Data & Research January 31, 2013

Gens X and Y Need to Make Retirement a Priority

Generation X and Generation Y consumers in the U.S. need convincing that saving for retirement should be a financial priority, a survey indicates.
Reported by

Fewer than half (46%) of Gen X consumers surveyed selected retirement as the most important reason to save. In a recent LIMRA study, “Sowing the Seeds for Retirement: Gen X and Gen Y Markets,” a larger proportion of Gen Y consumers ranked saving for vacation or travel (41%) than retirement (31%) as the most important reason to save.   

LIMRA notes this is a cause for concern given that most of Gen X and Gen Y consumers will have to rely primarily on their savings to fund their years in retirement—only 16% have defined benefit (DB) plan accounts.   

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Only 43% of Gen X women and 27% of Gen Y women listed retirement as one of their top three reasons for saving. According to LIMRA, since women are likely to live longer and often make lower wages than their male counterparts, it is even more critical that they start saving early so that they have enough saved to ensure their financial security throughout retirement.   

The survey was based on 854 consumers ages 32 to 47 (Gen X) and 698 consumers ages 20 to 31 (Gen Y) currently working for pay.  

The survey report is available to LIMRA members. More information about LIMRA is at http://www.limra.com.

The Markets January 31, 2013

Mutual Fund Inflows Set Industry Record

Stock and bond mutual fund net inflows reached and possibly exceeded $90 billion during January, excluding additional inflows to exchange-traded funds (ETFs).
Reported by

January net inflows were dramatically higher than the prior all-time monthly flows record — $58 billion—reached nearly a decade ago in January 2004, according to Strategic Insight, an Asset International company. 

Approximately $51 billion, or more than half, of the January net flows went into stock and balanced mutual funds, marking the largest monthly amount in more than a decade. Additional net inflows went to stock ETFs.   

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“In recent years, stock investors watched the rising stock market with either disbelief or regret. January flows data suggests that postelection assurance of political stability and tax rates — combined with rising home prices, falling unemployment and fading memories of 2008 — have helped investors overcome, at least for now, a state of investment anxiety,” commented Avi Nachmany, SI’s director of research.   

In January 2013, net inflows to bond funds are estimated to exceed $40 billion, significantly above 2012’s average monthly flows to bond funds of $27 billion. Strategic Insight projects bond fund inflows to persist in the coming months as investors holding $10 trillion of cash slowly search for income opportunities elsewhere.

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