It’s December, the month for setting new goals and resolutions, and creating business plans and marketing plans for 2025. If your financial advisory practice works with people getting close to or already in retirement, here are seven facts recently uncovered by research. Taken in total, the data shows that your expertise in retirement is very needed, and there are a lot of potential clients out there that merit your attention.
1) More 401(k) and IRA Millionaires
The total number of 401(k) and IRA millionaires hit an all-time high in the third quarter of 2024 according to research by Fidelity, the largest 401(k) plan provider in America. As of September 30, there are 497,000 401(k) accounts with a balance over $1 million, while there are 418,111 IRA account with balances over a million. Average balances have increased by more than 40% since 2014.
Sources:
https://www.cnbc.com/2024/12/06/number-of-401k-plan-and-ira-millionaires-hits-fresh-high.html
https://www.fidelity.com/about-fidelity/Q3-2024-retirement-analysis
2) Traditional and Roth IRA (Individual Retirement Account) Ownership Data
Both traditional and Roth IRA accounts are popular in America. According to Investment Company Institute research, as of mid-2023, approximately 41.1 million households in America owned a traditional IRA, which were made available to consumers starting in 1974. Roth IRA accounts, first available in 1998, are owned by 31.9 million U.S. households.
Sources:
https://www.thinkadvisor.com/2024/12/10/12-merry-retirement-facts-for-2024/
https://www.ici.org/research/retirement
3) Retiring Earlier Than Expected
According to a study of 3,661 American retirees between the ages of 62 and 75 completed by the Employee Benefit Research Institute (EBRI) in 2024, 58% retired earlier than they expected to. Most of those surveyed (38%) had to retire early due to a health problem or disability, followed by 23% who had to retire because of company downsizing, closing or reorganization. Only 21% said they retired early because they could afford to.
4) Fewer Working with Financial Professionals
The percentage of survey respondents who said they were working with financial advice professionals dropped to 21% in 2024, down from 36% in the EBRI study done two years ago.
5) Low Awareness of Retirement Strategies
Many of those surveyed by EBRI were unaware of retirement income strategies. Only slightly more than 50% were aware of annuities, 40% were aware of interest and dividends from an investment portfolio, and 37% were aware of reverse mortgages. More than 30% were unaware of any of these options.
Sources for 3, 4 & 5:
https://www.thinkadvisor.com/2024/11/15/12-new-findings-on-spending-in-retirement/
https://www.ebri.org/docs/default-source/ebri-press-release/pr-1366-spendinginretirement-13nov24.pdf
6) No Formal Retirement Withdrawal Strategy
A survey conducted in October of 2024 by IRALOGIX found that 49% had no formal withdrawal strategy in retirement, choosing to just withdraw what they wanted or needed as they went along. 44% said inflation had no impact on what they withdrew, and 29% had no strategy for adjusting spending based on market performance. Only 20% said they had a plan for healthcare or other unexpected costs, and only 17% said they managed taxes on their withdrawals.
Source:
7) Biggest Worries: Social Security, Long-Term Care, Outliving Savings, Cognitive Decline
A new research study by Transamerica Institute reveals that respondents’ greatest retirement fears revolve around money and health. Approximately 42% are afraid that Social Security will be reduced or will cease to exist in the future, with 60% expecting to rely on the program to be their primary source of income throughout their retirement. Approximately 32% of respondents are afraid of outliving their savings and investments in retirement. Others fear declining health that could require long-term care (37%), losing their independence (32%), and cognitive decline (28%). Only 13% say they are very confident they could afford long-term care—13% have LTC insurance. Almost half (48%) said they would rely on family members and friends to provide care.
Sources:
https://www.thinkadvisor.com/2024/12/03/the-7-biggest-retirement-regrets-and-how-to-avoid-them-/
If you are a financial advisor seeking to grow your firm and add clients in 2025, let’s talk about your business and marketing plan. Along with marketing and practice management help, we offer insurance and annuity strategies to help provide your clients with tax- advantaged lifetime retirement income from accumulated retirement assets, long-term care coverage options that kick in if needed, and tax-advantaged legacy options for heirs and/or charities. Call Quantum at 800.440.1088 for a case design customized based on your client’s unique parameters.
With a degree in journalism and many years of experience, Pel creates content for websites, blog posts, social media, whitepapers, marketing pieces and more. She is passionate about SEO.
