Data & Research October 19, 2010

"Sandwich Generation" Likely to Seek Financial Advice

New findings from MetLife’s 8th Annual Employee Benefits Trends Study show members of the working sandwich generation - those who are holding down a full-time job while raising children and caring for older relatives - are more likely to look for financial information and advice.
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About one in five full-time employees is a caregiver of an older relative and nearly three-quarters of these employees also have children under the age of 18. Nearly two-thirds (64%) of members of the sandwich generation employees say they live paycheck to paycheck, compared to 42% of employees with minor children and without the responsibilities of older relatives as well.  

According to a press release, only 5% of sandwich generation respondents say they don’t consult with anyone about their personal finances, compared to 30% of non-caregiving employees with children. And sandwich generation employees are turning to multiple resources including financial advisers (45%, compared to 24% without elder caregiving responsibilities), friends and relatives (39% vs. 17%), insurance agents (39% vs. 7%), accountants (32% vs. 9%), human resources department (26% vs. 10%), and financial publications and Web sites (23% vs. 13%).  

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Other survey findings included: 

  • Seven out of 10 working caregivers with minor children reported they are very concerned about their own long-term care needs in retirement, contrasted to four out of 10 non-caregiving employees with children; 
  • 37% of working men and women with minor children are very concerned about being able to afford to buy a home, but that percentage doubles to 74% for those who are also caregivers; 
  • 55% of workers with minor children are very concerned about affording college, but that percentage climbs to 72% for those who are also caregivers; 
  • While 45% of working parents are very concerned about having more time to spend with their families, that percentage jumps to 72% for those who are simultaneously balancing parental and elder caregiving responsibilities. 

The 8th Annual MetLife Study of Employee Benefits Trends was conducted during the fourth quarter of 2009 and fielded by GfK Custom Research North America. The employee sample comprised 1,305 interviews with full-time employees age 21 and over, at companies with a minimum of two employees. 

The Markets October 19, 2010

Investors Saying One Thing, Doing Another

An MFS Investment Management survey found misperceptions regarding asset allocation and retirement readiness. 
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The survey questioned people with at least $100,000 to invest.  The purpose of the survey was to compare attitudes and behaviors about investing today, to those before the recent economic downturn and recession.  Fifty-four percent of respondents said they are more concerned than ever about being able to retire as planned and 45% agree or strongly agree with the statement that “since the downturn, I’ve lowered my expectations about what life will be like in retirement.”

Accompanying this unease, investors do not have a high tolerance for risky investments in the current economic atmosphere; three times as many respondents said that their risk tolerance has decreased (43%) as those who said it increased (14%).  Whereas before the downturn, investors were primarily looking to make money; now the popular concern is to not lose more money – 36% say their investment objective is protecting principal/not losing money, versus 14% before the economic downturn, and 50% were generally willing to take substantial risk for substantial returns; today, it’s 23%.

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Despite these abundant concerns, the majority of investors are not doing enough to remedy the situation. According to the survey, only 37% have rebalanced their portfolio, (44% of advised investors have rebalanced).  Sixty-eight percent claim to be making decisions the way they want (on their own or with some minimal input from an adviser), yet more than 60% are less than ‘very’ confident that their assets are appropriately allocated.  

Bill Finnegan, director of Global Retail Marketing for MFS said, “less than four in ten [investors] have rebalanced their portfolios since the downturn–this type of behavior speaks to a need for many investors to be working with a financial adviser to develop a disciplined asset allocation strategy.” 

A general consensus about the optimal places to invest is also nonexistent.  Forty percent of investors surveyed agree strongly or somewhat that now is a great time to invest in the stock market (25% disagree strongly or somewhat) and 38% disagree strongly or somewhat that government bonds are the best place to put their money right now. 

  

When asked what action they were most likely to take to increase their chance of meeting their retirement goal, one third said they would put off retirement. Less than one fifth were willing to increase contributions to a tax deferred retirement account and even fewer (15%) would choose to save more outside of a tax deferred retirement account. Only 4% said they would shift their portfolio to more high risk holdings such as equities or equity mutual funds.  

  

“Advisors have an opportunity to remind investors about the power of compounding dividend yields over time,” said James Swanson, MFS Chief Investment Strategist. “Many investors focus on stock price appreciation, however, they should remember that approximately half of investors’ long term total returns from equities are driven by compounding dividends over time.” 

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