A Quarter of Investors Near Retirement are Delaying Plans due to Financial Uncertainty

Columbus, OH – After decades of planning, investors close to retirement age are delaying their retirement plans in light of today’s rising inflation, high interest rates and unstable economic environment, according to Nationwide’s eighth annual Advisor Authority survey, powered by the Nationwide Retirement Institute. A quarter (25%) of pre-retirees – defined as non-retired investors aged 55-65 – are planning to retire later than expected, and another 15% are unsure if they will ever retire.

In today’s landscape, pre-retirees are in a unique and challenging position. Although a number of factors are contributing to their decision to delay retirement, the majority (60%) said inflation poses the greatest immediate challenge to their retirement portfolio over the next 12 months. An economic recession (46%), market volatility (36%) and taxes (23%) are also factors that pose immediate challenges to their retirement portfolio.

“With economic stressors continuing to weigh on the minds of investors, working with an advisor has never been more important to achieving security in retirement,” said Eric Henderson, President of Nationwide Annuity. “Because the trajectory of the markets and the economy looks uncertain in the short term, an advisor can help investors who are nearing retirement age remain calm, nimble and informed when it comes to adjusting their plans.”

The stability of Social Security is in question
Over half (53%) of pre-retirees are concerned about the long-term viability of Social Security, indicating fears that these benefits will no longer be available to them in retirement. More than one in four (26%) pre-retiree investors believe Social Security will run out of funds in their lifetime, with the same number (26%) believing Social Security will run out of funds after they have entered retirement.

These fears are not unwarranted – the likelihood of Social Security running out is slowly becoming a possibility. According to the 2023 Old Age, Survivors, and Disability Insurance Program’s Trustees report¹, 23% of scheduled benefit payments for recipients could be depleted as soon as 2033.

Despite concerns regarding the program’s stability, the majority of pre-retirees who say they have strategies to protect against outliving their savings are primarily relying on Social Security (52%). Others have leaned into additional options, with 46% of those who have a strategy in place incorporating annuities into their retirement plans to guarantee income and protect against outliving their savings.

“I’m hopeful Congress will develop a plan to shore up the long-term viability of Social Security, but for now there remains some uncertainty about what the program will look like years down the road,” said Henderson. “The best thing those nearing retirement can do is to work with an advisor to choose the right time to claim benefits. This is a decision with huge implications for income over the course of retirement – which for many people could be 25-30 years or longer. It’s also worth having a conversation with an advisor about how you may be able to leverage the money you have saved, including your 401(k) plan, to create a predictable stream of income.”

Many investors nearing retirement also say they are planning to change their approach to saving for retirement by managing their investments more conservatively (30%) over the next 12 months. Nearly one in five (19%) are planning to contribute more to their 401(k) or employer-sponsored defined contribution plan each month. Just 10% are planning to manage their investments more aggressively.

Rise in pre-retirees seeking financial advice over the last year
With a recession on the horizon, investors are increasingly turning to financial professionals for retirement guidance. Nine in ten (90%) pre-retirees are concerned about a U.S. economic recession over the next 12 months, and of the 49% of pre-retirees that currently work with an advisor or financial professional, 40% began working with one over the last 12 months.

This surge in investors seeking advice stems from the security and guidance financial professionals can offer their clients. One-third (30%) of pre-retirees working with an advisor do so to feel more confident in their financial future, and 88% of pre-retiree investors say having a plan for their retirement helps them feel in control of their financial future.

In response to investors’ desire to feel confident in their futures, nearly half of advisors are helping their pre-retiree clients prepare for near-term retirement by adopting strategies to protect their clients’ assets against market risk (48%) and ensuring their pre-retiree clients have enough liquidity to cover expenses for two years in the event of a financial crisis (42%).

Pre-retirees say the reasons that are most likely to compel them to work with a financial professional or influenced them to work with their advisor include years of experience (37%); recent or current market conditions (17%); personalized advice for a holistic financial picture (16%); and the prospect of an economic recession (16%).

“Advisors recognize investors’ desire to make the right moves as they near retirement,” Henderson said. “They can start driving positive conversations with these clients by understanding their retirement goals, helping them predict and plan for fixed expenses and determining the right time to claim Social Security.”

For additional insights on this survey data, see our infographic.

Nationwide’s eighth annual Advisor Authority study powered by the Nationwide Retirement Institute® explores critical issues confronting advisors, financial professionals and individual investors—and the innovative techniques that they need to succeed in today’s complex market.

¹Federal Old-Age and Survivors Insurance and Federal Disability Trust Funds Trustees Report, 66

About Advisor Authority: Methodology
The research was conducted online within the U.S. by The Harris Poll on behalf of Nationwide from January 4-13, 2023, among 511 advisors and financial professionals and 789 investors ages 18+ with investable assets (IA) of $10K+.  Advisors and financial professionals included 274 RIAs, 175 broker-dealers, 128 wirehouse and 55 other financial professionals. Among the investors, there were 203 Mass Affluent (IA of $100K-$499K), 167 Emerging High Net Worth (IA of $500K-$999K), 106 High Net Worth (IA of $1M-$4.99M) and 104 Ultra High Net Worth (IA of $5M+), and 209 investors with $10K to less than $100K investable assets (“Less affluent”).  Investors included a subset of 224 “pre-retirees” age 55-65 who are not retired.

About The Harris Poll
The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas: building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com.