Retirement Attitudes as a Harbinger


 Advisors can tell a great deal about the current investment market by asking investors how they feel about their retirement finances.

The better investments and the stock market are running in the present tense, the better investors look at things in the future. An optimistic today makes for an optimistic tomorrow.

Research indicates investors have a more optimistic outlook about retirement finances today than they did one year ago. In some ways, the level of optimism is as high as it has been since the recession one decade ago.

These insights indicate a growing sentiment of positivity looking forward, but must also serve as a precautionary beacon as well. Advisors need to make sure their clients’ confidence is well-founded, and not just an overreaction to today’s slowly improving business environment.

“Investors often dance the fine line between being secure in their retirement and being uncertain they have enough to last them through all the years of their post-work days,’’ Spectrem president George H.  Walper Jr. said. “It is a good sign that retirees are showing more confidence in their retirement picture, but there is such a thing as overconfidence, and that is where advisors come in.”

Spectrem’s new wealth segmentation series study Financial Behaviors and the Investor’s Mindset asked investors their current attitudes regarding their preparation for retirement. Among Millionaire investors with a net worth between $1 million and $5 million, 30 percent said they were concerned about being able to retire when they want. That is not a significant percentage, but it is also almost 10 percent lower than the 2016 response of 39 percent. Forty-two percent of Gen X Millionaires and 39 percent of Millennial Millionaires expressed concern about being able to retire on their own schedule.

Obviously, investors in the wealthier segment expressed even less concern about retirement funds, while almost half of those investors who are not yet Millionaires expressed a concern about being able to retire when they want to.

 Only 22 percent of Millionaires were concerned about getting the help and advice they needed to achieve their financial goals, and only 23 percent were worried about being forced into an early retirement scenario, either for themselves or for their spouse.

Asked to place their concern about depleting retirement funds early on a 0-to-100 scale, investors place their 2017 level at 27.25, much lower than the 2016 level of 34.20.

These insights all indicate that investors are feeling good about their ability to financially withstand their retirement years. But as the percentages of concerned investors goes down, the percentage of relaxed investors goes up. While advisors perhaps prefer working with relaxed investors who are looking to cash in on the good times, they might need to provide guidance to an overconfident investor that the good times may not last and that the stock market and other investment atmospheres could be volatile, especially in light of so many investment questions that need to be asked in the Donald Trump presidency.

Just as advisors want to take advantage of an opportunity to work with a newly confident investor, or perhaps one that is not as stressed about retirement as he was five years ago, advisors need to be the grown-up in the room and make sure the investor understands how the current financial climate may not last.

Top Takeaways for Advisors

Perhaps you are an advisor who takes the “temperature’’ of your client regularly, and perhaps you have noticed an uptick in enthusiasm and a drop in concern over retirement issues. Accurately presenting the facts of the day to such investors could be rewarded when an investor acts according to your predictions rather than to the mood of the day and avoids pitfalls that come with overconfidence.


On the other hand, if it is your practice to let the investor tell you when his or her mood has changed, you may want to spark a reevaluation of confidence and optimism in light of the current investment atmosphere. Investors may have their own opinions about the stability of a Trump bump, or may have other opinions that run counter to the current environment. A couple of questions can certainly provide the answers.


 ©2017 Spectrem Group