Retiring With, Without Advice


 It is entirely possible to retire without receiving professional financial advice. Many retirees do it.

But retirees who accept advice from professional advisors usually are pleased they did so, and found the advice to be helpful in a number of different ways.

Retirement, a phase of life that remains a goal for most working Americans, comes with numerous unique pressures and concerns. Many retirees leave the workforce uncertain they will have enough funds through savings and income streams to live comfortably, and even affluent investors feel the sting of economic pressures when a regular paycheck is no longer part of their life.

Spectrem created a special quantitative and qualitative research study to look into how affluent retirees approached retirement and whether they asked for help along the way. The results were surprising, as a significant percentage of retirees made key financial decisions on their own, or with the help of non-professionals such as family and friends.

Financial Wellness in Retirement, the study that segments retirees based on how long they have been in retirement, found that only 53 percent of retirees used an advisor to plan for their retirement. That’s almost half of affluent retirees, those with at least $500,000 in net worth not including primary residence, who went into retirement without benefit of professional advice.

“There is a significant percentage of affluent Americans who do not use advisors for a variety of reasons, including cost and trust,’’ said Spectrem president George H. Walper Jr. “But the financial decisions leading up to retirement are complicated, and most affluent retirees have many financial aspects to consider. It is surprising such a high percentage chooses to enter the special stage of their life without talking to a financial professional.”

Why does it matter to advisors whether retirees use advisors in planning for retirement? It matters because of another key insight that appears in the Financial Wellness report: almost 70 percent of retirees use the same advisor in retirement they used to plan their retirement. Even though the stages of life have unique matters to deal with, many retirees gain comfort from working with an advisor to prepare for retirement and see no reason to change that status once they retire.

And it is not true that financial matters cease to exist once an investor reaches retirement. Matters related to wealth transfer, Social Security and current and eventual living arrangements could cause a retiree to need a financial advisor’s advice and knowledge.

The moment an American worker signs up for a 401(k) plan through their employer, they have started “planning for retirement.” After all, the money placed into a 401(k) account will eventually be distributed at some point, from some form of retirement product, when the retiree needs it in retirement.

But active planning for retirement means considering all of the income streams a retiree has set up and deciding whether a retiree can live as he or she wants amid all that income and dividends paid through the appropriate channels.

According to the study, of all retirees, more than 40 percent report starting their retirement planning more than five years prior to the day they officially retired. But a surprising one-quarter of retirees make no plans, or wait until a year before they leave the workforce, to begin planning.

There does seem to be more retirement planning going on earlier in more recent years. Among retirees who have been without a work plan for 20 years, only 38 percent made plans more than five years before retiring. Meanwhile, 47 percent of retirees who have been retired fewer than 10 years say they made plans related to their retirement more than 5 years in advance of retiring.

Among those investors who did receive professional advice in planning for retirement, most found the advice to be helpful, and in some cases very helpful. Most retirees appreciated the fact that a plan was created to help reach certain goals for the eventual day of retirement, and more than half said they were pleased to receive assurances that they had enough assets to reach their goals.

A telling fact that advisors should take into consideration is that only 22 percent of all retirees received assistance and advice on how best to take advantage of Social Security benefits. Considering how complicated the Social Security question can be, especially for married people, professional advice is warranted and would probably be appreciated.

Top Takeaways for Advisors

When investors receive advice regarding finances in anticipation of retirement, they almost always find the advice to be helpful. They welcome the attention to that part of their lives, which for many is a time when they need the most assistance. Advisors who work diligently to increase portfolios to prepare for retirement stages should also consider what happens to a retiree financially once they leave the workplace. Often, the best-laid plans made before retirement are not sufficient to handle post-retirement issues.


Retirement does not end an advisor-investor relationship. Although retirees no longer have a paycheck to consider, they have all of those investments they made while working that are now the foundation of their income. Deciding when to take disbursements from retirement accounts is perhaps more complicated than figuring out which retirement accounts to fund.


©2017 Spectrem Group