Retirees are abandoning common practices traditionally seen in retirement

As perceptions of what retirement should look like continue to evolve, retirees are reevaluating their financial approaches and lifestyles.

Nearly one-third (31%) of retirees expect to be less secure in their retirement than their parents and grandparents were, according to Nationwide's ninth annual Advisor Authority study, powered by the Nationwide Retirement Institute®.

This feeling of uncertainty among retirees is compounded by the fact that everyday financial obligations remain a concern – more than one in five (22%) retired investors worry about affording their monthly bills.

Retirees Reevaluate Financial Commitments

The transition to life after retirement demands crucial shifts, including the prioritization of financial commitments. In addition to short-term financial obligations like basic living expenses, long-term debt continues to weigh on retirees, with 26% of retired investors continuing to pay off their mortgage, and 25% still paying down credit card debt.

While most American savers dream of a retirement of leisure and travel, retired investors are adjusting their priorities to make ends meet in the wake of economic constraints. Nearly four in ten (39%) retired investors are spending less on entertainment to meet financial commitments in today's economic environment, and more than a third (34%) are taking fewer trips or vacations.

To compensate further, 22% of retired investors are drawing more funds from retirement accounts, intensifying the traditional decumulation stage.

"The picture of life after retirement has changed for many people as economic stressors continue to weigh on retired investors," said Mike Morrone, Vice President of Nationwide Annuity Business Development. "Now is the time for advisors and financial professionals to check in with their clients and help them remain calm, nimble and informed in the face of continued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement."

Strategies Vary for Investors Already in Retirement

To account for financial headwinds, retirees are bolstering their plans. Nearly two in three (63%) retired investors have a strategy in place to protect their assets against market risk, up from 54% last summer.

However, these retirement plans look radically different from the plans of generations past. Some retirees (12%) are abandoning the 70-80% spending rule (i.e., ensuring they have 70-80% of their pre-retirement income per year in retirement) and 11% are casting aside the 4% rule (i.e., withdrawing 4% of their retirement portfolio each year when retired).

Retired investors are also initiating conversations about legacy planning and wealth transfer with their heirs. Nearly a third (32%) of retirees are discussing wishes for end of life (long-term care expenses, funeral preferences, etc.), and 34% are discussing financial details of their estate with heirs.

Financial Advisors Guide Clients Toward Retirement Security

Advisors are supplying their clients with the guidance needed to help achieve financial security in retirement, counseling their retired clients on how to generate guaranteed income (23%), prioritizing wants vs. needs (21%) and supplementing income out of necessity (16%).

Advisors are also helping investors plan for lingering financial commitments, such as mortgage repayments, which more than a third (34%) of advisors say their clients are planning to continue paying in retirement.

With the Great Wealth Transfer underway, advisors are helping clients – and their heirs – prepare. More than half (59%) of advisors say their clients are confirming beneficiary designations to prepare their heirs for the transfer and management of wealth. Another 54% say their clients are reviewing or creating estate planning documents, and 44% are building financial confidence and knowledge.

"Advisors are recognizing and acknowledging investors' desire to avoid making the wrong moves in retirement," Morrone said. "They can help clients feel more confident about their retirement plans by understanding their goals and anxieties, and helping them protect their savings and plan for income they won't outlive by reinforcing the value of different retirement solutions and products, like annuities."

For additional insights on this survey data, see our infographic.

Nationwide's ninth annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today's complex market.

About Advisor Authority: Methodology
The research was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from January 8-23, 2024, among 518 advisors and financial professionals and 2,346 investors ages 18+ with investable assets (IA) of $10K+. Investors included a subset of 391 "pre-retirees" age 55-65 who are not retired, and subsets of 346 single women and 726 married women.

Weighting: Raw data from advisors were not weighted and are therefore only representative of the individuals who completed the survey. Investor data are weighted where necessary by education, age by gender, race/ethnicity, region, marital status, household size, employment, household income, investable assets, and propensity to be online to bring them in line with their actual proportions in the population. To ensure the investor sample was representative, the data were initially weighted separately for those with investable assets of $10K to less than $100K and those with $100K+ and then post-weighted/combined into a total investor group. Data for the subset of pre-retirees age 55-65 who are not retired were weighted separately as needed by education, age by gender, race/ethnicity, region, marital status, household size, employment, household income and investable assets.

Respondents for this survey were selected from among those who have agreed to participate in our surveys. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within + 2.8 percentage points using a 95% confidence level. This credible interval will be wider among subsets of the surveyed population of interest. The sample data for the subset of pre-retirees age 55-65 who are not retired is accurate to within + 6.2 percentage points using a 95% confidence level.

All sample surveys and polls, whether or not they use probability sampling, are subject to other multiple sources of error which are most often not possible to quantify or estimate, including, but not limited to coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments.

About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.

About Nationwide
Nationwide, a Fortune 100 company based in Columbus, Ohio, is one of the largest and strongest diversified insurance and financial services organizations in the United States. Nationwide is rated A+ by Standard & Poor's. An industry leader in driving customer-focused innovation, Nationwide provides a full range of insurance and financial services products including auto, business, homeowners, farm and life insurance; public and private sector retirement plans, annuities and mutual funds; excess & surplus, specialty and surety; and pet, motorcycle and boat insurance. For more information, visit www.nationwide.com. Subscribe today to receive the latest news from Nationwide and follow Nationwide PR on X.

This material is not a recommendation to buy or sell a financial product or to adopt an investment strategy. Investors should discuss their specific situation with their financial professional.

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Annuity Alliance is not affiliated with Nationwide or The Harris Poll. This article is for informational and educational purposes only. It should not be used to make a buying decision. If you would like to speak with a financial professional at Annuity Alliance using the Contact Form.