Gens X and Y Eyeing Retirement Savings Needs

A new report finds Generations X and Y members have defined financial goals including amassing a retirement savings nest egg.

A news report released Wednesday by Divided We Fail, a coalition of business groups, reports that three out of four of those in Generation X and Y cited saving for retirement as a personal financial goal, and 92% feel they can achieve their most important financial goals in the next decade.

While 86% of Gen Xers and Gen Yers admit they should be more prepared for a rainy day, many report that they know more about their iPod (40%) than they do about saving for retirement (15%) or other financial matters such as paying taxes or investing outside of a workplace plan.

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The survey also found that young people place a high value on benefits in the workplace such as health insurance (94%), retirement savings plans (88%), matching or contributing to a retirement savings plan (89%), wellness plans (78%), and offering financial education/advice (77%). While they may look to the workplace for tools, 70% of Gen Xers and Gen Yers look to their parents for personal finance advice and guidance.

Divided We Fail is made up of AARP, Business Roundtable, National Federation of Independent Business, the Service Employees International Union and the American Savings Education Council. The group promotes solutions to pressing national problems such as health care and long-term financial security.

The results came from an online survey of 1,752 young people in early 2008. For the purposes of this report Gen X includes those respondents ages 28 to 39 years old (born 1968 to 1979) and Gen Y includes those between the ages of 19 and 27 (born 1980 to 1988).

More information is available at http://www.choosetosave.org/.

Stocks Down in Feb. but Equity Inflows Continued

The equities markets may be on a long-term fritz, but that hasn’t stopped fund investors from taking stock positions in their portfolios, according to new Strategic Insight data.

According to a Strategic Insight news release, U.S. mutual fund investors added an estimated $17 billion of cash inflows to stock mutual funds in February, despite the 3% decline in the S&P 500 during that month. The data showed about half of the February stock fund net inflows were to international / global equity funds, with the balance added to US-centered funds.

Meanwhile, bond funds’ February inflows totaled $12 billion and money market funds added nearly $95 billion, with further gains in March.

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The inflows to stock mutual funds in February marked a reversal from net redemptions out of equity funds experienced in January, a month during which the average stock fund investor lost over 6%. With more than two-thirds of equity fund assets designated for retirement savings and their very long time horizons, most mutual fund investors have taken stock market volatility in stride; and some investors continue to benefit from “buying on market dips” and dollar-cost-averaging, the research firm said.

Asset allocation, the dominant investment theme in recent years, continues to drive fund choices even during the alarming 2008 financial market volatility, according to the analysis.

As a result, there was continued demand this year for funds-of-funds (including target-date lifecycle funds), mutual fund “wraps,” international/global funds, and bond funds, all of which are areas that experienced large gains in 2007, Strategic Insight said.

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