One in Five Americans Over Age 50 Are Unsure of How Much to Save, Say They Lack Money for Investing
“Too many Americans don’t know what they need to do to meet their goals, and that is limiting their ability to prepare for the future. They aren’t aware of the solutions available to them or simply don’t have enough money available to put toward savings,” said
Among the key findings from the NGAM survey:
- Americans don’t know how much to save. Some 27% of Americans aren’t sure how much to save or invest to meet their future needs. The total includes 30% of investors with
$300,000 to $500,000of assets, 22% of those with more than $1 millionand 18% of those over age 50.
- Many Americans say they can’t afford to save. Many Americans say they don’t have enough money to set aside savings. Among them are 32% of respondents with less than
$1 millionin investable assets, 16% of those with more than $1 millionin assets and 19% of those over age 50.
- Spend today, worry about tomorrow later. One in five Americans (18%) say they would rather spend today than put money away for the future. The survey found 22% of Americans with less than
$500,000in assets say they’d rather spend than save, compared with 13% of those with more than $1 million.
“The fact that one in five Americans over age 50 don’t know how much to save is especially troubling, since many Baby Boomers will be retired for decades,” said
Steep market movements in the last few years have raised doubt among investors. Overall, 47% say they curbed their savings and investing because they didn’t want to risk losing money.
NGAM CEO Hailer said effective retirement solutions should be “durable portfolios” that aim to limit risk in all types of markets. Durable portfolios go beyond a traditional mix of stocks and bonds to include investments such as commodities, currencies and alternative mutual funds. The returns from these investments are designed so they do not move in lockstep with more-familiar assets.
“A different combination of assets can lower volatility in unstable markets, a plus for investors saving for long-term needs,” Hailer said.
Other findings from the survey include:
- Few investors say their portfolios are risky. Concern about market volatility and rising awareness of risk management appears to have had an impact on investors. Only 28% percent of investors rate their portfolios as “risky,” while 47% categorize them as “neutral” and 25 percent as “not risky.” Perceptions of risk divided along wealth lines. Just 17% of those with more than
$1 millionin investable assets label their investment portfolios as “risky,” compared to 33% of those with less than $1 million. More men (35%) than women (19%) classify their investment portfolios as risky, although it is unclear whether this reflects differences in attitudes or actual differences in portfolio risk.
Worries about risk and volatility are common. “As someone mid-career, it makes you more nervous, the wild swings,” said
- Why Americans save. Asked what most motivates them to save, 48% of Americans overall say providing for themselves and their families is their primary objective. Asset growth is the second choice, at 18%, and capital preservation to provide for future generations of their family is third, at 9%. Saving for their children’s education trails at 5%. More women than men (53% compared to 43%) say their top reason to save is to take care of themselves and their families. More men than women (21% compared to 14%) said asset growth is the next biggest motivator for saving.
Concern over the ability to achieve personal financial goals is a continuing concern. As
“Planning for retirement is much more complex than it was a generation ago, and far more important,” said NGAM’s Flaherty. “With the decline of retirement pensions, uncertainty about the future of
The NGAM survey looked at four different categories of investors, including: Mass-market investors (with
1Cerulli Quantitative Update: Global Markets 2011, based on
Diversification does not ensure a profit or guarantee against a loss.
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