- What's at Stake: Workers might have to take on second jobs or delay retirement plans in order to make ends meet and have enough savings for the future.
- Expert Quote: "There's a lot of people that are nervous about retirement, whether they're in it or whether they're still working and preparing for it." — Leah Schwarz, managing director of Perspective Wealth at Steward Partners
- Supporting Data: Thirty-seven percent of those making more than $500,000 live paycheck to paycheck.
Financial strain shies away from no income bracket.
Workers at pretty much all income levels are facing "financial strain," impeding their progress in saving for retirement, according to Goldman Sachs Asset Management's retirement data. Advisors can help them figure out how to make it add up.
Even some individuals who are on the wealthier side are having challenges, including living paycheck to paycheck, according to the survey of 5,106 individuals, including 3,612 workers and 1,494 retirees aged 45 to 75.
"Certain financial concerns also appeared among some higher-income households, although the nature and retirement implications of those concerns may differ from those experienced by lower-income households," according to the survey results.
Although more workers live paycheck to paycheck at lower income levels, there are still a substantial portion at higher income levels. Of those making between $300,000 and $500,000 annually, 34% live paycheck to paycheck, as well as 37% of those making more than $500,000.
However, a smaller percentage of the survey respondents in the $100,000 to $200,000 income range live paycheck to paycheck, 22%, and a little more of those in the $200,000 to $300,000 income range, 25%.
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How advisors can help
Financial advisors are trying to figure out how to service all parts of a 401(k) plan, such as adding digital services and advice, Christopher Ceder, senior retirement strategies at Goldman Sachs Asset Management, said in a press briefing. High-income participants aren't the only ones who need support.
"I do think it's a broad-based situation, and it's figuring out how to segment to help make sure that you're delivering a more comprehensive set of services," he added.
Wyatt Lee, head of target date strategies in T. Rowe Price's Global Multi-Asset Division, said in the briefing that demand for annuities has increased, and advisors "are ideally placed to be able to talk about them because many individuals are reluctant to annuitize on their own."
Considerations such as these are even more important as
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In addition, advisors can see across an individual's portfolio.
Although many workers use AI for research, a majority would still prefer human guidance for all of the following categories: "major life events," "emotional reassurance," tax planning, retirement income, guaranteed income and market downturns, according to the survey results.
Leah Schwarz, managing director of Perspective Wealth, which partners with registered investment advisor Steward Partners, said she sees clients coping with financial strain, such as one who took on a second job to help his son pay for college or others who are giving up tickets to sporting events because the prices are too high.
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Thirty-four percent of the respondents to the Goldman Sachs survey said they will probably seek another job due to financial security.
"The numbers don't lie, and so I think I consistently show people, 'Hey, this is where you are. This is what you can generate,'" Schwarz told Financial Planning. "I definitely try to manage clients' assets where they get to their point where they're just living off the dividends and income."
Schwarz encourages clients not to touch the principal portions of their savings so they have a cushion for emergencies, such as appliances breaking in their houses.
"It's an important time for advisors right now to reassure and show clients that you have a plan and keep them updated on how well the plan is working because I think there's a lot of people that are nervous about retirement, whether they're in it or whether they're still working and preparing for it," she added.
