T. Rowe Price, a global investment management firm and a leader in retirement, today published a new report that reveals the importance of financial planning for retirement. The report shows a correlation between individuals with a formal financial plan and having two to four times more wealth when entering retirement compared to those without one. Individuals with a financial plan are also more likely to contribute more toward their retirement and work with a financial advisor.

The report also found that the demand for financial planning services is strongest among individuals who are within one to five years of their retirement date, and 38 percent of respondents over the age of 50 indicate that not having enough money was their most significant obstacle to starting retirement planning.

"The retirement industry has historically focused on helping savers climb the hill of contributing toward their future retirement," said Bill Meyer, head of Retiree, Inc. at T. Rowe Price. "However, given the number of complex financial decisions facing retirees on the other side of that hill, the need for better planning and guidance through retirement is clear. Ultimately, having a formal financial plan tailored to one's specific needs can help not only with wealth accumulation, but also with making retirement savings last longer."

Additional key insights from the report include:

• Survey respondents with a formal plan reported 60 percent higher confidence about their financial outlook

• Seven in ten pre-retirees who responded to the survey were in the process of forming a retirement plan or thinking about it

• Sixty percent of survey respondents indicated that their employers are the primary source for financial education and guidance

• Forty percent of respondents stated that they are willing to engage a financial advisor and are interested in using digital planning tools to help with income, savings, and spending

Meyer continued, "Advances in technology have given investors greater access to effective and convenient solutions for personalized financial planning, and we expect the demand to increase, especially for tools involving retirement income."

Plan sponsors can meet this need by providing digital services and financial wellness programs that address the impending needs of pre-retirees and families in retirement. These types of solutions are not only valued by participants but could also be a catalyst for driving better retirement outcomes.

The insights from the report are based on T. Rowe Price's annual Retirement Savings and Spending study, which surveys a national representative group of 401(k) participants. The report with more details on the importance of financial planning for retirement can be found here. Retirement Income was a key theme in T. Rowe Price's 2024 U.S. Retirement Market Outlook.