|New Data from BlackRock Investor Watch™ Survey Finds: INVESTORS LOWERING EXPECTATIONS FOR RETIREMENT LIFESTYLES -- AND INFORMATION GAPS, LACK OF PLANNING STILL POSE RISKS|
37% Not Confident They Will Achieve Needed Retirement Income
Investors Not Prioritizing Retirement Planning; Spend More Time Planning Vacations Than Retirements
Stocks Beat Out Bonds or Cash As Most Important Retirement Investments, Investors Say
More than four in 10 (42 percent) of non-retired investors say they have lowered their expectations for the kind of lifestyle they will have in retirement. Half of investors say either they have pushed their date back to retire later (15 percent) or are unsure regarding when they will retire (35 percent).
At the same time, many investors continue to misunderstand or underestimate both the financial and demographic realities of retirement, and they also make retirement planning a relatively low priority.
Just 51 percent of non-retired investors agree (and only 10 percent strongly agree) that they know how much to save to cover the lifespan of their full retirement. More than one-third (37 percent) say they are not confident that they will achieve the annual income they need for the time they expect to be in retirement.
About one in three expect to spend less than 15 years in retirement – despite the fact that a healthy couple aged 65 in the U.S. today has a 50 percent chance that at least one of them will live to the age of 92.* Assuming retirement at age 65, that translates into 27 years of retirement.
“It’s common for investors to underestimate how much money they will
need to cover themselves for their life when retired,” says
“Retirement today is not a single life stage and the new reality is that it could cover a 25-year period or longer during which time an individual’s needs, goals and risk tolerance are likely to change.”
“It’s understandable that investors are not paying as much attention to retirement as they ought to, given today’s market uncertainty in addition to questions about how much they will need, how long they will live or where to invest,” adds Mr. Porcelli. “But investors don’t have to lower expectations for life after retirement. One of the most important steps they can take is to fully educate themselves about the facts of retirement and then ensure that their savings and investment strategies are fully aligned with those needs.”
Addressing the educational need, earlier this month
Stocks Named Most Important Asset Class in Retirement;
Meeting retirement goals today requires dynamic asset allocation that
reflects the specific goals, risk tolerance and time horizon of each
individual investor. The majority of unretired investors rate stocks (81
percent) as the most important retirement investment vehicle followed by
bonds (60 percent), cash (57 percent) and annuities (48 percent). But at
the same time, four in 10 non-retired investors surveyed by
“It’s good to see investors’ understanding of the importance of equities in investing for retirement. However, fund flow data tell us that most investors are underweight equities and overweight traditional core bond holdings and cash,” noted Mr. Porcelli. “With interest rates at historical lows and the risk of inflation, investors need to protect and grow their money with investments that span asset classes and geographies.”
Knowledge of Income Investments Remains Spotty
Growing appreciation of the value of secure income in retirement is
generating interest in a broader range of asset classes that seek
income, given that interest rates available from traditional fixed
income investment remain at historic lows. Yet, the
Almost two thirds – 63 percent – of investors say they are familiar with income generating investments. However, majorities of investors, both nonretired and retired, did not correctly identify several such investments as income generating, including municipal bonds (34 percent identified these as “income generating”), government bonds (29 percent), money market funds (25 percent), and corporate bonds (25 percent).
Investors were able to most often identify dividend paying stocks as “income generating” (61 percent). Over the next six months, about one quarter of investors (24 percent) say that they will increase their portfolio allocation to dividend producing equities, the investment category most likely to attract new money.
“Particularly for those near or in retirement, increased longevity gives investors the ability to ride out market cycles, use a broader range of investments and keep their money working hard for them over time, said Mr. Porcelli. “While it’s a good sign that investors are looking at dividend paying investments, those seeking income would benefit from looking across sectors and geographies worldwide.”
Though their knowledge has gaps, investors generally do appreciate that income generation offers benefits at every life stage: 56 percent disagree that these investments are only for retirees and 60 percent agree that they “make me feel safer in the current investing environment.”
“The old ways of investing no longer work – and our poll tells us that investors still need plenty of fundamental support and direction in adjusting to a new world,” said Mr. Porcelli. “The good news is that help is available, and new insights and tools are emerging all the time that offer tangible advantage for investors seeking income, inflation-combating growth, and solid investment return in a low-yield, slow-growth world.”
Note to Editors: The
*Source: Annuity 2000 Mortality Table,