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New study finds correlation between formal written plans and retirement confidence

While affluent Americans approach retirement planning with far more assets than average savers, they still have concerns about their retirement.

A new LIMRA Secure Retirement Institute study found nearly 70 percent of affluent consumers said maintaining their lifestyle in retirement was a top financial goal.

More than 80 percent of the affluent are confident they will be able to live their desired lifestyle in retirement, but only 4 in 10 are “strongly confident,” despite having substantial assets.  Reasons for their concern include market volatility, rising inflation, living more years in retirement and unexpected events.

This particular study looked at Americans at three asset levels: $500,000 to $999,999, $1 million to $3.5 million, and $3.5 million-plus.

The study found that those who work with an advisor to develop a formal written plan to manage their assets also derive a benefit of increased confidence. Among those with written plans, 54 percent said they were “very confident” about living their desired lifestyle in retirement. Yet, only half of affluent consumers have a formal written plan.

The study pointed out that once a written plan is in place, both advisor and client can pursue realistic planning and improve preparation for retirement.  With a plan, 30 percent of affluent households feel “extremely well prepared” for retirement compared to only 17 percent who do not have a plan.

As confidence and preparation increases, it starts a positive cycle that benefits both client and advisor. (See Chart) Forty percent of those with a plan give their advisors perfect scores on satisfaction measures. In turn, clients have more trust in the advice they receive and look to consolidate more of their assets with their advisor.

The study suggests this sequence of events all begins with a formal retirement plan.