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Morningstar’s Retirement Quiz for Advisors: Research to Help Drive Your Plans

Do you know what can make the difference for reaching your clients’ retirement goals?

Samantha Lamas

Online financial-planning tools have made it easier to see how a client’s existing financial plan can make or break their retirement goals and to identify where adjustments may be necessary. As advisors know, however, moving a few sliders on a software page is different from actually implementing those changes. And when it comes to impact, not every strategy is created equal. 

Over the last few months, we’ve conducted in-depth research about several aspects of retirement: the various investing techniques individuals use to work toward their retirement goals, the effectiveness of these techniques, and the current state of retirement in the United States. This research suggests that even the most advanced online tool can’t erase a client’s retirement woes; rather, most investors need unique advice that is personalized to their behavior and financial lives. 

To help both advisors and clients build a better understanding of how to reach their financial goals for retirement, we compiled our findings in the Morningstar Retirement Quiz for Advisors.

Here’s an overview of some of the topics this quiz tackles.

What moves the needle on retirement-planning success?

Research by Steve Wendel, head of behavioral science, took a closer look at the effectiveness of common financial-planning tactics, such as increasing contribution rates, using various asset-allocation strategies, and delaying retirement. 

The research suggests that a combination of several smaller behavioral changes can be more effective in achieving retirement success than extreme actions related to any single technique. For example, if Americans delayed retirement until at least age 67 and contributed a minimum of 6%, the percentage of American households that would be financially prepared for retirement would increase from 25.6% to 71.2%. 

However, since the right combination of techniques can vary significantly depending on an investor’s unique situation, professional advice can be extremely valuable in helping identify their appropriate strategy.

How realistic are investors’ retirement plans?

Research by David Blanchett, head of retirement research for Morningstar Investment Management LLC, suggests that despite the effectiveness of online planning tools in projecting the likelihood of reaching one’s financial goals (shown in Blanchett’s study of 58,000 users of Morningstar® Retirement ManagerSM Managed Accounts), the tools may be unrealistic if their results are based on incorrect assumptions.

For instance, Blanchett analyzed the 12 waves of the University of Michigan’s Health and Retirement Study (each of which surveyed about 20,000 Americans who reached retirement age during their respective study period) to understand how individuals’ actual retirement age compared with their planned retirement age. This analysis uncovered that most people retire four years later than they had originally planned, and this difference can drag down a person’s probability of reaching their retirement goals by about 40 percentage points for some ages. 

Combining what’s effective with what’s realistic

Our Retirement Quiz for Advisors and their clients features information on findings like these, with the aim of helping advisors digest this data and introduce the topics to clients. 

The quiz can help you understand the different factors involved in retirement planning so you can start developing ideas about how to best help your clients. 

Test your knowledge with the Morningstar Retirement Quiz for Advisors.

Take the Quiz

Morningstar Investment Management LLC is a registered investment adviser and subsidiary of Morningstar, Inc. The Morningstar name and logo are registered marks of Morningstar, Inc. Opinions expressed are as of the date indicated; such opinions are subject to change without notice. Morningstar Investment Management and its affiliates shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, the information, data, analyses or opinions or their use. This commentary is for informational purposes only. The information, data, analyses, and opinions presented herein do not constitute investment advice, are provided solely for informational purposes, and therefore are not an offer to buy or sell a security. Before making any investment decision, please consider consulting a financial or tax professional regarding your unique situation.

The Morningstar Retirement Quiz for Advisors

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