Affluent boomers who seek financial advice are more likely to reach retirement visions

As millions of baby boomers prepare for lifeís most expensive undertaking ñ retirement ñ a new survey by American Express Financial Advisors Inc. finds that those who seek help from a financial advisor save nearly twice as much for retirement than those who donít seek advice. The survey also found that the advised group reported less anxiety, worry and uncertainty about their future retirement years than those who chose to go it alone without professional advice.

The national online survey, ìVisions of an Ideal Retirement,î questioned 1,393 affluent baby boomers, age 40-64, with annual incomes of at least $75,000. Of those surveyed, 541 qualified as advised (39%) and 785 qualified as unadvised (56%) based on whether or not they have ìoftenî or ìsometimesî discussed retirement planning with a financial advisor.

A clearer path to retirement
According to the survey, affluent boomers who build a relationship with a financial advisor are more likely to set accurate financial goals for income in retirement. In fact, when asked how much savings they think is needed to maintain their current standard of living in retirement, the unadvised reported a perceived need for twice the amount reported by advised boomers.

The advised group expects to need about $2.5 million to maintain their current lifestyle in retirement and, on average, they report about $1.8 million in savings ñ a gap of $700,000 between financial need versus savings. The non-advised group expects to need $3.5 million to maintain their current lifestyle in retirement and, on average, they report having about $950,000 in savings ñ a gap of close to $2.6 million.

ìPeople who have not discussed their retirement plans with a financial advisor may be overestimating what they will actually need for income in retirement and could be causing themselves needless anxiety about the future,î says Craig Brimhall, vice president of Retirement Wealth Strategies at American Express Financial Advisors. ìIronically, although they think they need more, they have saved far less ñ thatís a recipe for a lot of sleepless nights.î

According to Congressional Budget Office (CBO) estimates, Americans in their early 60s can expect to live another 20 years past retirement age. Based on this estimate, advised boomers are more on target. Over a 20-year span the $2.5 million they expect to need to maintain their lifestyle amounts to about $125,000 per year, which is approximately 97% of the current average income reported by this segment.

Advisors Take Anxiety Out of Planning
The survey confirms that discussing retirement plans with an advisor helps take the anxiety out of retirement planning. Those without a financial advisor are 63% more likely than the advised to be ìuncertainî about their retirement (31% vs. 19%).

Expectations surrounding work in retirement also suggest that the unadvised perceive themselves as less financially prepared for retirement than the advised group. According to the survey, the unadvised are twice as likely as the advised to expect to work in retirement because they have to rather than because they want to (22% vs. 9% respectively).

Not Their Parentís Retirement
The survey found that a majority of affluent boomers are planning for a retirement far different than the one chosen by their parents. According to the survey, boomers see their retirement as a time for ìlearning and self-discoveryî (85%), for ìreinventing oneselfî (65%) and for a ìnew beginningî (51%). About nine in 10 (88%) see it as a new phase of personal growth and development. Also, six in 10 say they plan to work because they want to not because they have to. This is in stark contrast to the 57% who say their parents did not work at all in retirement.

ìWith greater expected longevity, Boomers canít help but redefine retirement as theyíve redefined major life events every step of the way,î said Rusty Field, vice president of Financial Education and Planning Services. ìThey are interested in reinventing themselves, starting a new business or career, going back to school to learn new skills or travel. And they are increasingly reassessing their future role in the workplace by extending their careers or downshifting.î

ìAs boomers embark on this exciting era of transition, employers need to revisit their retirement plan services and financial education programs, as well as the impact of these major trends on their workforce management practices,î says Field. ìThe ground rules are clearly about to change.î

Even trailblazers look for role models
Huge numbers of boomers are approaching retirement ñ new terrain as they define it ñ without information or support, and many say they seek someone who can offer ideas, solutions and inspiration for the future. Three out of four (75%) say they could learn more about retirement planning by talking with others, yet most (79%) admit they do not have a role model for planning this phase of life.

To address that need, American Express Financial Advisors has developed a website located at www.getadvice.com to help individuals envision the possibilities for their years in retirement. This interactive and user-friendly website can help pre-retirees prepare for retirement emotionally as well as financially. Visitors will find articles written by leading authorities about ways boomers are reinventing retirement as well as video stories about individuals who have transformed their lives. The website also features easy-to-use calculators that can help visitors estimate their financial readiness for retirement.

The survey was conducted for American Express Financial Advisors by Roper Public Affairs in November 2004. The margin of error is /- 3 percentage points.

American Express Financial Advisors is one of the nationís leading financial planning companies. It is part of the American Express Financial Corporation, which currently owns or manages more than $354 billion in assets. Through a network of more than 12,000 financial advisors, the company provides financial advice, long-term financial planning and high quality financial products to more than 2.7 million clients throughout the United States.

On Feb.1, 2005, American Express Company announced plans to pursue a spin-off to shareholders of the American Express Financial Advisors unit. The transaction is expected to be completed in the third quarter of 2005, subject to certain conditions.

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