Empower.

In a survey of more than 1,000 Americans, 41% say they are working or plan to work in retirement for personal fulfillment. Meanwhile, slightly more than 40% say they are working or will work due to financial needs, according to an Empower report,  “Redefining the ideal retirement,”  released September 21.

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“There are many different reasons someone may want to continue working, and they’re not always financial,” says Nik Franklin, a financial adviser for Empower. “Every person’s ideal retirement will look different. Whether someone works post-retirement may affect their retirement income and investment strategies and when they take Social Security.”

Overall, more than half (58%) of respondents said they are likely to work in retirement, with Baby Boomers (born from 1946 through 1964) and Generation X (born from 1965 through 1980) coming in at a higher 64%.

Ready or Not

It has been well documented that many Americans are not ready for retirement. In a Schroders 2023 U.S. Retirement Survey published earlier this year, most working Americans showed concern that a workplace retirement plan will not grow to the level they hoped to achieve, as expressed by 64% of Millennials and 62% of workers 45 and older.

But the Empower study showed that a decent number of people are working or plan to work for personal reasons. Nearly two out of five Americans said working post-retirement would help them maintain a daily routine (37%) and keep their minds (37%) and bodies (36%) active. Gen Zers are the least likely generation to say they are open to working after they retire, at 49%.

Some do remain concerned about economic factors that could impact their finances in retirement. Respondents expressed concern about inflation (52%), running out of money (51%) and unexpected expenses (49%).

Adviser Franklin says personalized financial planning is key, no matter what the path.

“Holistic financial planning is about creating a unique roadmap: customized solutions that consider an individual’s circumstances, goals, major life events and the future they imagine for themselves and their family,” he says. “Receiving objective advice can help people map out a strategy for the long term.”

401(k) Key Investment

Overall, respondents point to having a 401(k) account as their top vehicle for retirement saving (56%), followed by stocks (35%) and then a traditional savings account (34%).  

Empower’s data shows that people aged 60 through 65 have, on average, $198,194 in their 401(k) account.

According to Alight, another recordkeeper, the average plan balance overall fell from $114,280 at the start of 2021 to $111,210 at the end of 2022, showing grimmer news for retirement savers.

“Whether no work, full-time work or part-time work, the key is to make sure each employee receives the necessary advice and comprehensive financial assessment to pave the way for a customized plan,” Franklin says. “Helping participants understand their complete financial picture—expected expenses, income streams and overall net worth—is a great way to help them navigate these decisions.”

The research included a survey of 1,009 Americans conducted in July 2023 by Fractl on behalf of Empower.

Data & Research September 25, 2023

As Women Face Uncertain Retirement Outcomes, Advisory Practice Says: ‘Relate’

The need to relate more to female participants comes as 71% of women report they will outlive their retirement savings, according to a recent survey by IRALogix.

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As studies indicate women face uncertain retirement futures, advisers should focus on relating to their female participants, such as through one-on-one consultations or women-oriented events, according to Jessica Ballin, the principal in 401(k) Plan Professionals, an all-women team of retirement plan advisers.

“We like being creative with our education … being relatable and delivering the education in a way that connects with them,” Ballin says.  The adviser was responding to recent reports that show uncertain outcomes for women in their retirement saving and planning.

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‘The Gravity of the Situation’

According to a recent survey by IRALogix, a retirement industry fintech provider, 71% of women said they expect to outlive their retirement savings. The report, “Women’s Road to Retirement,” was based on data obtained from late July through late August. Among the respondents, 48% of women reported they will use up their savings between four and seven years into retirement.

Meanwhile, 30% say they have sufficient money to last between one and three years, and only 7% believe they have enough to last their entire retirement, the researchers found.

“Given what we already know about Americans’ retirement readiness, we hypothesized the survey’s results would point to women being largely unprepared for retirement, reflecting the general trends of low savings and diminished confidence that retirement savings will last as long as needed,” Lowell Smith, IRALogix’s co-founder, said in a statement. “What we weren’t expecting was the gravity of the situation. As many as seven in every 10 women surveyed were certain their savings won’t last the length of their retirement, driving almost half of the respondents to consider relinquishing their independence and moving in with family members to save on expenses.”

Furthermore, the 2023 State of Women survey from HerMoney and Principal Financial Group, which included 900 full-time employees of small and midsize businesses, revealed 45% of female employees, compared with 58% of male employees, were confident about money management. Only 22% of women consider themselves knowledgeable about investing, compared with 46% of men, the researcher found.

When it comes to financial guidance, women reported seeking the advice of financial experts slightly more than men: 59% of women noted working with an adviser, as compared with 50% of men. Women are also relying more on other resources to learn about investing than men, whether it be podcasts (44% vs. 27%), books (40% vs. 26%) or workplace programs (25% vs.15%).

That education is important, Teresa Hassara, senior vice president of workplace savings and retirement solutions at Principal Financial Group, said in a statement accompanying the report.

“While employees’ needs are varied, almost everyone can benefit from more guidance, education, and support to build their financial acumen and confidence,” Hassara said. “The more personalized the experience, the more success we believe individuals will have when it comes to achieving long-term financial security and retirement goals.”

Women-Focused

Ballin says her firm offers events and education focused on women, specifically. The firm has hosted a variety of events to connect with female participants, such as hosting a wine-tasting event.

Ballin sees webinars and group settings as effective methods of communicating on topics like Social Security, drawdown strategies, financial wellness, generational planning and more.

“We do a lot of one-on-ones—virtual one-on-ones via Calendly links—and I think those are the meetings that really help females understand their finances,” she says. “We show the retirement income calculators. A lot of times [participants] are not even sure what questions to answer. We’ll help them with just the very basic knowledge—how much they should be saving—and empower them to learn more on their own about investing.”

The adviser notes that these practices can work no matter the gender of the adviser representative, so long as the participant’s needs are front of mind.

“The key really is just becoming that trusted resource, really being a good listener and talking to them on a level that isn’t intimidating,” says Ballin. “Then they can have a couple of takeaways that can be put into practice to improve their financial health and financial success.”

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