Americans with financial advisors have $132,000 saved for retirement versus $62,000 for those without advisors.
79% of advisor clients have long-term financial plans compared to 38% without advisors.
A $132,000 balance at age 45 grows to $888,000 by 65 at 10% returns without additional contributions.
If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here
Saving for retirement is something every American needs to do, but not that many Americans are great at actually doing. In fact, according to the 2024 Northwestern Mutual Planning and Progress Study, Americans anticipated they would need $1.46 million to retire comfortably, while they had just $88,400 saved for retirement currently. This left a $1.37 million gap between the amount people believe they will need for a secure future and the amount they actually have.
Americans are not wrong to assume they’ll need a large nest egg, topping $1 million. The reality is that Social Security replaces only 40% of pre-retirement income, and $1 million in an investment account only provides around $40,000 at a safe withdrawal rate. Since most people need to replace around 80% to 90% of pre-retirement earnings, even $1.46 million may not cut it — especially for those who are retiring many years into the future and who will see their buying power decline due to inflation.
The good news is, there’s one surefire habit that can help Americans save more for their golden years and have the secure future they deserve. Here’s what it is.
So what’s the habit that doubles your retirement savings? It’s simple: Working with a financial advisor.
Financial advisors can help you at all phases of your financial journey, working with you to create a plan for retirement and to increase your overall financial stability and open up the door to being able to save and invest more to make that plan a reality.
Northwestern Mutual’s data was very clear on how much better people who have advisors do with retirement investing compared with those who don’t have professional advice. Specifically, the survey showed that survey respondents who had an advisor had double the amount saved for retirement.
While Americans without advisors had an estimated $62,000 in retirement savings, those with an advisor had $132,000.
As big as that gap is, when you consider the impact of compound interest, the discrepancy in how much each investor will end up with becomes even more apparent.
Say, for example, that you manage to save that $132,000 by the age of 45 thanks to getting professional financial advice. If you earn a 10% annual return for the next 20 years until age 65, you’d have $888,029.99 even if you never contributed another dime. By comparison, compound growth on $62,000 would give you only $417,105.00 over two decades.
This goes to show that the sooner you work with an advisor and start building up a reasonable investment balance, the greater the impact their assistance can have on your long-term future.
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Working with a financial advisor can make a huge impact on your retirement savings because getting professional advice to learn how to manage your money more effectively can impact every aspect of your finances.
Let’s take a look at some more data from Northwestern Mutual’s survey that shows differences in the behaviors engaged in by those with an advisor versus by people without one.
How many Americans engage in different kinds of financial behaviors
With an advisor
Without an advisor
Have a long-term plan that factors in up-and-down economic cycles over time
79%
38%
Have an emergency fund
84%
48%
Feel financially secure
64%
29%
Have good clarity on how much they can afford now vs. save for later
79%
60%
Have taken a step to address the possibility of outliving life savings
83%
53%
Have a specific plan to pay off debt
79%
49%
Have inflation factored into your financial plan
69%
48%
Have a plan to address health care costs in retirement
69%
38%
Will have enough to leave behind an inheritance or charitable gift
64%
33%
Source: Northwestern Mutual
As you can see, advisors don’t just give you tips on saving for retirement. They help set you up to ensure you can make and carry out plans by working with you to improve your overall financial situation.
If you want to make sure you have the money habits that will allow you to save and invest so you have the funds to actually enjoy your retirement free of financial worries, it’s worth exploring the possibility of working with an advisor ASAP. You can get started on making compound growth work for you and can close that gap between your retirement dreams and your retirement reality.
You may think retirement is about picking the best stocks or ETFs, but you’d be wrong. Even great investments can be a liability in retirement. It’s a simple difference between accumulating vs distributing, and it makes all the difference.
The good news? After answering three quick questions many Americans are reworking their portfolios and finding they can retire earlier than expected. If you’re thinking about retiring or know someone who is, take 5 minutes to learn more here.
