If you ask financial advisors what most disturbs their clients’ sleep, they’ll point to the fear of living longer than they can afford.
This curious conundrum isn’t a sleep-deprived delusion: few clients have enough money set aside to retire earlier than average, unless they are willing to take a step down in living standards. For some people, a simpler life might seem OK, but in most cases, it wouldn’t be welcomed. Tossing and turning is to be expected.
Financial Advisor magazine surveyed 1,130 financial advisors and revealed their views in the recently released Retirement Planning Survey 2019. The survey found that a restless 42% of clients are worried about lasting longer in life than their assets. A similar number of advisors (45%) said this issue was their main concern when considering clients: longevity sounds great until the money runs out and many customers are nowhere near prepared.
One advisor said that paying for long-term healthcare is the primary cause of unquiet slumbers among his clients. Galen Norby, a CFP in Wichita, Kansas, disturbingly noted that most of his clients “bury their heads in the sand” and become uncommunicative when the subject is broached.
Louis Avalos of Irvine, California says that the problem stretches across all income groups. If a substantial pension or Social Security benefits are in place, anxiety levels tend to drop, he says. Lacking these resources, clients start to worry, even if they have other substantial assets in their portfolios.
On the bright side, many clients say they hope to work after retirement – indeed, some retire early so they can launch a different career, perhaps less demanding, but remunerative and personally stimulating, to boot. It’s good that so many people enjoy working, because it may be a necessity.
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Outliving Assets are the Number One Client Worry | Financial Advisor