Data & Research September 26, 2016

Use of Online Tools, Advice Boosts Savings

Mobile banking apps are the most commonly used online tool.
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Investors who frequently use online tools and consult with a financial adviser have higher savings than those who do not, according to a survey by The PNC Financial Services Group, Inc.

The most digitally connected investors have the highest average household income and highest total investable assets. They spend an average of three hours and forty-two minutes a week reviewing their finances or looking up financial information on a computer or mobile device. Of the 45% of survey participants who say they are “very connected” to their finances, 50% look at financial headlines every day and 50% use a mobile application to access their accounts. More than one-third of these “very connected” investors would like even more information.

“The most digitally connected investors tend to be better informed, which contributes to their success and positions them well for the future,” says Rich Ramassini, director of strategy for PNC Investments. “For instance, they are more likely to know about the fiduciary standard for investment advisers, and are more likely to consult with an adviser who follows the standard. The information and advice they access should give them an advantage as they save and invest for retirement.”

The survey also found that 60% of the “very connected” investors rely on an adviser. Two-thirds of investors would like to hear from their financial advisers, particularly during an economic downturn.

“Making a change in a portfolio during periods of market volatility is the chief source of regret among investors,” Ramassinin says. “A financial adviser can be a steady hand in times of stress and help avoid panic selling or buying. When it comes to successful saving, information—particularly information gained through a combination of digital resources and expert advice—is powerful.

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The most commonly used app is for mobile banking, which 58% of respondents have used in the past year. However, only 37% have used mobile apps to access their investment accounts, which indicates, PNC says, that firms could do more to promote these resources.

Artemis Strategy Group conducted the survey for PNC among 1,002 adults between the ages of 35 and 75 in May. Those age 45 or older had investable assets of $100,000 or more, and those between the ages of 35 and 44 had investable assets of $50,000 or more.

Data & Research September 26, 2016

Majority of Today’s Retirees Have a Pension

However, only 24% of workers are covered by a pension.
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Eighty-one percent of today’s retirees receive some income from a pension plan, and for 42% of these people, their pension provides half or more of their retirement income, according to a study by the Insured Retirement Institute (IRI). However, for those not yet retired, only 24% have a defined benefit (DB) plan.

IRI estimates that as many as 56 million Baby Boomers will not receive retirement income from a pension, and that future retirees will need upwards of $400,000 to make up for this income shortfall.

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“Replacing pensions and achieving financial security these plans provide to retirees will be a key issue for future generations,” says IRI President and CEO Cathy Weatherford. “As Baby Boomers retire in greater numbers over the next decade, and as Gen Xers begin to leave the workforce, financial professionals have an historic opportunity to help Americans create their own pensions, through Social Security optimization and the use of lifetime income strategies, to help their clients attain the same security, lifestyles, confidence and positive outlooks as the participants in this study.”

The study also discovered that nearly 60% of retirees have worked with a financial adviser, and 93% of these people say the advice they received has been effective. Seventy-two percent of retirees who own an annuity are satisfied with it. Retirees also face unexpected expenses; 40% have suffered a major health event, such as a heart attack or stroke, and 25% have faced a major non-medical event, such as a major home repair.

More than one-quarter, 27%, have relocated their primary residence in retirement, and of these people, 60% did so for lifestyle reasons, and 30% in order to lower their cost of living.

While 67% of retirees think their chance of requiring long-term care is less than a 25% chance, the Department of Health and Human Services (HHS) believes that 70% of those turning 65 today will need such services. Sixty-percent think that Medicare will pay for their long-term care expenses.

Greenwald & Associates conducted the survey among 806 retirees between the ages of 65 and 80 who retired with at least $50,000 in investable assets and have been retired for at least five years. The full report, “It’s All About Income,” can be downloaded here.

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