Lifestyle, Health Are Key Drivers To Retirement Delay - Survey

Vanessa Doctor

7 April 2010

A recent survey by MainStay Investments of financial advisors reveals that US clients opt to delay retirement and work longer in order to protect their lifestyles, suggesting that the buffeting experienced in recent financial markets is not causing people to choose austerity in their older years.

According to the Retirement Income Survey, 61 per cent of the advisors said clients are not concerned with covering basic retirement needs but are actually more concerned with having to let go of luxuries, like dining out or traveling.

"While the market upheaval shook both investor portfolios and confidence levels, advisors in our survey reveal that their clients have not pared down their expectations for their golden years, choosing to delay retirement rather than scale back their lifestyle plans," said Matthew Leung, the director and head of practice management programs at MainStay.

"We believe this signals a need for close advisor-client communications, so that together they agree on the asset allocation strategy and investment product mix that is best suited for both their risk tolerance levels and lifestyle expectations."

More than 50 per cent of the financial advisors polled said their clients are deliberately delaying retirement. Forty-six per cent cited loss of assets in late 2008 and early 2009 as the number one reason for the postponement, while 40 per cent pointed to healthcare costs as the second.

In regard to risk tolerance, 60 per cent of those surveyed admitted that too much exposure to equities has been a major issue. This resulted in about 91 per cent of advisors making major changes to their clients' retirement portfolios, mostly in favor of mutual funds, which garnered 85 per cent approval, and guaranteed income products, which received over 60 per cent of nods.

There is still a need for clients to be educated on the amount of the supplemental income essential to maintaining their current lifestyle in retirement, the survey said. According to the advisors polled, less than half of their clients know how much money they actually need to supplement their incomes. Helping to identify income shortfalls and to determine alternate sources of income is therefore a key priority.

The MainStay Retirement Income Advisor Study was conducted online in the US via Harris Interactive during December last year; more than 500 advisors participated.