Americans Across Generations Turn to Technology to Manage Money
Matters
NEW YORK--(BUSINESS WIRE)--
Americans put urgent financial goals like a secure retirement high on
their list of priorities, but their attitudes and behaviors regarding
money aren’t necessarily aligned with their intentions, according to the
latest Global Investor Pulse survey from BlackRock (NYSE: BLK).
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In a survey of 31,139 individuals in 20 nations, including 4,213
Americans, BlackRock’s Global Investor Pulse found that, overall,
Americans are positive about their financial future (54%) and confident
they are making the right savings and investing decisions (49%), but
hold high amounts of cash and often haven’t produced a large enough nest
egg to meet their annual stated income goals for retirement.
For Americans, Enormous “Gap” in Retirement Savings
Saving to live comfortably in retirement was cited as the most important
financial priority by Americans after saving money in general, yet the
majority (71%) are concerned they won’t be able to do so. Many
respondents indicated that they find it very difficult to keep up with
bills and save for retirement at the same time (74%). The efforts of
many Americans to prepare themselves financially for retirement are
falling dramatically short of what most say they want. Baby Boomers (age
55 to 65), who are closest to retirement age, said they want to have
$45,500 in annual retirement income, but the nest eggs they have
accumulated ($136,200 in average retirement savings) could provide
$9,129 of estimated annual retirement income1, leaving a
potential annual gap of $36,371, according to the BlackRock CoRI
Index 2025.
“It’s clear the proverbial ‘nest egg’ is broken and misleads investors
into guessing how much they want in retirement and whether they really
have enough savings to reach their goals. Americans need to look at the
retirement challenge in a whole new way, starting with the number they
should focus on, which is the annual income they need each year in
retirement,” said Rob Kapito, President, BlackRock.
Too Much Allocated to Cash
While Americans said that they ideally should have 33% of their net
worth in cash instruments, they admit to holding 65%--far too high an
allocation to achieve their retirement goals, given low interest rates
and the diminishing purchasing power of their cash related to the
pressures of inflation. The current asset allocation of American
portfolios according to the survey includes 65% in cash, 18% in
equities, 6% in bonds, 4% in property, 2% in alternatives, 5% listed as
"other."
In addition to being cash-heavy, many Americans are failing to grow
their money in a disciplined way. Fewer than one in four Americans
regularly put aside a certain amount of income into long term savings or
investments (23%) or has a formal financial plan for their retirement
(14%). Only about one in five makes regular contributions to retirement
accounts through their employer (21%) or saves for retirement outside of
any employer plans (21%).
What’s Holding Americans Back?
A key obstacle is the feeling of security that cash brings: Nearly four
in 10 (39%) say they want to have "cash saved as a security blanket or
reserve for unforeseen events before I can think about investing."
Further, respondents said that saving money makes them feel secure
(39%), hopeful (29%) and confident (28%), while investing money makes
them feel risky (37%) and nervous (35%). More than one-third (36%) of
Americans are afraid of taking risks with money or losing money,
although only 7% said that they actually have lost a lot of money in
past investments.
Technology: Not Just for the Young
Americans across multiple generations are turning to technology to
support their financial goals. For all Americans, the Internet is by far
the most widely used source of information for long term savings and
investment decisions (used by 35%).
About four of 10 Americans (41%) say they are interested in
robo-advisors, online investment services that provide recommended
portfolios, and interest is particularly strong among Millennials (58%).
At the same time, 72% of people interested in robo-advisors also say
that they value professional financial advice.
Millennials: Engaged, Yet Concerned
Millennials display youthful exuberance in terms of their willingness to
take risks with their investments and feel positive about investing
their money. Sixty-five percent feel positive about their financial
future and 48% say “investing is for people like me,” and are most
likely to buy a new investment or add to an existing one in the coming
year (58%), the highest of any age group. They also take financial
planning seriously (68%) more than other generations (GenX, 62%;
Boomers, 59%). Yet, having seen the impact of the financial crisis on
their parents’ investments, Millennials are the most likely of any
generation (46%) to agree that “what you might earn investing isn’t
worth the risk of losing your money” or say that “investing is like
gambling” (62%), and despite their longer investment horizon they hold
high amounts of cash (70% of their portfolio is in cash or cash like
investments).
And while 61% of millennials report having started to save for
retirement, they are also most likely to report being concerned and
confused about saving for retirement, and most likely to agree that “I
don’t know where to go for financial advice about my retirement” (45%,
compared with 38% of Gen X’ers, and 23% of Boomers).
Positive Attitudes, Behaviors Can Make a Difference
There are a group of Americans – found across the survey population –
who are breaking free of the attitudes and behaviors that can hinder
effective saving and investing. These are engaged investors, who keep
less than 25% of their assets in cash, and more often they have a formal
financial plan and tend to have more positive attitudes about investing
overall. They review their investments regularly and are most likely to
use online sources and financial advisors to support their decision
making. They are the most willing to take risks in order to achieve
higher returns and the only group who actively ensure that their assets
are diversified across multiple investment classes (stocks, bonds, etc.).
In line with such “good behaviors,” they are most likely to feel well
prepared for retirement – nearly nine of 10 (86%) feel on track to reach
their retirement goals. And though their income on average is only
slightly higher than that of other Americans, they have been able to
accumulate considerably more overall wealth and retirement savings than
any other group of Americans.
1 Based on the CoRI Index 2025 level as of 10/20/2015.
Subject to change. Retirement is assumed to be at age 65.
About the Survey
One of the largest global surveys ever conducted, the BlackRock Global
Investor Pulse survey interviewed 31,139 respondents, in 20 nations. In
North America: 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 included 4,213 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 2015. For the global sample the margin of error is +/-0.7 percent
and for the US sample of 4,000 respondents, the margin of error is +/-
1.55 percent.
About BlackRock
BlackRock is a global leader in investment management, risk management
and advisory services for institutional and retail clients. At September
30, 2015, BlackRock’s AUM was $4.506 trillion. BlackRock helps clients
around the world 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®. As of September 30, 2015, the firm had approximately 12,900
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
| Twitter: @blackrock_news
| Blog: www.blackrockblog.com
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GMC-0121
View source version on businesswire.com: http://www.businesswire.com/news/home/20151022005191/en/
BlackRock
Jessica Greaney, 1-212-810-5498
Jessica.greaney@blackrock.com
Source: BlackRock