Data & Research November 19, 2014

Millennials Are More Engaged, But Not Saving Enough

While 64% of Millennials say they have a financial plan, most believe they are only saving half of what they should be, according to a Nationwide Retirement Institute survey.
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While the high percentage of Millennials who report having a financial plan is encouraging, the 68% who say they are not investing enough for retirement is highly problematic, Nationwide says. The survey reports 36% of Millennial investors only guess at how much they need to fund their retirement, and nearly one in four do not know if they even have a 401(k) plan.

“While it’s great that Millennial investors now have a financial plan, they’re still coming up short when it comes to savings,” says Mike Spangler, president of Nationwide’s mutual funds business. “To help close the gap, we recommend that Millennials work closely with a professional financial adviser.”

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The survey finds 56% of Millennial investors think they would be more financially successful with professional financial advice; however, only 39% use a financial adviser. A majority (58%) conduct their own financial research and make their own investment decisions, but only half are confident they know how much to save. Of those without a financial plan, 28% feel that creating a financial plan is overwhelming and 40% say they haven’t gotten around to it yet.

Millennials are more likely to consult family (50%) and websites (49%) than a financial adviser for meeting their financial planning needs. In contrast, retirees are more likely to turn to a financial adviser (62%), traditional media (37%), and to follow their gut feeling (36%).

“The good news is that Millennials acknowledge the value of a professional and want to save and invest more,” Spangler adds. “The financial industry has a real opportunity to help Millennials understand how to balance the demands of paying for today with investing for the future.”

Additional data from the survey is presented here.

Products November 19, 2014

Franklin Templeton Unveils Social Security Optimizer

A new tool from Franklin Templeton Investments helps financial advisers as they guide clients through important decisions around the timing of Social Security benefits.
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Franklin Templeton says Americans are often driven by a lack of understanding and confusion surrounding Social Security, leading many to make decisions that permanently reduce their monthly income in retirement. In fact, according to the 2014 Franklin Templeton Retirement Income Strategies and Expectations Survey, nearly two-thirds of retired respondents are opting to take their Social Security benefits early, that is before “full retirement age,” defined as age 66 for those born from 1943 to 1954 and gradually increasing to 67. This has the result of substantially reducing individuals’ potential lifetime income, the firm says.  

The Social Security Optimizer enhances the suite of resources already offered through Franklin Templeton’s “Income For What’s Next” program, explains Michael Doshier, head of retirement marketing for Franklin Templeton Investments.

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The tool, developed by LifeYield, enables financial advisers to begin tailoring a Social Security approach to fit the nature of each client’s overall retirement situation and income plan. Once an adviser enters specific inputs from their client, the tool assesses a range of variables and produces benefit filing options that could lead to greater total lifetime benefits using certain assumptions. Advisers then have the capability to further customize the proposed strategy to align more closely with a client’s specific retirement resources and goals, Franklin Templeton says.

The Social Security Optimizer also provides actionable suggested “next steps” for the chosen Social Security benefits claiming strategy. Other key features of the tool include:

  • Clear information on the month and year for filing a benefits claim based on a selected Social Security benefits strategy and certain assumptions;
  • An evaluation of a client’s potential benefits claiming choices in monthly and cumulative dollar amounts, and the ability to incorporate inflation assumptions into the calculation; and
  • A printable hypothetical illustration to aid advisors during client discussions.

“It is imperative that financial advisers be involved in their clients’ decisions about when to stop working and when to begin receiving the Social Security benefits for which they are eligible,” notes Gail Buckner, Franklin Templeton’s financial planning spokesperson. “These are choices that will permanently impact a client’s monthly income throughout their retirement.”

The tool can be launched here, following registration.

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