If networking is useful for finding a job, how about for achieving retirement readiness? To offset the loss of the pension and uncertainty over Social Security, Americans are looking to other means to ensure they save enough for retirement. Those other means may be people.
“Americans are taking retirement into their own hands and surrounding themselves with a network of people to help them plan,” says Celandra Deane-Bess, chair of the national practice group for retirement at PNC.” According to the bank’s study Perspectives on Retirement 2015, 93% of “successful savers” have formed a network of advisers, ranging from personal to professional, who help them make financial decisions for retirement—and be more confident those decisions are good.
This confidence is far from just friendly optimism. A cool 45% of those with “a very effective network” have saved, on average, hundreds of thousands more, the survey says. PNC defines “successful savers” as Americans ages 35 through 44 with at least $50,000 of investable assets and ages 45 through 75 with at least $100,000 of investable assets. The average retirement savings for both age groups is $800,000 vs. $510,000, based on whether the saver had or didn’t have such a network, the study says.
On the whole, savers enlist various types of advisers, including family, friends, employers, accountants and, of course, financial advisers. Of their top two recruits, their spouse/partner, selected by 32%, is mainly an encourager. Their financial adviser (41%) aids with “most important” activities such as creating a plan, providing specific expertise and suggesting investments.
NEXT: What to keep in mind when forming a network
What’s important when creating a retirement advisory network is to be deliberate, Deane-Bess says. She recommends that the saver choose people he knows he can trust. Just because someone is a friend or a highly paid professional doesn’t necessarily make him a good prospect for a particular saver’s network. Also, the saver should capitalize on any available tools and resources, such as online retirement calculators—as these are part of his network, too, PNC says.
Beyond this, he should “plan for all circumstances” by thinking through different scenarios, and, ultimately, “take responsibility,” Deane-Bess says.
In other words, to get the most from a network, the saver must work the network.
Because a major reason to have the network in the first place is to get help with the financial decisions, 95% of the savers seek information to that end. The top three needs they expressed were: help with choosing investment vehicles (72%), organizing an investment portfolio (68%) and rebalancing a portfolio (67%).
The support makes a significant difference in savers’ confidence they will indeed save enough—90% vs. 70%. Age apparently does, too. Eighty-three percent of Baby Boomers surveyed are more confident they know how much they need to save ($1.16 million) than the 74% of Generation Xers who believe $1.48 million is the number. The most confident are those who have at least $500,000 in investable assets, and are served by both a financial adviser and a strong retirement advisory network.
Pensions—here including defined contribution (DC) plans—and Social Security were still in the equation—when confident savers projected how much they expect to store up for retirement, 48% calculated the numbers based on those benefits. Yet, a combined 59% arrived at their amount based on their adviser’s help (33%) or an online retirement calculator (26%).
The Perspectives of Retirement Survey was conducted online, July 17 through 26, among 1,025 American adults representing a cross section of successful savers aged 35 through 75. About 20% of those surveyed were retired.
More information about the survey may be found here.