Conversation Conundrum ? Despite Lingering Worry, Majority of Americans are Reluctant to Discuss Retirement Concerns

Although the impact of the COVID-19 pandemic has many Americans feeling more worried about the health of their finances and retirement savings, most are reluctant to discuss these concerns with their financial professional, according to the 2021 Retirement Risk Readiness Study from Allianz Life Insurance Company of North America (Allianz Life).

Respondents reported increased worry in 2021 regarding a number of retirement risks, including concerns about healthcare costs (71% versus 65% in 2020), the rising cost of living (67% vs. 59% in 2020), the impact of a market downturn on retirement savings (66% vs. 54% in 2020) and running out of money before they die (59% vs 56% in 2020).

However, among respondents who currently work with a financial professional, approximately two-thirds indicated they are not currently discussing these topics, but would welcome that conversation. The issues people are most interested in getting professional guidance on include: running out of money before they die (66%), the impact of a market downturn's on savings (64%) and being too conservative in investments and missing out on market gains (63%). In addition, more than half said they would like to discuss concerns about high healthcare costs (59%), the rising cost of living (58%) and lack of funds to do all they things they want to do in retirement (57%).

"It's no secret that Americans are uncomfortable discussing financial topics, but it's troubling that this reluctance extends to conversations with their own financial professionals," said Kelly LaVigne, vice president of Consumer Insights, Allianz Life. "If they don't feel comfortable addressing these concerns with the very people who are there to help plan for the future, it's unlikely they'll take any action to address the various risks that could jeopardize their retirement, and that needs to change."

More opportunity with recently retired

The 2021 Retirement Risk Readiness Study surveyed three categories of Americans to get different perspectives on retirement: pre-retirees (those 10 years or more from retirement); near-retirees (those within 10 years of retirement); and those who are already retired. Although the study found a clear opportunity for financial professionals to assist pre and near-retirees, retired respondents reported less anxiety about various risks to their retirement.

Yet, a closer analysis reveals a distinct difference between those who are recently retired (less than 10 years into retirement) and retirement veterans (10 or more years in retirement) in terms of both their level of worry as well as their willingness to get professional help.

Recently retired respondents reported feeling significantly more concerned about the majority of retirement risks when compared with those who have spent more time in retirement, including healthcare costs being too high (64% vs. 40%), the rising cost of living (54% vs. 27%), the impact of a market downturn on retirement savings (61% vs, 39%) and running out of money before they die (46% vs. 24%).

One bright spot is that recently retired Americans are more willing to discuss these topics with their financial professional. For those that reported interest in discussing retirement risks, the most popular topics were the impact of a market downturn on retirement savings (54%), running out of money before they die (37%) and the rising cost of living (34%).

Preference for protection

Another notable finding from the study that reflects the increased level of worry Americans are feeling about their finances this year is a clear preference for protection products. When asked whether they would rather have financial products that have the potential for big gains, but also potential for big losses or products that protect from big losses, but come with smaller gains, nearly seven in 10 (68%) said they would prefer the protection product.

"These findings point to a clear opportunity for financial professionals to be more proactive and initiate conversations that can help people feel more confident about their financial future," added LaVigne. "Whether it's someone who is several years from retirement and needs more information about how to mitigate various risks, or a client early into retirement who is feeling anxious about market volatility and longevity risk, it's important that open and honest conversations occur on a regular basis."

*Allianz Life conducted an online survey, the 2021 Retirement Risk Readiness Study, in December 2020 with a nationally representative sample of 1,000 individuals age 25+ in the contiguous U.S. with an annual household income of $50k+ (single) / $75k+ (married/partnered) OR investable assets of $150k.

About Allianz Life Insurance Company of North America

Allianz Life Insurance Company of North America, one of the FORTUNE 100 Best Companies to Work For® and one of the Ethisphere World's Most Ethical Companies®, has been keeping its promises since 1896 by helping Americans achieve their retirement income and protection goals with a variety of annuity and life insurance products. In 2020, Allianz Life provided additional value to its policyholders via distributions of more than $10.1 billion. As a leading provider of fixed index annuities, Allianz Life is part of Allianz SE, a global leader in the financial services industry with approximately 150,000 employees in more than 70 countries. Allianz Life is a proud sponsor of Allianz Field® in St. Paul, Minnesota, home of Major League Soccer's Minnesota United.