The current outlook for many Americans meeting their retirement goals is “bleak,” Wendel says. “The only thing that can happen in some cases is changing the standard of living in retirement. And that can be scary.”
In his study analyzing which clients can and cannot achieve retirement goals, he makes certain assumptions: that the average client has no massive debt, that he or she won’t require high standards of living in retirement, and that there will be no cuts in Social Security.
Despite those assumptions, he estimates only some 25.6 percent of currently working households are “on track to have what they need in retirement.”
Even the rich have problems, Wendel says, adding that only about 50 percent of mass-affluent households will achieve their retirement goals.
But he emphasizes that the situation doesn’t have to be bleak if clients can receive good advice in a timely manner and the advice includes multiple strategies.
Delaying retirement can be a good option, he says. But it’s also effective if clients simply contribute more to a plan—say 6 percent instead of 3 percent—and accept a lesser standard of living in retirement.
It makes a big difference if advisors can work closely with clients and make them understand the nature of the savings gap.
“If you can begin early on, then you are going to have more options,” Wendel says.