The Markets August 28, 2018

HNW Investors Pay Close Attention to Inflation as They Prepare for Retirement

Sixty-eight percent say they pay close attention to inflation as they prepare for retirement.

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High-net-worth investors’ perceptions about inflation rather than hard economic data have a greater influence on how they plan for retirement and spend their money today, according to the latest income investing survey by Nuveen Investments.

Seventy-six percent say they trust their personal experience with inflation rather than statistics calculated by the Department of Labor (24%). Sixty-eight percent say they pay close attention to inflation as they prepare for retirement, invest (62%) or spend money (57%).

Seventy-five percent correctly recognize that inflation is currently low, and 71% understand that retirees experience higher inflation rates than the norm. However, 60% incorrectly say that inflation is 5% or more or say they are not sure. Only 32% are near the real number of 2% to 3%.

Seventy-seven percent say the economic situation will make investment planning more complex. Eighty-six percent say they have experience high interest rates in their lifetime. Within this group, 79% of Millennials, those between the ages of 18 and 37, say they have experienced high interest rates in their lifetime.

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Asked what they think will happen to bond values when the Federal Reserve Bank increases interest rates, 40% think they will increase, 30% think they will decrease and 30% think they will either remain the same or they don’t know.

Fifty-two percent said they would make an investment change as a result of interest rate hikes.

The Harris Poll conducted the survey of 1,000 high-net-worth investors for Nuveen Investments.

Data & Research August 28, 2018

Investing HSA Assets Helps Savings Grow

Devenir estimates that $9.8 billion of HSA assets are invested as of June 30, 2018—an estimated 45% year-over-year increase.

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Through the first half of 2018, total contributions to health savings accounts (HSAs) were $19,753,000,000, while withdrawals totaled $13,695,000,000, revealing retained assets so far this year of $6,058,000,000, or 31% of balances, according to Devenir’s 2018 Midyear HSA Market Statistics & Trends.

The study also estimates that $9.8 billion of HSA assets are invested as of June 30, 2018—an estimated 45% year-over-year increase. Nineteen percent of all HSA assets are in investments as of June 30th, 2018. Further, those who have HSA assets invested have a $16,007 average total balance, more than eight times larger than a non-investment holder’s average account balance.

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These stats are revealing as more plan sponsors and advisers see HSAs as a way to save for retirement expenses, and investing options in HSAs improve savings potential.

Other trends

The study found account growth in the first half of 2018 was in-line with recent years. Overall, accounts grew by 5.2% in the first half of 2018, compared with 5.0% in 2017, 8.5% in 2016, and 5.5% in 2015.

Devenir continues to see seasonality in the percentage of accounts that are unfunded as accounts are opened during the fall open enrollment season, but often not funded by employers until the beginning of the following year. Halfway through 2018, about 15% of all accounts were unfunded, down from 20% a year ago. The company notes this drop off in the percentage of unfunded accounts can largely be attributed to a continued uptick in the closure of accounts, with many HSA providers noting that they were cleaning up dormant accounts.

Nearly one-third (32%) of all HSA dollars contributed to an account came from an employer. The average employer contribution was $658 (for those making contributions). More than half (52%) of all HSA dollars contributed to an account came from an employee. The average employee contribution was $1,086 (for those making contributions).

The 2018 Midyear Devenir HSA Research Report may be downloaded from here.

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