Many Americans are confident about their financial future, but are potentially jeopardizing their hopes for a secure retirement by holding back as investors, according to a new BlackRock Global Investor Pulse Survey.
Fifty-two percent of Americans in the poll had a positive view of their financial future, compared with 56% of respondents globally.
At the same time, 61% of American respondents cited high cost of living as the top threat to their financial future, while 55% pointed to the state of the U.S. economy and 50% to health care costs.
Only about 25% said the U.S. economy and job market were improving, despite recent employment and equity gains.
BlackRock polled 27,500 individuals in 20 countries, including 4,000 Americans, on a wide array of financial and investment management questions. The research, conducted in July and August, did not use income or asset qualifications in selecting survey participants.
Americans Feel Squeezed
BlackRock said the high cost of living was a particularly pernicious influence on investors’ psyche. Americans reported allocating 42% of household income to expenses, compared with only 32% worldwide.
As a result, less income was left over for spending, savings and investing, including retirement.
Three-quarters of American respondents said it was hard or very hard to both regularly pay bills and save for retirement.
Perhaps as a result, BlackRock said in a statement, a big majority of Americans considered Social Security a main source of retirement income. Sixty-four percent said the benefits would be “critical” to supporting themselves in retirement.
“It’s clear that immediate financial needs are hindering people’s ability to focus on longer-term investment decisions and retirement planning,” BlackRock president Rob Kapito said in the statement.
“Focusing primarily on the short term is concerning for investors of all ages, and can eventually create special risks for those closest to or newly in retirement, who need to be well prepared to spend as much as two or three decades in retirement.”
This “short-termism” was evident in survey results. Just 27% respondents said they were more interested in investing in stocks today than five years ago, and 18% said they were not interested in stocks at all.
Thirty-five percent said they did not hold and would not consider investments outside the U.S.
On average, the survey found, 63% of Americans’ total household savings and investments comprised cash and cash-related products, compared with the 59% global average. Most respondents intended to increase their commitment to cash over the next 12 months.