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Investors Near Retirement Are Nervous About Economy, Volatility: Survey

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Risk aversion was on investors’ minds as they looked forward to the new year, according to new research released Thursday from Kiplinger’s Personal Finance magazine and Personal Capital, a digital wealth management company.

Investors in a fourth-quarter survey expressed fear of market volatility, and said they were stockpiling cash and thinking about reducing investments in stocks and even putting off retirement.

“While most people saving for retirement need to increase their stock holdings to reach their savings goals, many who were scarred by the Great Recession are now nervous about the economy and the bull market’s longevity,” the magazine’s editor, Mark Solheim, said in a statement. “They want to reduce their risk as much as possible.”

At the same time, most investors surveyed said they understood the value of having a long-term financial plan to get them through the stock market’s ups and downs.

The poll was conducted in mid-October among 850 respondents across the country. Participants were evenly split by gender and had a minimum age of 40, a minimum $50,000 annual household income before taxes and a minimum $100,000 combined household net worth, excluding primary residence.

Investor Actions

“This survey shows that market volatility is a genuine concern for investors, especially those who are nearing retirement age,” Solheim said.

Investors worried about a bear market said they were considering several actions.

Respondents reported that they were currently holding about 18% of their portfolios in cash — nearly six times the average of 3% to 5%, according to the researchers. Fifty-three percent said they would increase their holdings in traditional savings accounts in order to counter market volatility.

Some 47% of respondents said they would consider reducing investments in stocks to combat market volatility, and four out of 10 of these said they would consider reducing stock holdings to 25% or less of their portfolio.

What if portfolios should decline by more than 25%? Forty-two percent of investors between the ages of 55 and 64 said they would delay retirement, and 21% said they would consider claiming Social Security benefits earlier than they had planned.

Value of Advice

Seven out of 10 survey respondents reported that they had a long-term financial plan, and two out of three investors said they were dealing with market volatility by staying diversified and waiting it out.

The survey results also showed that opportunities exist for many Americans to consider the kind of personal financial advice that would help them endure any turbulent times.

For instance, only 18.6% of respondents reported that they were currently seeking the advice of a professional advisor to address market volatility.

A trusted advisor can help create a holistic, long-term financial plan designed to weather market cycles, including volatile ones, over time, according to Kyle Ryan, executive vice president of advisory services at Personal Capital.

“When volatility inevitably hits, or even if you’re just feeling anxious enough about volatility to consider knee-jerk changes that could impact your long-term goals, your first call should be to your advisor,” Ryan said in the statement. “A trusted advisor will help keep you from making emotional decisions and make sure you stay on track toward growing your net worth.”

Personal Capital offers investors a free report about the costly mistakes that can result from emotional decision-making.

— Check out Bob Doll’s 10 Predictions for 2020 on ThinkAdvisor.


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