Why Many Americans Don’t Save for Retirement

One in Five Americans Over Age 50 Are Unsure of How Much to Save, Say They Lack Money for Investing

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BOSTON–(BUSINESS WIRE)– Amid concern about Americans’ level of preparedness for retirement and other long-term financial goals, a survey of 463 investors commissioned by Natixis Global Asset Management (NGAM) found that even many affluent people aren’t sure how much they need to save, say they lack money for investing and prefer to spend today rather than save for tomorrow.

“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 John T. Hailer, president and chief executive officer, Natixis Global Asset Management – The Americas & Asia. “The combination could be harmful for Americans’ long-term financial health.”

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 $500,000 of assets, 22% of those with more than $1 million and 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 million in investable assets, 16% of those with more than $1 million in 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 $500,000 in 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 Tracey Flaherty, senior vice president, retirement strategies, Natixis Global Asset Management (see related video). “It’s particularly urgent that these Americans build their savings now, to prepare for secure retirements.”

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 million in 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 Michael Charlton of Rochester, Minnesota, who was interviewed by Natixis as part of a separate survey. “You wonder where it will be when you get to retirement,” he said. (See related video)

• 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 Ruth Strekow of Hales Corner, Wisconsin, who was interviewed by NGAM, said: “What worries us most is that we’re getting closer to retirement and we’re afraid we’re not going to have enough to retire on and we’re going to have to work longer.” (See related video)

“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 Social Security and market volatility, Americans need, more than ever, to commit to a robust program of saving and investing.”

The Natixis Global Asset Management U.S. Investor Insights Survey was conducted by CoreData Research, which surveyed 463 American adults to better understand their investment attitudes, behavior and sentiments. The survey was conducted in May and July 2011. In addition, NGAM conducted qualitative interviews with investors in October 2011.

The NGAM survey looked at four different categories of investors, including: Mass-market investors (with $200,000–$300,000 of investable assets); mass affluent investors ($300,000–$500,000 of investable assets); emerging high-net-worth investors ($500,000–$1 million in investable assets); and high-net-worth investors (more than $1 million of investable assets).

About Natixis Global Asset Management, S.A.

Natixis Global Asset Management, S.A. is one of the 15 largest asset managers in the world based on assets under management.¹ Its affiliated asset management companies provide investment products that seek to enhance and protect the wealth and retirement assets of both institutional and individual investor clients. Its proprietary distribution network helps package and deliver its affiliates’ products around the world. Natixis Global Asset Management, S.A. brings together the expertise of multiple specialized investment managers based in Europe, the United States and Asia to offer a wide spectrum of equity, fixed-income and alternative investment strategies.

Headquartered in Paris and Boston, Natixis Global Asset Management, S.A.’s assets under management totaled $706 billion (€544 billion) as of December 31, 2011. Natixis Global Asset Management, S.A. is part of Natixis. Listed on the Paris Stock Exchange, Natixis is a subsidiary of BPCE, the second-largest banking group in France. Natixis Global Asset Management, S.A.’s affiliated investment management firms and distribution and service groups include: Absolute Asia Asset Management; AEW Capital Management; AEW Europe; AlphaSimplex Group; Aurora Investment Management; Capital Growth Management; Caspian Capital Management; Darius Capital Partners; Gateway Investment Advisers; H2O Asset Management; Hansberger Global Investors; Harris Associates; IDFC Asset Management Company; Loomis, Sayles & Company; Natixis Asset Management; Natixis Multimanager; Ossiam; Reich & Tang Asset Management; Snyder Capital Management; and Vaughan Nelson Investment Management.

¹Cerulli Quantitative Update: Global Markets 2011, based on December 31, 2010 AUM of $713 billion.

Diversification does not ensure a profit or guarantee against a loss.

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NATIXIS GLOBAL ASSET MANAGEMENT Jeanette Harrison-Sullivan, 617-449-2549
jeanette.harrison-sullivan@ngam.natixis.com
or Wesley Eberle, 617-449-2116
wesley.eberle@ngam.natixis.com

Source: Natixis Global Associates