In the first half of 2023 we have seen the S&P 500’s rise of more than 10%. The numbers speak for themselves and those few short sellers aside, a rising market generally lifts spirits.
More money means more consumption, the ability to pay off debts and the confidence to take out more. What could go wrong?
When people have money in their brokerage or 401(k) accounts, they tend to be less anxious. At least they should, according to the so-called wealth effect theory.
And yet, although things have started to get better on the retirement front, a large number of people remain very concerned about their retirement.
A study from Allianz Life revealed that the recent financial crises have caused 46% of Americans to reduce or stop saving for retirement. Meanwhile, 49% say the rise in the cost for the basics is one of the greatest risks to their retirement income, up from 44% who said that in 2022 and 38% in 2021.
It doesn’t end there. The study said nearly 40% of Americans admit their retirement strategy has been derailed and they aren’t sure when or how they’ll get it back on track. Finally, an unnerving 61% of Americans say they are really afraid of running out of money.
The Role of Wealth Managers and Financial Education
So how can wealth advisors help battle the overwhelming financial and retirement negativity permeating the general public, especially amongst the young?
According to Surya Kolluri, head of the TIAA Institute, the cure is more about education than cheering a bull market. He thinks that no matter how old people are, they need financial literacy and longevity literacy to know that the sooner they start saving, the more their money will compound. They also need to have access to financial advice through their places of work. Just like employers provide medical benefits, financial wellness benefits should also be a given.
Kolluri added that investors will also feel better about their financial futures if they utilize a wealth manager as opposed to relying on social media to answer their retirement planning questions. Moreover, he says employee retirement plan sponsors can help younger workers by automating retirement plan contributions, offering plans with guaranteed lifetime income, and by increasing access to financial wellness tools.
At RiXtrema, we provide financial advisors with prospecting software for plans all over the country. Our tools use qualified plan data taken from 5500 filings and open sources, allowing us to reach out to plan executives with marketing letters. We comply with fiduciary regulations, and can measure the risk of every client’s portfolio. Recently we have launched new AI tools. You can find all of RiXtrema’s products on our main website rixtrema.com and sign up for a free demo of any tool!