Investors are more likely to make a retirement transaction in the year they retire, according to new research by Cerulli Associates.
The retirement industry has focused much attention on pre-retirees and ways to gain their retirement assets, but Cerulli’s research shows that most people aren’t that prepared for retirement five years before they turn 65. Many procrastinate and some younger investors don’t see the urgency in planning or the concept of retirement is too ambiguous, according to the company.
Retirement doesn’t always happen as planned either. Many times, the loss of a job or health care problems will force a person out of the workforce much sooner than they expected, which also could account for the data showing that most investors are likely to make a retirement transaction the year they retire.
Once a person is retired they will finally take a moment to evaluate their financial situation and realize they have some gaps in their planning and will start questioning their spending level and their asset allocation.
“It is this uncertainty and forced planning that causes upticks in activities. Likewise, these investors may also use their newfound time to test out direct accounts or shop for bond investments and rates on certificates of deposit,” according to Cerulli.
The company recommends that asset managers consider not only how their products fit as part of a retirement planning strategy, but also how they work for an investor who is already retired, but confused.