Good News for Retirement Savers
New Rules to Protect Financial Advisory Clients
There’s some upbeat news for retirement savers this week. A rule protecting financial advisory clients was signed into law, and encouraging findings from a major retirement confidence survey show that the lion’s share of retirees are, well, happy.
The Biden administration announced new rules that will require more financial professionals to adhere to a higher standard when providing financial advice about retirement money. According to the US Department of Labor Acting Secretary, Julie Su, these rules exist to protect retirement investors from improper investment recommendations and harmful conflicts of interest. Starting September 23, investment professionals will be required to act as fiduciaries, meaning they must put your needs as an investor before their own interests and deliver unbiased advice to you.
Under the new rule’s wording, investment advice fiduciaries must give advice that is “prudent and loyal, avoid misleading statements about conflicts of interest, fees, and investments, follow policies and procedures designed to ensure the advice given is in an investor’s best interest, charge no more than is reasonable for their services, and give investors basic information about any conflicts of interest.”
This announcement signals good news for Americans as surveys indicate their need for financial advice and retirement planning. A survey conducted by the Employee Benefit Research Institute (EBRI) and Greenwald Research reveals that more than a third of workers and nearly half of retirees currently work with a financial adviser or professional. Moreover, over half of workers who currently don’t have any financial advice plan to seek help from an adviser in the future.
Confidence in a Comfortable Retirement
According to the same survey, two-thirds of Americans feel confident about having enough money for a comfortable retirement. Although retirees’ confidence levels dipped in the past year, in general, workers and retirees remain optimistic about their retirement prospects. Retirees have reported that their lifestyle in retirement is even better than they expected.
Calculating for a Secure Retirement
Many Americans are taking steps to make a financial plan for their retirement years. A little over half of Americans have calculated how much money they will need in retirement, leading to an increase in their savings. Research shows that those who have done the calculations are more likely to start saving and have better financial awareness. However, the survey reveals that while over a third of workers estimated needing $1.5 million or more for retirement, many of them currently have less than $50,000 in savings and investments.
Planning for Retirement and Social Security
Six out of ten workers have thought about how claiming Social Security benefits can affect their retirement finances. Surprisingly, though workers plan to retire and claim benefits at age 65, in reality, most retirees report retiring earlier than that, with a median age of 62. These retirees start collecting Social Security at around age 64. Additionally, workers express a desire for a gradual transition out of the workforce, while retirees often experience a full-time stop. Unforeseen circumstances and limited job opportunities are often the leading factors for early retirement.
Working in Retirement
Although the majority of workers express their intention to work part-time during retirement, only 3 in 10 retirees have actually worked for pay since retiring. The desire to stay active and involved is a common motivator for those who continue to work in retirement. However, factors like health issues and age discrimination often hinder these plans.
Conclusion
Despite a few challenges and a need for better financial planning, retirement confidence remains high among retirees and workers. The new rules implemented to protect retirement investors and ensure unbiased financial advice are likely to have a positive impact on Americans’ retirement savings. As workers continue to make retirement plans and improve their financial awareness, the hope for a comfortable and secure retirement remains strong.
