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The Expenses That Worry Retirees, and How They Want Advisors to Help

A survey shows what investors are most worried about and the products and solutions that they want to be part of their retirement portfolio.

Job-related worries might wane or disappear in retirement, but other concerns persist and emerge. A new survey shows what is troubling retirees and the investment plans and products they say will calm their nerves — something financial advisors should pay attention to.

In 2021, the top stressor for retirees was healthcare and or long-term care expenses, according to a survey of 1,493 retirees by Cerulli Associates, a Boston-based research and consulting firm focused on financial services. Twenty-six percent of respondents said those were the “most stressful” concerns and 19 percent said they were the “second most stressful.”

Meanwhile, 19 percent of retirees said outliving the money they saved for retirement was their top worry, and 12 percent were most worried about poor investment performance or a market downturn.

Other top concerns included a low interest rate environment, paying monthly bills, credit card debt, and financially supporting family members and friends.

“The importance of planning for healthcare costs in retirement cannot be understated, and advisors, both in-plan and out-of-plan, should account for medical expenses within the holistic, long-term financial strategies they construct for their clients,” Shawn O’Brien, senior analyst at Cerulli, said.

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Fifty-seven percent of investors say retirement income planning is among the most important services offered by financial advisors, according to Cerulli. Employees who work with an advisor — a digital advisor, human advisor, or both — also have, on average, “substantially higher projected income replacement ratios in retirement than employees without an advisor,” Cerulli said.

As the burden of saving for retirement is falling heavier on investors, they also want to gain flexibility. For example, the ability to withdraw additional funds from accounts if they need them, or for assets to grow with the market even after they begin drawing out of their accounts.

Advisors should pay attention to these concerns, because a growing number of retirees will be looking for help, half of American employees don’t have access to a retirement plan, and nearly a quarter of plan sponsors do not offer any retirement income solutions as part of their investment menu. 

Software companies are making it easier for advisors to help investors, too. For example, Healthpilot, an Envestnet-backed company that uses artificial intelligence to help wealth managers and their clients select and enroll in Medicare health insurance plans, launched in October.

Michael Thrasher (@Mike_Thrasher) is a reporter at RIA Intel based in New York City.

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