Posts Tagged ‘finance’

Americans Staying on the Sideline

October 2nd, 2014, Comments Off.

The stock market might have rebounded since the financial crisis, but according to the latest COUNTRY Financial Security Index survey, many Americans are still wary of investing or simply are unable to get started. Just over half of Americans (51 percent) say they do not invest in the stock or bond markets in any way.

For those who do not invest, 56 percent say not having enough money is the biggest obstacle. Americans also cite distrust of the stock and bond markets (12 percent) and not knowing how to get started (11 percent) as prominent barriers.

Of the 45 percent who invest, they’re focused on the future and are diligent about regularly checking their investments.

  • An overwhelming majority (88 percent) invest to improve their long-term savings.
  • Seventy-eight percent review their portfolios at least quarterly.

Regardless of whether or not they invest, Americans are struggling to keep pace with the speed of the market. Half say they find it difficult to keep up with the volatility of the stock market.

“Investing is a key component of any financial plan, and while half of people say they’re not invested, they might still be unknowingly benefiting from market upswings through an automatic 401(k) enrollment at work, for example,” says Troy Frerichs, director of wealth management at COUNTRY Financial. “Investing may seem daunting at first, but the key takeaway is any level of involvement is a good starting point.”

Do Americans have trust issues?

Perhaps as a result of the economic downturn, levels of trust in the stock and bond markets, and who Americans consult for investment advice vary noticeably across generations:

  • Those who are age 50 and older expressed higher levels of unease, with one in five Baby Boomers (21 percent) citing distrust in the stock and bond markets as their biggest reason for not investing.
  • For those who invest, 42 percent say a financial planner is their most trusted decision-maker. Americans over 65 are significantly more likely to trust a financial planner, with 61 percent of them citing a planner as their primary resource for investment advice.
  • However, those under age 30 are more likely to consult internet research (27 percent) than a financial planner (22 percent) when it comes to making investment decisions.

With Americans turning to financial planners and online research, an overwhelming majority (87 percent) say they’re rarely or never consulted by friends or family about their investment decisions.

“With a market that’s more complex and faster-moving than ever, having a resource you trust for advice, whether it’s a financial planner or online research, is essential,” adds Frerichs. “Investing helps you build financial stability and achieve your financial goals. Your investment strategy should be tailored to your unique needs. Reviewing it annually and after major life events can help keep you on track.”

Since 2007, the COUNTRY Financial Security Index has measured Americans’ sentiments of their personal financial security. The COUNTRY Index also delves deeper into individual personal finance topics to better inform Americans about the issues impacting their finances. Survey data, videos and analysis are available at www.countryfinancialsecurityblog.com and on Twitter at @FinanceSecure.

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By Ayo Mseka
Editor-In-Chief

 

 

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401(k) Balances Nearly Double Since Recession

June 24th, 2014, Comments Off.

401(k) account balances have gone up 93 percent, nearly double since the economic downturn in 2009, according to the latest research from the Principal Financial Group. While much of the increase reflects a rebounding market, the study found a significant increase in participation and savings rates since the market collapse, with account balances rising 17 percent in 2013 alone, to an average of $54,000.

“The economic downturn may finally be in the rear view mirror, but the lessons learned from the crisis are hopefully influencing our savings habits as a nation moving forward,” said Jerry Patterson, senior vice president of Retirement and Investor Services for The Principal. “While we still have a lot of work to do to help Americans save at more adequate levels for retirement, these numbers are a positive sign that retirement savings are moving in the right direction.”
The study, conducted by The Principal Knowledge Center, analyzed retirement plan participants savings and deferral changes among those enrolled in an employer 401(k) plan from 2008 to 2013.

More savings, more engagement

The study found a significant increase in the number of employees acting to increase their contributions or deferrals into their employer’s plan. The number of participants choosing to increase their contribution rates has increased almost 70 percent since 2009. The average employee-contribution rate has increased by 14 percent during the same period.
“Employees are making great strides towards signing up to save more, but employees still succumb to inertia and often set and forget their savings,” noted Patterson. “That’s one of the reasons we’re working with employers to design plans that use the power of inertia to help individuals continue to save at more adequate levels.”
Patterson says changing plan design features to help make savings more automatic can capitalize on the upward trend and accelerate overall participation and savings rates. The company recommends several key automatic plan design features, including:

  • Automatic enrollment with at least 6 percent elective deferral.
  • Automatic escalation of at least 1 percent per year up to 10 percent.
  • Sweep all existing employees into the plan at least one time at the default deferral rate.
  • Stretch the match by using a formula that incents employees to defer at higher levels in order to get the full employer match.
  • Use an asset-allocation choice as the qualified default investment alternative.

For more information, visit www.principal.com.

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By Ayo Mseka
Editor-In-Chief

 

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