New Survey of Financial Advisors Identifies Top Advice for Retirement Planning 5, 10 and 20 Years Out
Advisors from the National Association of Personal Financial Advisors (NAPFA) Say Tax Planning and Emergency Savings Critical; Longevity Most Pressing Issue For Consumers and Policymakers
CHICAGO, Oct. 22, 2015 /PRNewswire/ -- To adequately prepare for retirement, Americans need to minimize taxes, save for emergencies and be prepared to live longer than their parents, according to NAPFA-Registered Financial Advisors who ranked a comprehensive list of tried and true advice for people who are five, 10 and 20 years away from retirement.
According to the Federal Reserve's 2014 survey on the Economic Well-Being of American Households, 39 percent of Americans indicated that they have given little or no thought to financial planning for retirement. Furthermore, 31 percent of non-retirement respondents have no retirement savings or pensions whatsoever.
"We conducted this poll to raise consumer awareness about the urgency of preparing for retirement and the importance of having a comprehensive plan in place," said NAPFA CEO Geof Brown. "We encourage consumers to act on these tips which advisors rank as the most important steps to take five, 10 and 20 years out from retirement. When it comes to retirement planning, consumers need to remember that while the days are long, the years are short. "
To jumpstart Americans' retirement planning, NAPFA asked its members to rank advice that represents the type of comprehensive planning that consumers should expect from a financial planner, including estate planning, investments, education funding, insurance and risk management, retirement planning and senior issues, among others. NAPFA-Registered Financial Advisors are CFP-certified, Fee-Only advisors that meet the highest education and ethics standards in the financial planning profession.
The poll found that advice focused on maximizing retirement savings through tax planning ranks high with advisors in each time-frame category. Advisors recommend contributing the maximum amount of pre-tax income to 401(k)'s, utilizing tax-advantaged IRAs and staying abreast of tax-reduction opportunities provided by the IRS.
Mitigating the impact of a possible income disruption, whether due to job loss or disability, also ranked high with advisors. "Tips to prepare for possible income loss are common, but the high ranking in two out of three time-frame categories is surprising," said Brown. "Clearly the 2008 recession has had a long-term effect on the psyches of both advisors and their clients. Combine that with lagging wages and the unpredictability of corporate America, and you have a large number of Americans who are still very concerned about job security."
A write-in question asking advisors to list their clients' top concerns showed that clients are worried about their own longevity which could cause them to outlive their retirement income. "Clients are anxious about running out of money for retirement as they age. With people living longer, this is top of mind for advisors, too. Our clients need to make plans now for how they'll live in the future. If clients wait too long, their options will narrow and decisions will need to be made in times of stress," according to an advisor who participated in the poll.
Americans' increasing longevity is also a challenge for policy makers, according to advisors. When asked about the biggest policy issue facing America, advisors overwhelmingly pointed to fixing social security as the number one financial issue that the nation's next president must address.
"Planning for retirement is a big weight on consumers' shoulders – but the right guidance and tips can make the process feel approachable," said Brown. "We hope this poll will act as a motivator, helping consumers be proactive by identifying initial issues to consider and defining what services they should expect from advisors."
Nearly 100 NAPFA-Registered Financial Advisors participated in the poll. To view the full press release and pieces of advice click here. Results of the poll are also shared on an infographic, available here. Please visit the NAPFA site for more resources about financial advice or to find an advisor in your area.
About NAPFA
Since 1983, The National Association of Personal Financial Advisors has provided Fee-Only financial planners across the country with some of the strictest guidelines possible for professional competency, comprehensive financial planning, and Fee-Only compensation. With more than 2,500 members across the country, NAPFA has become the leading professional association in the United States dedicated to the advancement of Fee-Only financial planning. Learn more at www.napfa.org.
SOURCE National Association of Personal Financial Advisors (NAPFA)
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