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
NEW YORK--(BUSINESS WIRE)--
Many investors are lowering their expectations for their retirement
lifestyle -- but even those somewhat diminished plans could be at risk
because of key information gaps regarding retirement’s realities
combined with insufficient focus on planning, according to findings
released today from the latest BlackRock (NYSE: BLK) Investor Watch™
survey.
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 Frank
Porcelli, head of BlackRock’s U.S. Retail Business.
“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.”
The BlackRock survey also suggests that retirement planning does not get
all the focus it deserves: When compared with a list of other common
pursuits, planning for retirement ranks third among things that
investors spent the most time on last year (20 percent), after planning
vacations (30 percent) and exercising at the gym (29 percent).
“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 BlackRock launched
The BlackRock Retirement Center (www.BlackRock.com/Retirement),
which features practical and relevant age-based content and insights to
help individuals prepare for retirement in what BlackRock has called a
“New World of Investing.”
Stocks Named Most Important Asset Class in Retirement;
Most
Investors Are “Standing Still” in Their Portfolios
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 BlackRock
agree that they plan to be very “risk averse” in their retirement
investing; four in 10 also agree that they don’t think there is “a safe
way to invest for retirement.”
“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 BlackRock survey
shows that many investors still have a ways to go in understanding the
full scope of available income generators.
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 BlackRock “Investor Watch” research is
conducted over the Internet with support from research firm Market
Strategies International. For this research, conducted in September, 671
investors – 294 retired and 377 nonretired -- were polled between
September 26 and October 9, 2012. All of the investors surveyed work
with financial advisors, and all had $250K or more in investable assets.
*Source: Annuity 2000 Mortality Table, Society of Actuaries.
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
September 30, 2012, BlackRock’s AUM was $3.673 trillion. BlackRock
offers products that span the risk spectrum to meet clients’ needs,
including active, enhanced and index strategies across markets and asset
classes. Products are offered in a variety of structures including
separate accounts, mutual funds, iShares® (exchange traded funds), and
other pooled investment vehicles. BlackRock also offers risk management,
advisory and enterprise investment system services to a broad base of
institutional investors through BlackRock Solutions®. Headquartered in
New York City, as of September 30, 2012, the firm has approximately
10,400 employees in 29 countries and a major presence in key global
markets, including North and South America, Europe, Asia, Australia and
the Middle East and Africa. For additional information, please visit the
Company’s website at www.blackrock.com.
BlackRock
Jessica Greaney, 212-810-5498
jessica.greaney@blackrock.com
Source: BlackRock