Maintaining a sufficient allocation to stocks is important to achieving retirement goals and ensuring financial security throughout retirement; however, a new report reveals that consumers on average hold less than half of their assets in stocks, stock mutual funds and exchange-traded funds.
“Some consumers, particularly the risk averse, are not allocating enough of their retirement savings to stocks to reach their financial and retirement goals,” the report states. “Importantly, many recognize that some level of investment risk is inherently necessary to achieve their goals, but they are uncomfortable taking on that risk with their own financial assets.”
The report is based on a survey conducted on behalf of AXA and the Insured Retirement Institute, a trade group for the retirement income industry, that included more than 1,000 consumers ages 50 to 75.
Those who have a low tolerance for investment risk have an average of 37% allocated to stocks, the survey finds. For those with low risk tolerance and 25% or less of their investable assets allocated to stocks, the fear of losing money in the stock market and lack of trust in the stock market for money they are counting on in retirement are the most often cited reasons for allocating less of their portfolios to stocks, according to the report.
According to the report, the survey results uncovered several opportunities for financial professionals to drive deeper client satisfaction by proactively discussing protection against stock market downturns, guaranteed lifetime income options and by planning for health care expenses.