Second annual TD Wealth Study examines on retirement planning amidst COVID-19
As the country continues to grapple with the economic impact of the COVID-19 pandemic, business owners in particular are unsure how long they can sustain their business under current conditions. TD Wealth’s second annual Retirement Readiness Study gauged respondents' sentiment on retirement and financial planning.
Sixty-nine percent of business owners cited economic or political uncertainty as concerns when it comes to achieving their financial goals, as the economic impact of the pandemic and the 2020 election continue to be top of mind. Mass affluent business owners are more concerned about economic or political uncertainty (73%) than high net worth business owners (67%).
“It’s no surprise that business owners struggled during the COVID-19 pandemic due to stay-at-home mandates and non-essential business closures. Additionally, the impact of economic uncertainty, coupled with political uncertainty, are weighing heavily on the minds of business owners as they seek to recover their financial losses,” said Ken Thompson, Head of U.S. Wealth Shared Services. “Fortunately, business owners recognize that despite the difficult and volatile economic times, it is important to continue saving for retirement and avoid adjusting a long-term plan for short-term volatility.”
Additionally, the survey found that 87 percent of all business owners surveyed reported their revenues were impacted by COVID-19, with nearly half experiencing reduced operations (49%) and a quarter witnessing temporary or permanent closures (25%). Despite the economic impact of COVID-19 on businesses, 85 percent of business owners have not made changes to their retirement planning as a result of the pandemic, demonstrating that business owners are staying the course through economic volatility.
Advisors Can Boost Confidence and Ensure Retirement Readiness
Sixty-one percent of business owners indicated that they work with a financial advisor. Millennial business owners were more likely to work with a financial advisor (68%) compared to baby boomers (58%). Of the business owners who have a long-term investment plan, 94 percent are confident (very or somewhat) that their long-term investment plan will lead to the achievement of their financial goals.
Of business owners surveyed, only 35 percent report having a fully integrated estate plan. However, 66 percent of respondents have a last will and testament and 44 percent have trusts (one or more). Only 12 percent of respondents reported that they do not have any sort of estate plan, signifying that most respondents are well-prepared for retirement with the proper estate planning.
“In a time where the world seems to shift under our feet as we speak, a financial advisor is key to help navigate economic volatility and stay on track for retirement,” said Alyson Klug, Head of Mass Affluent, U.S. Wealth. “Many business owners could be facing the question of an early retirement due to the pandemic, and a financial advisor can help establish your goals, develop an estate plan and create a bespoke long-term investment plan that allow business owners to navigate the retirement journey with greater confidence.”
Retirement Confidence Remains High for High Net Worth Business Owners Year-Over-Year
Ninety-four percent of high net worth business owners are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement, compared to 95 percent in 2019. Mass affluent business owners are less confident, with 82 percent reporting that they are confident (very or somewhat) that their financial plans will be able to generate the income needed during retirement.
When it comes to retirement income, a healthy mix is important. For business owners, retirement savings plans constitute the highest proportion of retirement income, followed by investment portfolio and social security. Retirement savings and investment portfolios make up more than half of the retirement income across all respondents.
Survey Methodology
TD Wealth commissioned Maru/Matchbox to conduct a survey targeting business owners and individuals with investable assets over $100,000 with the objective of finding out about their retirement plans and the future of their business. A total of 1,296 responses were collected, split across four segments: high net worth business owners and individuals (investable assets over $500,000), and mass affluent business owners and individuals (investable assets of $100,000 - $499,000). Questionnaire was up to 15 minutes in length and fielded in July 2020. All sample is sourced through the Maru/Blue proprietary panel and partners.
About TD Wealth
Through TD Bank N.A.,TD Wealth’s Private Client Group and its affiliates work with mass affluent and high net worth individuals and institutions to help build, preserve and transition wealth. TD Wealth is committed to helping personal investors, institutional and non-profit organizations gather and potentially grow their assets by building long-lasting relationships, and is affiliated with one of the 10 largest financial institutions in the U.S., TD Bank, America’s Most Convenient Bank®. From private banking, securities, investment advisory services, private trust, and estate planning, to institutional trust, including retirement planning, captive insurance and trustee services, TD Wealth creates and delivers customized and integrated wealth management solutions. Banking, investment and trust services are available through TD Bank. Securities and investment advisory products are available through TD Private Client Wealth LLC, member FINRA/SIPC (TDPCW).TD Wealth is a service mark of The Toronto-Dominion Bank. For more information, visit http://www.tdbank.com/investments.
TD Wealth is not a tax or legal advisor. You must consult with your own tax and legal advisors for specific advice pertaining to your estate planning needs.
About TD Bank Group
The Toronto-Dominion Bank and its subsidiaries are collectively known as TD Bank Group ("TD" or the "Bank"). TD is the sixth largest bank in North America by branches and serves over 26 million customers in three key businesses operating in a number of locations in financial centres around the globe: Canadian Retail, including TD Canada Trust, TD Auto Finance Canada, TD Wealth (Canada), TD Direct Investing, and TD Insurance; U.S. Retail, including TD Bank, America's Most Convenient Bank®, TD Auto Finance U.S., TD Wealth (U.S.), and an investment in The Charles Schwab Corporation; and Wholesale Banking, including TD Securities. TD also ranks among the world's leading online financial services firms, with more than 14 million active online and mobile customers. TD had CDN$1.7 trillion in assets on July 31, 2020. The Toronto-Dominion Bank trades under the symbol "TD" on the Toronto and New York Stock Exchanges.
About MARU/Matchbox
MARU/Matchbox is a professional services firm dedicated to improving its clients' business outcomes. It delivers its services through teams of sector-specific research consultants that have technology in their DNA, specializing in the use of Insight Community and Voice of Market technology. MARU/ Matchbox's research drives decision-making across all aspects of customer experience, including innovation, product, branding, commercialization and communications.