Data & Research April 12, 2011

Boomers Feeling a Bind in Saving for Retirement

An MFS survey found 59% of non-retired Boomers agree with the statement, "I'm more concerned than ever about being able to retire when I thought I would."
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The MFS Investment Management’s Investing Sentiment Survey found half agreed that they have lowered their expectations about what life would be like in retirement. However, when it comes to investing, 30% of Boomers reported a net decrease in the risk they were willing to take to achieve higher returns over the last 12 months; only 12% reported a net increase.   

MFS also reported that Boomers are approximately evenly split when describing their primary investing goal: 34% reported it to be growing assets/increasing portfolio value as much as possible while 33% reported protecting principal/not losing money as their primary goal. Nearly four times as many Boomers would describe themselves as protective investors (37%) vs. opportunistic investors (10%).  

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Boomers’ average asset allocation included 26% of their portfolios in cash. Only 13% of Boomers surveyed reported having $1 million or more in median household investable assets, while on average, retirement was within 10 years.  

“Boomers appear to be in a bind, knowing they need to save more for a retirement that is not far off, but they have a protective mindset driving their investing approach,” said William Finnegan, senior managing director of retail marketing for MFS, in the press release. “In light of this sentiment, advisers should discuss with their clients both the risks associated with investing too aggressively or too conservatively as they approach retirement.”

MFS sponsored the survey from February 7-14, 2011, of 596 individual investors with $100k+ in household investable assets and 610 licensed financial advisers (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. Boomers refer to those 46 to 64 years old. 
Data & Research April 12, 2011

Gen X and Y's Investing Confidence May not be Justified

MFS found the younger generations are somewhat more optimistic in their approach to investing, but there is concern over Gen X/Y's ability to save enough to meet long term goals.
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The MFS Investment Management Investing Sentiment Survey found 42% of Gen X/Y investors reported they increased the amount they contributed to their IRAs/401(k)s in last 12 months; MFS’ 2010 Client Confidence Survey showed only 30% of Gen X/Y reported a net increase to tax-deferred retirement accounts since 2008’s economic downturn. In addition, 51% say they increased the amount saved in non-retirement accounts, a greater percentage than older generations.   

More than one-third (36%) of Gen X/Y investors report a net increase in willingness to take on increased risk, more than any other age cohort. More than half (55%) of Gen X/Y investors agree that an effective portfolio should always include a sizeable portion of international investments, more than Boomers (40%) or those aged 65+ (36%).   

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Forty-seven percent of Gen X/Y disagreed with the statement “I will never feel comfortable investing in the stock market,” an improvement in sentiment over MFS’ 2010 survey, which showed that 39% disagreed with a similar statement.  

However, despite a median 23 years until retirement, 61% of Gen X/Y reported being more concerned than ever about being able to retire when they thought they would. Forty-five percent of Gen X/Y agree that they are overwhelmed by all the different investment choices available.   

Forty-two percent say their need for financial advice has increased in the past year – far more than Boomers or investors aged 65+.   

The survey also found Gen X/Y investors on average had a lower percentage of their portfolios in equities (34%) than older generations (Boomers, 36%; 65+, 38%). Gen X/Y reported on average a higher percentage of their portfolio in cash (30%) than older generations. Twenty-two percent of Gen X/Y report their top investing goal is protecting principal/not losing money. Seventy-one percent of Gen X/Y report inflation as a primary concern, but have 30% of their portfolios in cash.

MFS sponsored the survey from February 7-14, 2011, of 596 individual investors with $100k+ in household investable assets and 610 licensed financial advisers (either FINRA or SEC) who have been licensed for at least three years with at least $500,000 or more in annual mutual fund sales. All investor respondents make or share in making financial decisions for their households. Gen X/Y refers to those respondents under age 46. Boomers refer to those 46 to 64 years old. Seniors or older generations refer to those 65 or older. 

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