From the Mouths of Babes: Millennials Are Frequently More Confident,
Engaged
NEW YORK--(BUSINESS WIRE)--
Despite improved prospects for U.S. growth, Americans are still
"holding back" as investors and potentially risking their financial
future, particularly hopes for a secure retirement, according to results
of the BlackRock (NYSE:BLK) Global Investor Pulse Survey.
About half of Americans (52 percent) have a positive view of their
financial future, compared with 56 percent of respondents globally.
Younger Americans are substantially more confident (66 percent positive)
than other age groups, especially their parents, with less than half of
Baby Boomers (45 percent) confident about their financial future,
according to the global survey, one of the largest of its kind.
BlackRock polled 27,500 individuals in 20 nations, including 4,000
Americans, on a broad selection of financial and investment management
questions (for more on the survey and its methodology, please visit www.blackrock.com/investorpulse).
Americans More Squeezed By Living Costs Than Global Respondents
Fundamental financial worries such as the high cost of living (cited by
61 percent), the state of the US economy (55 percent) and health care
costs (50 percent) are the top three threats that Americans see to their
financial future. Only about one in four Americans believes that the US
economy and job market are getting better, despite recent employment and
equity gains.
The high cost of living has a particularly acute impact on investors'
psyche in the U.S. Americans report having to allocate about 42 percent
of household income to expenses, compared with only 32 percent
worldwide. As a result, they have less left over for spending, savings
and investing—including retirement.
A full 75 percent of Americans say that it is hard to keep up with bills
and save for retirement at the same time, with 43 percent saying it is
“very hard.” Perhaps as a result, a sizeable majority of Americans are
counting on Social Security as a key source of retirement income, with
64 percent saying that it will be “critical” to their ability to support
themselves in retirement.
“It’s clear that immediate financial needs are hindering people’s
ability to focus on longer term investment decisions and retirement
planning," said Rob Kapito, President of BlackRock. "Focusing primarily
on the short-term is concerning for investors of all ages, and can
eventually create special risks for those closest to or newly in
retirement, who need to be well prepared to spend as much as two or
three decades in retirement."
Illustrating this "short-termism," many Americans are not necessarily
putting their money in the best places to achieve their long-term goals.
Just 27 percent of Americans surveyed by BlackRock say they are more
interested in investing in stocks today than five years ago; 18 percent
say they are not interested in stocks at all. More than a third -- 35
percent -- of individuals say they don't hold and wouldn't consider
investments outside of the U.S.
On average, cash and cash related products take up nearly two thirds (63
percent) of Americans' total household savings and investments, and most
intend to increase their commitment to cash over the next 12 months. "In
a low return environment, such as now, cash simply does not deliver the
kind of investment performance that most investors need to reach their
most critical objectives, like retirement," Kapito said.
Despite Obstacles, Hopes for Retirement Stay Strong
Despite the obstacles they see, many Americans are strongly optimistic
about achieving the financial goals that are most important to them. For
example, among Americans who place a high priority on saving money, 71
percent are confident about achieving this goal. And -- although 73
percent of Americans are concerned about being able to live comfortably
in retirement -- nearly seven of 10 (68 percent) of Americans who have
prioritized this goal believe they will get there.
"To achieve their strong retirement hopes, Americans need to plan, save
and invest with the realities of increasing retirement longevity firmly
in mind -- which means considering investments with good prospects for
long-term return," said Kapito. “Longevity is an urgent challenge
impacting every one of us -- regardless of age, gender, geography,
financial position and outlook -- but we feel strongly that the
challenge can be met."
US Millennials Confident, Set An Example for Their Parents
Overall, Millennials are the most confident age group in the U.S.: While
only a quarter (24 percent) of Americans overall think the economy is
improving, 32 percent of Millennials believe it is getting better. They
also are more confident in the job market: 34 percent think it is
improving, compared with 27 percent of Americans overall. They feel less
pressure when it comes to making room for retirement savings, with 37
percent saying that it is "very hard" to pay bills and save for
retirement at the same time, compared with a US average of 43 percent.
Millennials also display different attitudes about investing—especially
when compared with Baby Boomers. Nearly half -- 45 percent -- of
Millennials say that they are more interested in stocks than they were
five years ago; only 16 percent of Baby Boomers are. Millennials also
spend the most time reviewing or adjusting their investments—about seven
hours per month, compared with the US average of around four hours per
month and the Baby Boomer average of about two hours per month. Despite
their younger age, 60 percent of Millennials report having begun saving
for retirement—about the same as the US average overall (59 percent).
Additional Info
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The percentage of household savings and investments that Americans
hold in cash -- 63 percent -- is slightly higher than the global
average of 59 percent.
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Americans also acknowledge that their cash holdings are too high,
saying that their “ideal” level of cash would be 29 percent of savings
and investments.
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For the remainder of their savings and investments, Americans report
holding 18 percent in equities, six percent in bonds, five percent in
property, two percent in alternatives, and seven percent “other.”
Their levels of equity are slightly higher than the global average (15
percent).
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All age groups would advise their younger self to save earlier, save
more, spend less, and pay off debt sooner.
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The Silent Generation, age 69-74 (who are more likely to be covered by
pensions and to have paid off their mortgages, or are well into
retirement), report the least concern about being able to live
comfortably in retirement (17 percent vs. 34 percent overall)
About BlackRock
BlackRock is a leader in investment management, risk management and
advisory services for institutional and retail clients worldwide. At
September 30, 2014, BlackRock’s AUM was $4.525 trillion. BlackRock helps
clients meet their goals and overcome challenges with a range of
products that include 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, 2014,
the firm had approximately 12,100 employees in more than 30 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
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About the Survey
One of the largest global surveys ever conducted, the BlackRock Global
Investor Pulse survey interviewed 27,500 respondents, in 20 nations: the
US and Canada; in Europe, Belgium, France, Germany, Italy, the
Netherlands, Spain, Sweden, and the UK; In Latin America, Brazil, Chile,
Colombia, and Mexico; in Asia, China, Hong Kong, India, Japan, Singapore
and Taiwan. The US sample comprised 4,000 respondents. No income or
asset qualifications were used in selecting the survey's participants,
making the survey a truly representative sampling of each nation's
entire population. Executed with the support of Cicero Group, an
independent research company, the survey took place from July to August
2014. For both the global sample and the US sample of 4,000 respondents,
the margin of error is +/- 1.55%.
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© 2014 BlackRock, Inc. All rights reserved.
BlackRock, Inc.
Jessica Greaney, 1-212-810-5498
Jessica.Greaney@BlackRock.com
Source: BlackRock, Inc.