Cash-Heavy Americans Are Hurting Their Retirement: BlackRock

Americans have too much of their assets in cash — and it’s hurting their retirement.

That’s the conclusion of BlackRock in its latest Global Investor Pulse survey, which found that Americans hold 65% of their net worth in cash instruments.

This is “far too high an allocation to achieve their retirement goals, given low interest rates and the diminishing purchasing power of their cash related to the pressures of inflation,” the report says.

The survey included 4,213 people.

Ideally, Americans believe they should have 33% of their net worth in cash, but that’s not what’s happening.

The current asset allocation of American portfolios according to the survey is 65% cash, 18% equities, 6% bonds, 4% property, 2% alternatives and 5% listed as “other.”

“A key obstacle is the feeling of security that cash brings,” the report says.

According to the survey, the respondents said that saving money makes them feel secure (39%), hopeful (29%) and confident (28%), while investing money makes them feel risky (37%) and nervous (35%).

The survey finds that more than one-third (36%) of Americans are afraid of taking risks with money or losing money, although only 7% said that they actually have lost a lot of money in past investments.

According to the survey, nearly four in 10 Americans said they wanted to have “cash saved as a security blanket or reserve for unforeseen events before I can think about investing.”

Because of these attitudes, many Americans are cash-heavy and fail to grow their money in a disciplined way.

According to the survey, less than one in four Americans regularly put aside a certain amount of income into long-term savings or investments. And only 14% of the people surveyed had a formal financial plan for their retirement.

The survey finds that about one in five Americans makes regular contributions to retirement accounts through their employer (21%) or saves for retirement outside of any employer plans (21%).