Boomers are still more interested in guarantees than in high returns, a survey released Thursday by Allianz found.
When asked to decide between a financial product that promises a 4% return and is guaranteed not to lose value and one with an 8% return that is subject to market risk and loss of principal, 76% of respondents chose the guaranteed product.
“Despite a significant rebound in the equity markets since the financial crisis, this new study confirms that a ‘new normal’ mindset has dug deep roots in the minds of boomers,” Gary C. Bhojwani, president and CEO of Allianz, said in a press release. “With the vast majority still in favor of more security for their savings, boomers tell us they are not interested in going back to return-chasing behaviors.”
That “new normal” is defined by expectations of a sluggish economy, low investment returns, a more conservative investing strategy, expectations of delaying retirement and an increasing interest in seeking help from financial professionals, the survey found. More than one-third said they feel “totally unprepared” for retirement and 38% have “no idea if their income will last throughout their lifetime.” The average age of expected retirement is 66.
Allianz noted that while many people plan on working longer, many might not be able to. Data from a report by McKinsey & Co. found two in five people will be forced to retire earlier than they planned due to a layoff or illness.
Under the weight of these concerns, it’s not surprising that 32% of boomers say they are receptive to working with a financial professional, and 26% say they already have an advisor. The biggest problems boomers want their advisors to help them with are to create more safety and guarantees, and to help them understand the “big picture.”
Overwhelmingly, boomers’ most important goal is having a stable standard of living throughout retirement.
The survey was conducted in March among 439 of the same respondents who participated in the original May 2010 survey.