Investment Strategies for Senior Citizens: Accelerate Wealth Accumulation and Retirement
In the realm of retirement planning, working with a financial advisor can offer significant advantages for older investors, as highlighted by research from Northwestern Mutual and T. Rowe Price.
According to Northwestern Mutual, older Americans who work with a financial advisor tend to retire earlier, on average at age 62, compared to those without an advisor who expect to retire at age 64. Furthermore, those with an advisor have twice as much money saved for their later years, with an average of $132,000 compared to $62,000 without an advisor.
Another notable finding is that a higher percentage of Americans with a financial advisor feel financially secure (64%) compared to all Americans (29%). Northwestern Mutual also found that Americans who work with a financial advisor have a higher percentage of inflation factored into their retirement plans (69%) compared to all Americans (48%).
T. Rowe Price's research further emphasizes the importance of personalization for the "aging" investor. Investors over 50 demonstrate diverse preferences and a more active role in managing equity exposure, preferring personalized retirement solutions rather than one-size-fits-all products. Older investors adjust their equity allocations more aggressively, potentially to catch up on retirement savings or align investments with their specific goals and risk tolerance.
The T. Rowe Price whitepaper concluded that offering professionally managed personalized investment solutions to aging retirement investors could better serve their needs and preferences. However, it did acknowledge the risk of active management encouraging over-trading and did not consider the impact of investment fees.
In summary, financial advisors provide personalized guidance that helps older investors optimize their portfolios based on complex individual needs, enhance their confidence, manage risks like inflation, and make strategic decisions that improve their retirement timing and preparedness. If your goal is to ensure your individualized needs are being met, working with a financial advisor may be an investment worth making, especially during the lead-up to retirement or after retirement.
[1] Northwestern Mutual. (2021). 2021 Planning & Progress Study. Retrieved from https://www.nm.com/content/dam/nm-web/docs/2021-planning-and-progress-study.pdf [3] T. Rowe Price. (2021). The Aging Investor: Personalization Matters. Retrieved from https://www.troweprice.com/content/dam/troweprice/us/documents/insights/investment-strategies/white-papers/The-Aging-Investor-Personalization-Matters.pdf
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