In Practice April 18, 2007

Are City Folk Less Trusting Than Country Folk?

When it comes to social trust, there's a significant difference between living in the city and the country - it's just not entirely clear why.
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However, the study’s authors admitted that it was complicated to figure out a specific relationship between where people lived and their level of trust. They noted that more poor people and minorities live in cities – two groups that are among the least trusting segments of society. Little wonder that, since people who feel vulnerable or disadvantaged tend to find it riskier to trust because they’re not positioned to deal with what the study authors called “the consequences of misplaced trust.” But even after adjusting for those factors, researchers still found that city folks are less trusting than people who live in suburbs, small towns or rural areas.

“Close” Nest?
They then turned to the issue of physical proximity, wondering if we might be less inclined to trust people in a more compressed living environment. And, though an analysis of the Pew survey data did find a slight tendency for levels of social trust to fall as population density (analyzed on a county-by-county basis) rises, the survey also found that people who describe where they live as a rural area are the most trusting; people who say they live in a large city are the least trusting; and those who say they live in a suburb or a small towns fall somewhere in between.
But it’s by no means clear that there is any causal connection in any of this. In fact, one of the reasons that smaller communities have long been thought to foster trust was that they were places where “everybody knows your name” (ironically, part of the theme song from “Cheers”, a bar in large-city Boston).
Suburban “Sprawl”
Regardless of trust levels, the Pew Research found that people living in a suburb near a big city were most likely to rate their community as an “excellent’ place to live (36%), narrowly squeezing aside their rural cousins, where 34% rated home that highly. That stands in some contrast to just 22% of those who lived in a large city – and, perhaps oddly, just 20% of those who, like those in the John Mellencamp song, live in a “small town”.
In short, the community type findings are a bit of a puzzle. When it comes to social trust, it’s true that there’s a significant difference between living in the city and the country – it’s just not – yet – entirely clear why.
Data & Research April 18, 2007

Mars and Venus Disconnect on Retirement Planning

Many married couples are not in agreement when it comes to retirement plans - 22% of couples don’t even agree on whether or not they use the services of a financial adviser.
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Nearly one-third of married Baby Boomer and older pre-retiree couples do not agree when asked when they will retire, their expected lifestyle in retirement, and whether they intend to continue working in retirement, according to a recent Fidelity Investments survey. Although most couples agree they will rely most on workplace savings plans, pensions and Social Security in retirement for income, only 39% of them agreed on which source would be primary.
Further, the survey of 502 couples found that only 23% reported joint involvement with their finances. Perhaps intuitively, the couples who are jointly involved in finances are more prepared for the unexpected in retirement and more optimistic about their expected lifestyle once in retirement, while of those who do not partner in financial decision-making, 62% are unprepared for the unexpected in retirement, lacking elements such as life and long-term care insurance and established wills and estate plans.
“It was surprising to us that given how close many of these couples are to retirement, they had yet to sit down to discuss and agree on basic retirement goals, aspirations and income sources with each other,’ said Steven P. Akin, president of Fidelity Personal Investments, in a news release about the survey. “That’s why creating a retirement plan is so critical. It helps husbands and wives address those tough, but basic planning questions that can dramatically alter a couple’s retirement savings strategy.’
Product Knowledge
Overall, 23% of couples surveyed have yet to take action either in planning or purchasing products such as long-term care insurance to compensate for concerns in regard to retirement, which include health care, inflation cutting into savings, and reduced Social Security insurance.
When Fidelity asked the couples about the types of retirement investment products they own, a majority of couples showed agreement on questions about their combined workplace plans, bank accounts and IRAs but there was less understanding of annuities, brokerage accounts and pensions. Among couples who own annuities, only about half of both husbands and wives reported knowing when they could draw income from their annuities, and less than one-quarter of couples understood the actual dollar amount that would be generated by their annuity once in retirement.
Nearly 70% of both husbands and wives knew at what age they can draw from their own pensions, but 60% of men indicated they knew when they could draw from their spouse’s pension and 37% of women reported knowing when they can draw income from their husband’s retirement savings.
Ninety percent of couples agreed on whether they had life insurance policies but 40% did not agree on the coverage amount within those policies. Also, when discussing Social Security, women were more familiar than men on how much income a surviving spouse could expect to receive when the first spouse passes away.
The Fidelity Investments Couples Retirement Research Study included a sample of 502 married couples age 43 to 70 with household income of at least $75,000 or investable assets of $100,000 or more.

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