How Retirement Planning is Changing Post Pandemic

Retirement planning is undergoing a generational shift from DIY investing to following a structured, systematic and guided approach driven by millennial tech. Market downturns have unpredictably evolved beyond projections, affecting the retirement wealth of millions over the last few years.

Europe’s energy crisis, market volatility and the Fed’s hawkish stance to control raging inflation have worked to erase $3.4 trillion from 401(k)s and IRAs in the first half of 2022, Bloomberg reports.

The massive losses have inspired a renewed interest and sense of urgency in the minds of Americans to get their retirement planning in order. Finance of America Reserve released a new study, Disconnected: Perceptions vs. Reality in Retirement Planning, from the Stanford Center on Longevity (SCL). The study surveyed 2,000 U.S. retirees and pre-retirees between ages 50 and 74 and revealed that the majority are financially unprepared for retirement.

Most remarkably, only 41%of respondents consult a financial advisor, but 60% of retirees and 64% of pre-retirees would find it extremely valuable to have the guidance of a financial professional in formulating a retirement plan.

This free quiz can match you with up to three vetted financial advisors who serve your area, each obligated to work in your best interest.

At the same time, many are going beyond the traditional 60/40 portfolio allocation, exploring new and tangible investment options. Furthermore, workers are taking note of the importance of creating passive income streams and investing in employer-sponsored retirement vehicles or IRAs.

While older workers have growing concerns, the retirement picture for young Americans isn’t appealing, with most priced out of the wealth-generating housing market and finding it difficult to save money with ongoing student loans and credit card debt.

The retirement crisis could be attributed to lack of discipline, poor financial literacy and emotional investing tendencies triggered by unfavorable markets. A 2021 National Financial Educators Council survey of 3,389 people revealed that 10.7% lost more than $10,000 due to money mismanagement.

Watching your life savings vanish overnight can be difficult, and attempting to control the damage without appropriate knowledge could delay retirement goals by years. At the same time, talking about money isn’t easy for most.

The first impact of a compatible financial advisor on your life could be a simple yet effective step to prevent further financial losses, followed by chalking out a future growth plan while keeping your emotions at bay.

Want to speak with a financial advisor but unsure where to start? This free quiz can help match you with up to three advisors who serve your area.

Financial advisors following fiduciary standards are legally and ethically required to make the best possible decisions for clients. These trained professionals undergo rigorous coursework that focuses on establishing a safe space for clients to explain their situation. Detailed information helps advisors identify sources of money conflict, outline a wealth creation roadmap, and plan for unforeseen crisis events.

Although emerging AI-powered robo-advisors allow you to create an investment plan starting at $1, there are many life events like estate planning, starting a family, putting a down payment on a house and even getting divorced that digital apps cannot handle. Additionally, a robo-advisor won’t stop you from making rash money moves, unlike human intervention.

At the same time, partnering with an advisor should be looked upon as a long-term investment in itself since good client-advisor relationships have the potential to last decades. Depending on your goals, which could range from managing large amounts of wealth or taxes to navigating financial pitfalls and paying down debt, choosing the most compatible advisor with specializations in alignment with your situation becomes a vital part of the retirement vision.

An experienced financial advisor should know how to help younger clients get a headstart in saving money and assist those nearing retirement with catching up. A recent Vanguard whitepaper estimated that a hypothetical $500k investment could grow to more than $3.4 million in 25 years under an advisor’s oversight, compared to just $1.69 million from a self-managed portfolio.

Assuming 5% annualized growth of $500k portfolio vs 8% annualized growth of advisor managed portfolio over 25 years.

The hypothetical study discussed above assumes a 5% net return and a 3% net annual value add for professional financial advice to performance based on the Vanguard Whitepaper “Putting a Value on your Value, Quantifying Vanguard Advisor’s Alpha”. Please carefully review the methodologies employed in the Vanguard Whitepaper The value of professional investment advice is only an illustrative estimate and varies with each unique client’s individual circumstances and portfolio composition. Carefully consider your investment objectives, risk factors, and perform your own due diligence before choosing an investment adviser.

The research time involved with finding a financial advisor best-suited to your retirement goals can become hectic. Many check out with friends and family to see if their advisors worked for them, whereas others search online.

A good start would be free financial advisor databases like NAPFA (National Association of Personal Financial Advisors) and XY Planning Network, which could trim down your search time by sorting advisors based on location, specialties, and services offered.

However, SmartAsset has developed a free financial advisor matching tool that can match you with up to three fiduciary advisors who serve your area in just a few minutes.

SmartAsset can also help arrange introductory meetings for you to interview your advisor matches regarding their track record, fees, investment approach, specializations, services offered, minimum investable amount, mode of communication, and scope for gaining financial knowledge.

  • Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

  • If you’re just starting to invest, working with a robo-advisor may be helpful. Robo-advisors offer portfolio management services just like traditional financial advisors, but they typically have lower fees and account minimums. These are the top 10 robo-advisors.

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