When coupled with rising interest rates, inflation poses a problem for retirees and savers alike. As a result, some 42% are so worried about their retirement security that they avoid thinking about it at all.
But that presents a silver lining for financial advisors, who can assist investors feeling paralyzed about their retirement planning.
A 4% withdrawal “may be quite a bit less than these individuals are likely used to living on annually,” Goodsell added. “This underscores why it’s so important to work out all the assumptions and do the math early when making plans—and why professional advice is necessary.”
Longstanding investment principles for asset allocation may also suffer amid the current drama. The old standby, a portfolio of 60% stocks and 40% bonds, has come under the microscope, since the ratio doesn't account for heightened and emerging risks to the equity portion of portfolios or the low-rate environment, which can hurt bonds, Natixis said.
“Even as rates go up, it will still take time for them to reach a comfortable level for generating a consistent income for retirees,” the study said. “In the meantime, more than half (58%) of high-net-worth respondents recognize that low rates will make it difficult to generate an income off their savings.
“Investors would likely do better to diversify their holdings in consultation with a trusted financial advisor.”
Natixis found that the “three-legged stool” of retirement funding—Social Security, employment benefits and individual savings—may also require rejiggering in the current reality. There are still questions about the long-term viability of Social Security and rising public debt, yet 31% of respondents believe it will be difficult to make ends meet without Social Security benefits, Natixis found.