Prolonged economic downturn is the No. 1 concern of 19 percent of all plan participants.
Defined contribution plan participants are the type of people who have an eye toward the future, which is why they are putting money away for their needs in the coming years.
Many of their concerns on a national level are over financial matters, and the prolonged conversation about the American economy is chief among them.
Spectrem’s Millionaire Corner annual study Attitudes of Retirement Plan Participants asked respondents to select from a large number of issues that could be a concern, and 19 percent of all respondents said their No. 1 concern was the prolonged economic downturn. We are six years removed from the start of the recession, and there are continuing reports that the economy is making a comeback, but the issues that caused the recession remain active, and much of Congressional conversation is taken up with trying to solve the economic situation in the United States.
Of equal concern among plan participants is a potential increase in interest rates, which is considered a certainty when the economy reaches certain recovery stages. Nineteen percent of plan participants say that is their No. 1 concern.
Several other choices were given No. 1 status by at least 10 percent of the study group, including the national debt (11 percent), inflation (10 percent), government gridlock (10 percent) and the political environment (10 percent). Of those top six choices, four of them are financial in nature.
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Asked to select all of the choices that concern them, the prolonged economic downturn was selected by 79 percent, which means 21 percent of respondents did not have that concern. The political environment and tax increases was a concern for 76 percent, and government gridlock was selected by 74 percent.
Interestingly, while 19 percent of the study group said an increase in interest rates was their No. 1 concern, only 60 percent of the total group said that was a concern at all.
The concern over the prolonged economic downturn was highest among plan participants between the ages of 50 and 64, who are approaching retirement and are significantly affected by any economic event. Eighty-five percent of respondents in that age group said they were concerned about the lengthy economic recovery process.
Younger plan participants show little concern over tax increases, but participants over the age of 35 are certainly concerned, ranging between 76 to 80 percent of participants.
Two-thirds of participants said they were concerned about continued low interest rates on savings accounts, but that concern is highest among older citizens, reaching 82 percent of those 65 and older. Only 46 percent of participants under the age of 36 said low interest rates mattered to them, but many of them don’t remember when savings interest rates were much higher.
Overall, the concern over the low interest rates has fallen since last year, from 70 percent to 66 percent. At the same time, concern over a rise in interest rates has risen from 55 percent to 60 percent.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.