• / Free eNewsletters & Magazine
  • / My Account
Home>Practice Management>Practice Builder>Retirement by the Numbers: Over Half of Households Are Unprepared

Related Content

  1. Videos
  2. Articles
  1. The Friday Five

    Five stats from the market and the stories behind them. This week: Berkshire's stake in a $28 billion deal, Avon's not-so-pretty 1% sales growth, and more.

  2. No Great Expectations (or Worries) for the Job Market

    Recent revisions helped 2012's employment growth look better than initial forecasts, but we don't expect a sizable surge (or decline) for 2013.

  3. The Friday Five

    Five stats from the market and the stories behind them. This week: a steep 41% dividend cut, a surprising 12% sales gain, and more.

  4. 3 Inflation-Fighting Assets for Your Toolkit

    TIPS, real estate, and commodities are great inflation-hedging, liquid investments, says Morningstar's David Blanchett, who details the importance of exposure to these assets.

Retirement by the Numbers: Over Half of Households Are Unprepared

Even if households work to age 65 and annuitize all their financial assets, more than half are at risk in retirement, according to federal data.

Michael M. Pompian, 05/28/2015

This month's article is the fourth in a new series called "Behavioral Finance and Retirement," which is intended to provide insight to advisors on the unique needs and financial behaviors of clients who are entering that period of transition called "retirement."

I put retirement in quotation marks because people today are not retiring the way they used to. The days of the retirement party, the gold watch, and sitting out one's years doing crossword puzzles and watching "Wheel of Fortune" are over for most people.

We've all heard the analogy that the baby boomers are like a baseball going through a garden hose. Well, the baseball is getting to the end of the hose, and it's not leaving without a bang! And before it leaves, it will be a financial force to be reckoned with.

To serve retired clients properly, there are some key themes that advisors need to be aware of:

1. People are living longer than ever thanks in part to medical technology and better living habits such as diet and exercise. This is extending the length of time people are in a nonworking phase of life.

2. People's definition of retirement is changing, which is having a major impact on how individuals manage their finances.

3. In some cases, a certain segment of the population will have no choice but to produce some type of income after they leave the traditional workforce.

4. The responsibility of planning and investing for retirement has shifted in large part to the employee/retiree and away from corporations. As a result, behavioral biases significantly affect individuals who are entering or already in this phase of life.

The author is a freelance contributor to MorningstarAdvisor.com. The views expressed in this article may or may not reflect the views of Morningstar.

blog comments powered by Disqus
Upcoming Events
Conferences
Webinars

©2014 Morningstar Advisor. All right reserved.