Lack of Retiree Optimism Fixable for the First Generation of Self-funded Retirees

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Lake Point Advisory Group Wealth Management advisor Chris Massenburg explores the findings of Wells Fargo’s Investor and Retirement Optimism Index poll to learn why America’s aging and retired population is low on confidence despite positive economic news. Massenburg recently published a revealing blog on his findings, and encouragement for apprehensive seniors.

retirement planning, wealth management, ERISA ruling, fiduciary, financial planning

Lake Point Advisory Group

Our job is not to sell products or investments, our job is to understand your goals and help you meet your objectives.

While confidence in the country’s economic outlook is generally positive among younger investors, optimism among retired investors plummeted sharply in the second quarter of 2016, according to poll results released in August. In a newly published blog titled, “Achieving Retirement Goals in a Stagnant Economy has Aging and Retired Americans Short on Optimism,” Wealth Management Advisor Chris Massenburg of Lake Point Advisory Group examines some reasons behind retirees’ gloomy outlook—and offers positive alternatives for navigating this new era in retirement.

The most recent Wells Fargo/Gallup Investor and Retirement Optimism Index, a quarterly poll reflecting U.S. investors' outlook on their finances and the economy, found that optimism among retired investors fell by 17 points since February. Among non-retired investors, confidence in the economy fell only four points since February—an eye-opening disparity.

Retirees in 2016 include the first wave of Baby Boomers to reach full retirement age (70 ½) in the self-funded retirement system. While younger investors see a bright economic future, retirees see uncertainty, with a widening gap between those with robust retirement portfolios, those whose savings haven’t recovered from the financial crisis of 2008, and those with no retirement savings.

According to Massenburg, a variety of circumstances have retirees spooked. Portfolio performance, especially among conservative investors whose cash is earning virtually nothing in a market that has remained flat for more than a year. Today’s retirees are likely to live significantly longer than their parents, meaning retirement income streams must last. When they see no portfolio improvement month after month, their stress builds.

Inflation, a notorious portfolio bully, looms whenever the economy starts heating up, and today’s retirees face towering living expenses. Estimated healthcare costs for a 65-year-old couple are at $245,000, according to Fidelity Benefits Consulting.

“Overall, the rate of retirement savings growth has stalled, and retirees’ living expenses continue to increase,” Massenburg says. “Compounding retirees’ pressures is a shorter investment horizon than investors still in the prime of their careers.

“An investor at age 70 or 75 with little to show for their post-retirement conservative investment strategy is feeling very attracted to shorter-term portfolio gains,” Massenburg says.

Fear often causes people to take reflexive action. Antsy investors are prone to make risky market decisions at a time when their risk tolerance is already low. It is not easy for retirement advisors to tell clients to take a deep breath and relax, but that is precisely the strategy to take, according to Massenburg.

“The crash of 2008 may have been eight years ago, but it’s still fresh in a lot of people’s minds,” he says. “People who go the dividend income strategy route, putting all their money back into stocks, may have forgotten that lesson.

“In a market like this, there’s not a whole lot of true growth; as fiduciaries we encourage our clients who are nearing retirement or retired to be patient, and make sure they’re properly diversified.”

Lake Point Advisory Group advisors encourage clients nearing and in retirement to resist making decisions that allow their portfolios to become over weighted in risk. According to Massenburg, every individual’s risk is different depending on their situation, which is why it is important to sit down with a fiduciary retirement planner, advisor, coach—somebody qualified to explain the ramifications of any investment decision an anxious client is tempted to make.

As fiduciaries, LPAG advisors are duty-bound to act in each client’s best interest. That means understanding each individual’s retirement goals, devising a plan that supports those goals, providing the best advice to help clients meet those goals and executing the client’s wishes.

“Our job is not to sell products or investments, our job is to understand and help you meetyour objectives,” Massenburg says. “We have a legal and ethical obligation to act in our clients’ best interest.

“Don’t make any rash portfolio decisions without consulting your advisor first—even if your next door neighbor did well on a particular investment, it doesn’t mean it suits your situation.

“The neighbor may have a different risk tolerance or contrasting circumstances, so at the very least talk to your advisor before jumping on anything—if your advisor is a fiduciary, he or she is obligated to explain any potential long term impact.”

According to Massenburg, revisiting one’s asset allocation, particularly if it’s been a few years since the client has done so, is also a good idea. He and his colleagues at LPAG help dial down clients’ worries by sitting with them, reviewing their assets, and offering strategies that can put their minds at ease.

“Shifting a percentage into fixed income can not only stabilize your portfolio’s volatility, it will help you sleep at night,” he says. “There are plenty of strategies available for bolstering a low- or non-performing portfolio, and we’re here to help you do that.”

“Stress is understandable, but unnecessary as almost every situation can be resolved with the right strategies,” Massenburg says. “After working 40 – 50 years to get to retirement, enjoying it should be a given.”

To learn more about retirement planning, visit the Lake Point Advisory Group website, email info(at)lakepointadvisorygroup(dot)com, or call 214.771.3363.

About Lake Point Advisory Group:

Established in 2000 by President Reid Johnson, Lake Point Advisory Group is committed to helping clients meet their financial needs. By evaluating and assessing their clients’ financial situations, the firm’s wealth management team provides suitable recommendations to improve each client’s portfolio, and they do so with integrity and transparency. Lake Point Advisory Group’s experienced professionals are not only knowledgeable about finances, they also understand the importance of priorities, family and confidence in the client’s financial future.

Lake Point Advisory’s wealth management team employs members of the Financial Planning Association (FPA®), the largest membership organization for personal financial planning professionals in the United States. FPA members are those who commit to the highest standards of professional competence, ethical conduct and clear, complete disclosure to those they serve. They deliver advice using an objective, client-centered, ethical process.


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