Retirement Risk Index: Up as Investors Disengage

Along with the new NRRI data, Nationwide’s senior vice president of Customer Insights and Analytics, Paul Ballew, says the company’s own research is showing that a significant number of investors who were actively planning for retirement before the recession are disengaging from the process. Those insights are confirmed by existing market conditions.

“We’re really looking at a one-two punch right now,” Ballew says. “We’re seeing the number of disengaged households increasing by more than a third. Many of these individuals felt the brunt of the economic downturn to a greater degree than others and have moderated their expectations toward retirement. It’s clear that many of these people who were planning before the downturn are now pulling away from the table. That’s exactly the opposite of what they should be doing.”

Ballew adds, “The situation isn’t hopeless, but now more than ever Americans need to take a more active role in achieving retirement stability. The key is to keep working at it or to start preparing now if they haven’t already.”

Nationwide released some limited findings from recent proprietary market research that underscores the disengagement issue. The results include a comparison of recent responses to those provided by the same individuals in 2007 that would now be considered “newly disengaged.” Findings for this group include:

? A 60 percent drop in agreement with the statement that creating a retirement income source is important.

? A 25 percent drop in those who say they would seek advice before making investment decisions.

“The big question is if this increase in disengagement will be long lasting or not,” Ballew says. “For financial advisors, there is an opportunity to reengage these households. Demonstrate an understanding of the frustration being felt. Be consistent by offering relevant solutions that help cynical clients preserve remaining assets and appropriately rebuild balance sheets.”