Inflation and rising healthcare expenses have become the dominant sources of financial anxiety for American retirees, according to new data from Cerulli Associates. The research, released this month, underscores a persistent planning gap that advisors are still working to bridge.
Cerulli's findings show that 40% of retirees experience at least moderate financial stress. That figure drops to 29% among those who have a financial plan in place, but jumps to 69% among those who do not. The disparity highlights the tangible value of ongoing planning conversations, a message that resonates amid broader industry trends.
Inflation was the most frequently cited stressor, with 21% of retirees calling it a high or very high concern. Healthcare and long-term care expenses followed at 16%, and worries about an economic downturn came in at 14%. Unlike younger investors who have time to recover from market shocks, retirees face the dual threat of inflation eroding fixed income streams and market volatility hitting portfolios just as they begin drawing down assets.
“Retirement has long been the key financial goal for clients, and investment tailoring has been focused on ensuring the longevity of those investments,” said John McKenna, senior analyst at Cerulli. “A detailed financial plan that is updated periodically can relieve financial stress, while helping advisors determine the best mix of investments and products to support clients’ retirement goals.”
The Cerulli data aligns with a recent LIMRA report on pre-retiree planning that found 88% of pre-retirees have thought about generating retirement income, yet half lack a meaningful or recently updated written plan. Only 40% currently work with a financial advisor, and those who do are far more likely to feel prepared—77% versus 47% without one. Just 8% of the least-prepared pre-retirees have connected with an advisor.
Together, the two reports suggest the industry's clearest opportunity lies not in acquiring new assets but in converting awareness into action. Advisors reviewing how clients approach building a comprehensive retirement income strategy may find inflation-indexed and guaranteed income products a natural entry point, particularly for clients within a decade of retirement. The Principal survey showing 69% of employers report workers delaying retirement adds further evidence of inflation's impact on retirement timelines.
Cerulli also points to health-related costs as an area advisors can address even outside their traditional remit. By stress-testing portfolios against unexpected medical expenses and opening conversations about insurance and long-term care needs before they become urgent, advisors can provide proactive value. Because healthcare costs tend to climb with age regardless of existing coverage, this creates room for more ongoing communication between clients and advisors.
Among the services retirees ranked as important, portfolio management was cited by 91% as at least moderately valuable. A smaller 72% majority said the same about retirement planning, while 60% placed the same importance on income tax planning. These numbers suggest that while portfolio management remains central, there is significant room for advisors to expand their role in holistic planning.
“While neither client nor advisor can predict the future, structuring investments and saving strategies while a client is still working, and when retirement is less than a decade away, will increase the chances of a stable and secure retirement,” McKenna said.
