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Half of Pre-Retirees Worried About Running Out Of Money, Plan To Retire Early Anyway
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Happy Sunday everyone, and welcome to Benzinga’s financial advisor newsletter.
Today we’re discussing a new survey showing most Americans about to retire are worried about how they’ll make ends meet in retirement - but almost half still plan on retiring early. That’s an opportunity for advisors to provide guidance, reassure and help Americans secure their retirement.
So, let’s get into the Industry Chatter!
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INDUSTRY CHATTER
A new Schroders survey reveals a paradox among pre-retirees: while half are concerned about outliving their assets, 43% plan to claim Social Security before age 67, the full retirement age for those born in 1960 or later.
Only 10% of survey respondents plan to wait until 70 to maximize their monthly benefit, and the respondent who had not yet retired estimated needing $4,947 monthly for comfortable retirement.
NO WAITING
Despite 74% knowing that delaying Social Security increases payments, many plan early claims due to:
Needing the money (39%)
Concerns about Social Security's future (38%)
Wanting immediate access (36%)
Deb Boyden, head of U.S. defined contribution at Schroders, emphasizes that delaying benefits can significantly impact retirement quality of life.
The survey, conducted among 2,000 U.S. investors aged 28-79, also found that a whopping 88% are concerned about generating retirement income, 57% worry about losing regular paychecks and only 10% are confident they can replace 75% of their last paycheck in retirement.
NO STRATEGIES FOR INCOME IN RETIREMENT
Even worse, among retirees, 53% lack specific income generation strategies, simply withdrawing money as needed.
Boyden notes the challenging transition from accumulation to decumulation, suggesting that plan sponsors and asset managers collaborate on solutions bridging these phases.
The survey highlights a disconnect between retirement concerns and Social Security claiming strategies, underscoring the need for better education and planning tools to help pre-retirees optimize their retirement income, marking a huge opportunity for advisors.
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MARKET RECAP
In a pivotal address at the Jackson Hole Symposium in Wyoming, Federal Reserve Chair Jerome Powell signaled a forthcoming shift in interest rates Friday, stating “the time has come for policy to adjust.”
His remarks suggest the Fed is on the cusp of easing interest rates, yet Powell emphasized the importance of data-driven decisions, carefully avoiding any commitment to specific timing or the magnitude of those cuts.
As the Fed becomes more confident in inflation gradually returning to its 2% target, Powell emphasized the need to closely monitor the labor market, which he said is showing "unmistakable" signs of cooling.
The anticipation of impending interest rate cuts extended a decline in the dollar, which tumbled to its lowest level in over a year. This shift in policy direction invigorated interest rate-sensitive markets, with small-cap stocks, real estate and regional banks surging as clear beneficiaries following Powell’s remarks.
Simultaneously, gold — which historically moves inversely to interest rates and the dollar — soared to a record high, surpassing $2,500 per ounce.
All major U.S. equity indices ended the week in positive territory, with the S&P 500, represented by the SPDR S&P 500 ETF Trust (SPY), rising 1.3%. Small-cap stocks significantly outperformed their large-cap counterparts, as the iShares Russell 2000 ETF (IWM) surged 3.4% for the week.
Election-Proof Stocks
Market strategist Jay Woods said certain stocks, especially in the defense and cybersecurity sectors, could perform well regardless of whether Donald Trump or Kamala Harris wins the presidency. Notable mentions include Boeing Company (BA), Lockheed Martin Corp. (LMT) and Palo Alto Networks Inc. (PANW), alongside Woods' recommended exchange traded funds for diversified exposure.
Job Growth Revised
The U.S. economy added 818,000 fewer jobs than initially reported from April 2023 to March 2024. This significant revision increases expectations for interest rate cuts, as it suggests the labor market is weaker than previously thought.
EV Ambitions Scaled
Ford Motor Co. (F), General Motors Co. (GM) and Stellantis N.V. (STLA) are reducing their electric vehicle investments due to weakening demand. Ford canceled a planned electric SUV this week, while GM and Stellantis delayed new EV projects, signaling a strategic shift in uncertain market conditions.
Gold Bars Shine
With gold prices cracking $2,500 per ounce, a standard 400-troy-ounce gold bar is now valued at $1 million. The surge is driven by expectations of Federal Reserve interest rate cuts and a weakening U.S. dollar, boosting gold’s appeal to investors.
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THE WEEK AHEAD
Economic Data
Monday: German GDP, US goods orders
Tuesday: US consumer confidence, US house price indices
Wednesday: US crude oil inventories
Thursday: Inflation numbers for Germany, Japan, and the US
Friday: Purchasing Managers Index numbers for US and China
Earnings
Click here for the full calendar of economic data and earnings reports.
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