Protecting Investments, Minimizing Risk Top Priority in Retirement Planning: Survey

More than one-third (35 percent) of Americans place a higher priority on protecting, rather than growing, their retirement assets, according to Charles Schwab’s latest quarterly retirement survey released Thursday.

“In a continued choppy market environment, it’s not surprising that investors are concentrating on managing risk and protecting their nest egg,” observed Carrie Schwab-Pomerantz, CFP, senior vice president in a statement. “It’s also clear that the sharp downturn in 2008 remains fresh in their minds.

A first quarter wealth level study conducted by Millionaire Corner of households with a net worth between $100,000 and $1 million (not including primary residence) found that nearly half (48 percent) of respondents are similarly included, up slightly from 2011.  

The prolonged economic downturn has had an impact on younger investors, who, at the beginning of their careers and with more time ahead of them, ordinarily might be less risk averse. But they have may have seen market volatility deplete their parents’ retirement savings, and so are taking more caution. The Schwab survey found that 29 percent of those ages 18-34 plan to pull money out of the market

The survey also found:

·         28 percent of Americans plan to seek professional advice on managing their retirement accounts in the next six months

·         42 percent are concerned with uncertainty about future legislation that may impact retirement accounts

·         25 percent fret about protecting retirement savings during a period of market volatility, while 23 percent are concerned about generating sufficient retirement income if interest rates remain low. Twenty percent worry about striking the right balance between portfolio growth and asset protection, and 18 percent are concerned about growing retirement savings to outpace inflation.

Schwab did find a disconnect between what respondents say and do in regard to retirement investments. While more than a third of the respondents said that protecting their assets was their top priority, another 37 percent said they are not investing in products traditionally designed to manage their portfolio risk. Just 17 percent reported using bonds and other fixed-income products, while 13 percent use annuities and insurance products. Among the 49 percent who say they are managing their retirement portfolio’s risk with investments, about half are using cash instruments.

More than one-third (35 percent) of Americans place a higher priority on protecting, rather than growing, their retirement assets, according to Charles Schwab’s latest quarterly retirement survey released Thursday.

“In a continued choppy market environment, it’s not surprising that investors are concentrating on managing risk and protecting their nest egg,” observed Carrie Schwab-Pomerantz, CFP, senior vice president in a statement. “It’s also clear that the sharp downturn in 2008 remains fresh in their minds.

A first quarter wealth level study conducted by Millionaire Corner of households with a net worth between $100,000 and $1 million (not including primary residence) found that nearly half (48 percent) of respondents are similarly included, up slightly from 2011.  

The prolonged economic downturn has had an impact on younger investors, who, at the beginning of their careers and with more time ahead of them, ordinarily might be less risk averse. But they have may have seen market volatility deplete their parents’ retirement savings, and so are taking more caution. The Schwab survey found that 29 percent of those ages 18-34 plan to pull money out of the market

The survey also found:

·         28 percent of Americans plan to seek professional advice on managing their retirement accounts in the next six months

·         42 percent are concerned with uncertainty about future legislation that may impact retirement accounts

·         25 percent fret about protecting retirement savings during a period of market volatility, while 23 percent are concerned about generating sufficient retirement income if interest rates remain low. Twenty percent worry about striking the right balance between portfolio growth and asset protection, and 18 percent are concerned about growing retirement savings to outpace inflation.

Schwab did find a disconnect between what respondents say and do in regard to retirement investments. While more than a third of the respondents said that protecting their assets was their top priority, another 37 percent said they are not investing in products traditionally designed to manage their portfolio risk. Just 17 percent reported using bonds and other fixed-income products, while 13 percent use annuities and insurance products. Among the 49 percent who say they are managing their retirement portfolio’s risk with investments, about half are using cash instruments.