There's some positive news for retirement savers this week.
Rules protecting financial advisor clients have been signed into law, and encouraging findings from a large-scale retiree confidence survey show that the majority of retirees are quite happy.
First, the headline: The Biden administration has announced new rules that will require more financial professionals to be held to higher standards when providing financial advice on retirement benefits.
“America's workers and their families are looking to investment experts for guidance as they save for retirement,” Julie Su, Acting Secretary of the U.S. Department of Labor, said in a statement. “This rule protects retirement investors from inappropriate investment recommendations and harmful conflicts of interest.”
From September 23, investment professionals will be required to act as fiduciaries. In other words, investment professionals must prioritize the needs of investors over their own interests and provide unbiased advice. It's hard to understand that I needed to clarify this, as it sounds obvious, but here it is.
Now, when customers like you pay for financial advice from experts about retirement accounts, such as 401(k) plans and individual retirement accounts (IRAs), they can provide the advice that's best for you. That is what is required. do not have they.
The text of the new rules states that investment advice fiduciaries must be “prudent and loyal, avoid conflicts of interest, fees and misleading statements about investments, and ensure that the advice given is in the best interests of investors.” “Designed policies and procedures must be followed.” We will not go beyond what is reasonable for our services and will provide investors with basic information regarding conflicts of interest. ”
Hallelujah.
More than one-third of workers who currently work for a financial advisor or professional, and nearly half of those who left the company, are hearing from a survey by the Employee Benefits Research Institute (EBRI) and Greenwald Research. , that it sounds like music.
“And more than half of workers who don't currently have advisor support say they will in the future,” Craig Copeland, director of wealth benefits research at EBRI, told Yahoo Finance.
He added that “retirees were most likely to consider financial advisors and professionals as trusted sources of information for planning for their retirement.”
Confident in living a comfortable retirement
This year's big takeaway from the survey is that two-thirds of Americans are confident they have enough money for a comfortable retirement, a significant increase from last year. That's it. However, baby boomers and millennials reported higher confidence in having enough money to live comfortably into retirement than Gen Xers.
While this is certainly encouraging, confidence among workers and retirees has fallen significantly from the 77% confidence level in 2022, and has yet to fully regain the confidence it lost in 2023.
“But overall, there is pretty strong optimism among workers and retirees about their retirement prospects,” Copeland said.
Just a heads up: More than one-third of retirees say their travel, entertainment, and leisure expenses are higher than expected. Additionally, more than half of retirees say their total retirement expenses are higher than they originally expected.
But they shook it off. Most people say they can spend their money however they want, within reason. Even better, their retirement lifestyles are better than expected.
“Retirees are pretty happy with what they're doing,” Copeland said. “Retirees generally seem pretty satisfied with their situation, although they're not as optimistic as they were two years ago.”
Not only are retirees managing their current expenses, the majority say they are still saving for the future. And nearly two-thirds are confident they have enough money to leave a legacy.
run the numbers
Americans are sticking to the “glass half full” theme and taking steps to plan for their golden years.
More than 4 in 10 workers who were offered a workplace retirement savings plan reported increasing their contributions in the past year.
According to researchers, half of Americans have calculated how much money they'll need in retirement. And the fallout from their calculations has led a significant portion of workers and retirees to start saving more.
“Our research shows that if someone is doing the math, they are more likely to start saving and have a better understanding of what numbers seem reasonable.” Copeland he said. “Having that plan in place and coming up with the numbers kept them feeling real and gave them confidence because they knew what they needed to accomplish.”
They have a lot of ground to fill. According to the survey, one-third of workers who tried to calculate how much they needed for retirement estimated it at more than $1.5 million.
However, many of these workers currently have less than $50,000 saved or invested, and 14% have less than $1,000.
Dig deeper into your plan
Six in 10 workers have thought about how the age at which they claim Social Security affects the amount they receive.
However, what workers plan to do and what retirees actually do are very different. Just over a quarter of workers plan to claim Social Security benefits at a median age of 65, the same age they plan to retire.
However, this was not the case in the past. Most retirees (7 out of 10) report that they retired earlier than age 65, and the median retirement age is 62. And they started collecting Social Security from him around age 64.
Most workers want to exit the workforce “gradually over time.” However, a whopping two-thirds of the retirees had experience working full-time.
Additionally, the majority of retirees report that the reasons for leaving their job earlier than expected were outside of their control.
work for a salary after retirement
Although the majority of workers say they will continue to work for pay after retirement, only 3 in 10 retirees say they actually work for pay after retirement.
For those who continue to work, they do so primarily to stay active and involved.
That didn't surprise Copeland. “Historically, going back to 2005, the majority of retirees said they wanted to work for paychecks in retirement.” But what's actually happening is that health and aging Copeland added that the difficulty of finding a job makes it difficult to work.
“There continues to be an issue of older workers facing discrimination in the workplace,” Copeland said.
Kelly Hannon is a senior columnist at Yahoo Finance. She is a career and retirement strategist and the author of 14 of her books, including “The World's Best.''Taking Control Even Over 50: How to Succeed in the New World of Work.” and “You’re never too old to get rich.” Follow her on X @Kellyhannon.
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