- Investors estimate they lost more than a third of their assets. Yet, 62 percent of workers think they can grow back the money they lost in their workplace retirement plans, and more than two-thirds of this optimistic group thinks it will be within five years.
- Eight in 10 acknowledged a need to start rebuilding their savings after the recession.
- 73 percent of retirees say they are exploring new ways to grow their assets.
- Three-quarters said a product with guarantees for lifetime income, protection of principal, and opportunities to lock in market gains would be important or nice to have as part of their portfolio.
“There’s no doubt that investor confidence suffered over the last year, which left Americans a bit shaken as they absorbed the shock to their account balances,” said Jacob Herschler, senior vice president of Business Development for Prudential Annuities. “As a result, many investors have shifted their focus from that frustration to planning. They are using what they’ve learned from this period to carefully evaluate their next financial moves so that they can rebuild their retirement savings.”
Conservative investor behavior could limit growth
Although most investors are optimistic they can grow back the money they lost, they are, paradoxically, shying away from aggressive portfolios. In fact, 7 in 10 say that being too aggressive with investments is riskier than being too conservative, which is in stark contrast to just two years ago when respondents were evenly split on the same question. Unfortunately, conservative investing likely won’t provide investors with the growth or income they need to last through retirement.
Looking ahead
Investors admit to exploring numerous tactics to deal with the financial and emotional challenges they are facing from the recession. Many have made immediate sacrifices, such as cutting back on spending (54%) and postponing retirement (41%).
For the longer term, however, Americans are re-evaluating their overall approach to retirement planning. They are assuming greater accountability and seeking new options including guaranteed income products. In fact:
- 77% of those surveyed said they will pay more diligent attention to their investments following the recession.
- Two-thirds would likely pursue a solution that offered guaranteed income, including those individuals who have access to guaranteed income through other sources (e.g., Social Security or pensions).
- Seven in 10 said they would put money back into the stock market if protected by such income guarantees.
“Many Americans lack the confidence that they have saved enough to take them through retirement and, therefore, recognize that they need to become more responsible for their own retirement planning,” Herschler continued. “But they also feel that they don’t have the experience and product knowledge to be successful in making their money last, which means that financial advisors must play an even more critical role for clients who want to explore new strategies on their own.”
That shift is driving many investors to rely primarily on their own research for financial guidance – especially via the Web (48% of respondents today vs. 37% before the market decline). However, financial advisors are still seen as viable sources of information, especially for more complicated products:
- Two-thirds would trust a financial professional for information and guidance on how to best manage their retirement savings and investments.
- 66% said their preference for learning more about guaranteed income would be by talking to a financial professional.
“While the interest is high, many of these products are complicated,” Herschler continued. “Companies that manufacture these products have to do a better job of educating investors about guaranteed income solutions so clients can go to their advisors armed to discuss options available to them.”
