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Retirement Planning > Saving for Retirement

Allianz Global Investors Takes Pulse of Mass Affluent Investors

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In the wake of the recent economic crisis, investors have generally had reasonable expectations for markets and the economy, but they have yet to translate these expectations into more realistic retirement planning, according to results of a nationwide survey of mass affluent investors by Allianz Global Investors (AGI) released Wednesday, July 14.

Of 1,002 investors surveyed, only 27% were expecting stock market returns of greater than 8% over the next 12 months and only 34% expected stock market returns of more than 8% five years from now. Still, 87% were at least somewhat confident they would reach their long-term financial goals.

However, this more temperate view has not translated into more realistic expectations for retirement. Eighty-seven percent are somewhat to very confident they will reach their financial goals, and 86% of pre-retirees believe their savings and investments will generate enough income throughout retirement. About four in 10 of the pre-retirees surveyed say their investment strategy for retirement has not changed in the last two years, and 72% of all investors interviewed are confident they will not need to tap into their retirement savings earlier than planned.

Investors are particularly sanguine about their post-retirement style of life. Only 21% of pre-retirees think their standard of living in retirement will be worse than it is now, and 80% believe they will have better than average health in retirement. And although 54% of Americans have $25,000 or less saved for retirement and household net worth is still more than 20% below its pre-recession peak, less than one-third of the pre-retirees surveyed have pushed out their retirement date since 2008.

The survey showed evidence of general investor sensitivity to risk. More than one-third of all investors have talked to a financial professional about investment risks within the past six months, with more than half doing so over the past year.

Although risk-sensitive, almost seven in 10 investors agreed with the statement: “Risk is a necessary evil. I know I can’t completely avoid it, but I can try to manage it.” And most investors will not be taken by surprise by the next market downturn, as 72% believe that another major market meltdown is likely sometime in the next five years.

But many investors are failing to mitigate risks in their portfolios. One-third said they give little or no consideration to the percentage of their portfolio that is invested in cash, 50% believe it is not too or not at all important to invest in inflation-protected securities, and only 27% think it is very important to diversify globally.

Fixed income investments are a mystery to many mass affluent investors. Forty-seven percent of those surveyed said they are “not too” or “not at all” knowledgeable about the risks associated with bonds– two-and-a-half times the 19% who say they are “not too” or “not at all” knowledgeable about the risks associated with stocks. Forty percent said they didn’t know enough to offer an opinion about where bond returns will be in 12 months.

Not surprisingly, then, investors have been slow to deploy some basic fixed income vehicle in their portfolios: 85% do not own Treasury Inflation Protected Securities, 30% do not own domestic bonds or bond mutual funds, and more than two-thirds do not have foreign developed or emerging market bonds or bond mutual funds in their portfolios.

Even older investors have allocated relatively small proportions of their portfolios to fixed income. In fact, 57% of investors aged 65 or older have less than 25% of their portfolios in bonds and/or bond mutual funds.

Investors who work with a professional financial advisor tend to more actively manage risk than do-it-yourselfers. The survey also revealed that advised investors are less likely than direct investors to be taking big risks in an effort to make up for lost time. One-quarter of unadvised respondents say they are investing aggressively to meet their financial goals, compared with only 16% of advised investors.

Financial advisors are well-positioned to help their clients. According to the survey, 89% of advised investors have a fair to great level of confidence in the professional advice they receive, and 95% say they are as close or closer to their advisor today than they were before the economic and market difficulties of the last two years.

The Allianz Global Investors Get Real Survey was conducted online from April 19 to April 29 by GfK Custom Research. Completed surveys were obtained from 1,002 Americans with sole or shared responsibility for investment decisions in households with portfolios of at least $250,000.

Michael S. Fischer ([email protected]) is a New York-based financial writer and editor and a frequent contributor to


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