Mortgage debt still burdens retirees

Nationwide study finds a host of retired investors are still paying mortgages

Mortgage debt still burdens retirees

Retirees are facing a new reality as economic pressures force them to re-evaluate their financial plans.

Debt lingers long into retirement for many, with a surprising number still carrying mortgages. A study by Nationwide revealed that a significant portion of retirees, over a quarter (26%), are still paying off their mortgages. This financial burden forces them to cut back on leisure activities (39%) and vacations (34%) to make ends meet.

The study also found that nearly a third (31%) of retirees believe they’ll have a less secure retirement than their parents. This financial anxiety is translating into real changes, with over one in five (22%) worried about affording monthly bills.

“The picture of life after retirement has changed for many people as economic stressors continue to weigh on retired investors,” said Mike Morrone, vice president of Nationwide Annuity Business Development. “Now is the time for advisors and financial professionals to check in with their clients and help them remain calm, nimble and informed in the face of continued economic headwinds, ensuring the plan they have in place continues to position them for a secure retirement.”

The study, conducted by The Harris Poll, surveyed 518 advisors and financial professionals and 2,346 investors with at least $10,000 in investable assets.

It further revealed that retirees are adapting their financial strategies. Nearly two-thirds (63%) of retired investors now have a strategy to protect their assets against market risk, up from 54% last summer. Some are abandoning traditional retirement spending rules, with 12% moving away from the 70-80% spending rule and 11% discarding the 4% withdrawal rule.

Legacy planning is becoming a priority for retirees, with 32% discussing end-of-life wishes and 34% discussing estate financial details with their heirs.

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Financial advisors are playing a crucial role in guiding clients towards retirement security. They are counseling retired clients on generating guaranteed income (23%), prioritizing wants vs. needs (21%), and supplementing income out of necessity (16%). Advisors report that 34% of their clients plan to continue paying mortgages in retirement.

In preparation for the Great Wealth Transfer, 59% of advisors say their clients are confirming beneficiary designations, 54% are reviewing or creating estate planning documents, and 44% are building financial confidence and knowledge among heirs.

“Advisors are recognizing and acknowledging investors’ desire to avoid making the wrong moves in retirement,” Morrone said. “They can help clients feel more confident about their retirement plans by understanding their goals and anxieties, and helping them protect their savings and plan for income they won’t outlive by reinforcing the value of different retirement solutions and products, like annuities.”

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