Investors’ confidence in their ability to fund their retirement is up dramatically this past year, but it may be a misplaced confidence, says financial advisor Tony D’Amico.

The continuation of the bull market, despite recent volatility, and the growth in 401(k) and other retirement funds has people feeling good about their prospects for retirement.

But how much a person should have in the bank for retirement depends on more than good investment returns, said D’Amico, the CEO of Fidato Wealth in Strongsville, Ohio.

D’Amico is one of more than 1,000 advisors who participated in Financial Advisor’s Retirement Planning Survey 2018, which showed people are feeling good about their retirement. The participants covered the gamut of advisors from sole practitioners to members of large firms and advisors with no investment minimums to those with million-dollar minimums.

In the 2018 survey, more than 46% of the advisors said their clients who are still working have become more optimistic this year about having enough money for their lifetime. This is a dramatic uptick from three years earlier, when only 10.6% of advisors said their clients were more optimistic than they were the year before.

The numbers for those who were less optimistic were reversed. This year, only slightly more than 12% found their clients to be less optimistic whereas 35% of advisors had found clients less optimistic in the 2015 survey.

Currently, 41% of advisors say their clients have not within the last year moved at all in their optimism or pessimism about their ability to save enough money for the rest of their lives. Fifty-four percent were static in their feelings three years ago.

D’Amico, whose client minimum in investable assets is $500,000, says 70% of his clients have enough money saved to retire early if they wanted to. “Clients are more engaged in being ready for retirement now. They are asking more detailed questions and becoming more educated,” he adds. “Five years ago, they wanted to know when the recovery would be complete. Now they want to know how long this can continue.”

Don Mahlke, senior wealth management advisor for GCG in Deerfield, Ill., says client confidence is attributable to the market highs and the stability in the job market. “A good share of our clients are on track to meet their retirement goals, but not all by any means,” Mahlke says. “We make sure they are saving enough and taking the right amount of risk.”

One of the things affecting the clients’ level of optimism is the potentially high cost of health care in retirement. Most advisors, 63%, provide at least limited advice on health-care financing, while nearly 20% provide extensive planning. Only slightly more than 17% do not include any health-care advice in their planning process.

The shift in this area has been toward providing more, not less, health-care advice. Only 16% of advisors provided extensive health-care counseling in their advice three years ago.

Advisors, meanwhile, are not quite as optimistic about their clients’ prospects of meeting their retirement goals as the clients seem to be, and percentages have not shifted much over the last three years.

According to the 2018 survey, only 10% of advisors said that 90% or more of their clients between 50 and 65 are on track to reach retirement goals. An almost equal number (11%) had fewer than 40% of clients on track. The rest are somewhere in the middle. In 2015, 10% of advisors had their clients in the top range and slightly more than 11% were at the bottom, so at least the bottom is improving.

“Clients are wiser about their investments now than they were in the past,” explains Erik Daniels, executive vice president with Ronald Blue Trust in Atlanta, where more than 70% of clients could retire early if they desired. “From my perspective, I think the 2007-2008 financial crisis still weighs heavily on people’s thinking. They are more wary than they were in the past.”.

Some of that same wariness may be affecting advisors, according to the survey. Over the last three years, more advisors have shifted away from making annual adjustments to withdrawal rates and more are setting withdrawals below the traditional 4% level.

Only 26.6% of advisors adjust clients’ portfolios every year now while 33.8% did in 2015. Twenty-eight percent now set initial withdrawal rates at between 3% and 4% while 25.4% did three years ago. But 33.5% of advisors still have drawdowns set between 4% and 5% of portfolio values now, an increase from 30% in 2015.

Alan Myers, president of Aerie Capital Management in Baltimore, is one of the advisors who sets a slightly higher withdrawal rate for his retiree clients at 4% to 4.5%. “The lessons of the financial crisis about the need to save seem to have sunk in, and most of my clients’ minds are at ease. They are not stressing about the volatile market. Whether the savings rates will continue into the future remains to be seen,” he says. “Despite the fact that we have seen phenomenal market performance in the last few years, I have not seen any of my clients doing anything stupid with their money. Again, I think that is a function of the financial crisis.”

Myers is one of the advisors who adjusts clients’ portfolios at times. “If they are spending sustainably, we usually do not adjust downward. For some, because of the good market performance, we have adjusted upward.”

Most of the advisors reported a majority of their retired clients are spending their funds in a way that will be sustainable for years to come. More than three-quarters (77.6%) have at least 60% or more of their clients spending sustainably and 20% have 90% or more of their clients on the right track to make it through retirement.

But even some high-net-worth clients are a little nervous, according to Daniel P. Lash, a partner and advisor at VLP Financial Advisors in Vienna, Va., whose clients have $100,000 and up in annual income and at least $500,000 in investable assets.

“Our clients have saved enough to maintain their lifestyle, but some are still worried. They are millionaires, but they do not feel like millionaires because of the longevity risk,” Lash says.

In order to provide for a longer life span, Lash advises clients to draw down assets depending on the market. The sale of bonds and equities should be timed appropriately depending on what the interest rates and return rates are, rather than by a predetermined schedule.

“The strategies to create an income stream for life are different now than they were for earlier generations. Baby boomers are the first to not have guaranteed pensions and they are telling their children to save. The next generations just know that is the way it is—there is not going to be anyone to take care of them,” he says.

Succeeding generations will need products to provide income for the rest of their lives. “If you have pointed conversations with clients, they will be confident. If you do not have those conversations, the clients will not be optimistic,” Lash adds.

Most people do not have to worry about having enough money to last through retirement, according to a recent study conducted by the BlackRock Retirement Institute and the Employee Benefit Research Institute. The two organizations found that most retirees have 80% of their pre-retirement savings nearly two decades after they quit work.

In part this could be because most advisors (63%) say their pre-retiree clients are saving at least 10% of their income and more than 20% of advisors say clients are saving at least 15% or even more. Furthermore, a strong bull market has boosted balances.

Forty-eight percent of survey participants say their clients are saving more than clients of the same age did in the past. The survey revealed other facts about the advisors.

• Many advisors also report their clients are working until 65 and beyond, either because they need to or they enjoy working.

• More than half of advisors (56.7%) manage one to 20 401(k) plans or other retirement savings plans.

• Alternative investments, which seem risky to some, are not an anathema to advisors. Most (55%) at least sometimes include alternative investments in the portfolios of retired clients. Equal numbers (about 22%) always or never recommend alternatives.

• Retired clients have two major concerns, according to the advisors surveyed. Thirty-six percent of advisors said running out of money concerned their clients most, while 23% said health-care costs were their clients’ top worry. They also worried about generating a reliable income stream and worried about a future stock market crash (concerns that came in third and fourth).

• Clients who are not yet retired have similar concerns. Advisors say their clients who are not yet retired are concerned most about outliving their assets and generating a reliable income stream. A future stock market crash comes in third.

• Almost all advisors are counseling at least some retirees and 63% of advisors say their client base is made up of 21% to 60% retirees.

• Most of the people who seek help from a financial advisor have at least some money, if not substantial amounts of investable assets, and are asking advisors for help in managing it. More than half (53%) of advisors say most of their clients have between $501,000 and $2 million to invest.

• Nearly 10% of advisors say most of their clients have $2.1 million to $5 million in investable assets; and, finally, 31% have clients with $100,000 to $500,000.

No matter what the amount of assets, people seeking out financial advisors want to make decisions but need guidance with the important questions, says D’Amico of Fidato Wealth. “They want specifics about what they should do. They are comfortable when they know [the details] are accounted for and, then, they do not react when the pendulum swings.”