Planning cuts retirement stress by 40 points

Inflation and healthcare costs now top the list of worries for American retirees, Cerulli Associates says. Its latest survey also finds four in ten retirees reporting at least moderate financial stress.

The stress is not evenly spread. Among retirees with a written financial plan, 29% say they are at least moderately stressed. Among those still building a plan, 69% do. That is a 40-point gap.

Inflation is the single biggest worry, cited as a high or very high concern by 21% of retirees. Healthcare and long-term care expenses come next, at 16%. Economic downturn concerns round out the top three, at 14%.

Older investors cannot wait out a market shock the way younger ones can, and inflation is eating into the income streams their retirement plans depend on, said John McKenna, senior analyst at Cerulli.

“A detailed financial plan that is updated periodically can relieve financial stress, while helping advisors determine the best mix of investments and products to support clients’ retirement goals,” McKenna added.

The Cerulli findings align with a separate LIMRA report published earlier this month. Half of pre-retirees lack a meaningful or recently updated written plan. Just 40% work with an advisor. Of the least-prepared, only 8% have made that advisor connection.

Working with an advisor changes the outlook. Some 77% of pre-retirees who work with one say they feel prepared for retirement. Among those without an advisor, 47% do.

Taken together, the two reports point to a single opening: turning concern about retirement into a written plan. For clients within a decade of retirement, inflation-indexed and guaranteed income products are a natural first step. The healthcare numbers give advisers another entry point: stress-test a portfolio against unexpected medical costs, a conversation that may sit outside the traditional remit but sits squarely inside the planning gap.

The LIMRA report shows why the gap exists in the first place. Half of pre-retirees have no updated plan. Just 8% of the least-prepared have found an adviser. That is the front where the 40-point gap gets closed.