Two in Three are Expecting to Face More Challenges in Retirement Than Their Parents and Grandparents

As more Americans begin turning 65 this year than at any other point in history, many are coming to grips with a cold reality: this is not going to be their parents' retirement.

The majority of pre-retiree investors (69%), defined as non-retired investors aged 55-65, agree that the norm of retiring at 65 doesn't apply to them, according to Nationwide's ninth annual Advisor Authority survey, powered by the Nationwide Retirement Institute. The survey also found that two-thirds (67%) of pre-retirees expect to face more challenges in retirement than their parents and grandparents.

This stress is shifting the perception of life as a retiree, especially for those closest to retirement age. Four in 10 (41%) pre-retirees said they would continue working in retirement to supplement their income out of necessity, and more than a quarter (27%) plan to live frugally to fund their retirement goals. What's more, pre-retirees say their plans to retire have changed over the last 12 months, with 22% expecting to retire later than planned.

"Many of us watched our parents and grandparents enjoy a smooth transition to a secure retirement powered by traditional pension benefits," said Eric Henderson, President of Nationwide Annuity. "Today's investors are having a tougher time picturing that for themselves as they grapple with inflation and concerns about running out of money in retirement."

Adjusting Financial Habits and Expectations

More than other cohorts, pre-retiree investors are adjusting their spending and savings habits. Four in 10 (42%) agree that managing day-to-day expenses is getting more difficult due to the cost of living. Nearly three in 10 (27%) are saving less for retirement because of inflation, and more than half (57%) believe inflation poses the most immediate challenge to their retirement portfolio over the next 12 months.

Additionally, more than four in 10 (41%) pre-retiree investors are avoiding unnecessary expenses such as vacations, jewelry and shopping sprees to save more for retirement, compared to 34% of non-retired investors.

In contrast to previous generations, trust in traditional financial and retirement safeguards, such as Social Security, has waned. Lack of confidence in the viability of Social Security upon retirement (38%) is a significant factor influencing pre-retirees to rethink or redefine their retirement planning strategies. Over two-fifths (43%) are not counting on Social Security benefits as much as previously expected, and more than a quarter (27%) expect to receive less in benefits than previously anticipated.

Financial Professionals Guide Near-Retirement Strategy

With difficult financial choices ahead for those nearing retirement, advisors are offering actionable insights and recommendations to guide clients toward post-career financial security. Pre-retiree investors are talking with their advisors about: accumulating sufficient savings to enter or stay in retirement (49%), tax planning strategies (38%) and converting accumulated savings into retirement income (33%).

Advisors report counseling their pre-retiree clients on when to claim Social Security benefits (28%), taxes and tax planning (23%), and planning for healthcare costs in retirement (21%). Additionally, advisors are recommending their pre-retiree clients delay taking Social Security benefits (32%) to ensure maximum payment benefits in retirement, an increase from five months ago (28%).

Advisors have also amped up their efforts to incorporate strategies to protect pre-retiree clients against market risk – more than six in ten (61%) advisors are adopting strategies or annuities to do so, compared to 55% just five months ago. Annuities (79%) and diversification/non-correlated assets (77%) rank as the most popular solutions used to help clients protect their assets against market risks.

"The final years leading up to retirement are a critical time for making decisions that can carry life-long implications," Henderson said. "Financial professionals can help this group create a holistic plan for addressing factors like Social Security, healthcare, long-term care, taxes and income in retirement, topics the Nationwide Retirement Institute offers additional resources on to help facilitate conversations with clients. Good advisors can identify gaps and create plans to address them before it's too late."

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, investable assets and propensity to be online.

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.

Nationwide, the Nationwide N and Eagle, Nationwide is on your side and Nationwide Retirement Institute are service marks of Nationwide Mutual Insurance Company © 2024 Nationwide.

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Annuity Alliance is not affiliated with Nationwide, Advisor Authority, 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.