More than one-third of Americans are more concerned with protecting against risk in their retirement accounts than managing their assets. Only 8 percent of those surveyed felt that growing retirement assets was more important than protecting them, according to a Charles Schwab survey.
"Risk management strategies vary by investor based on an individual's situation and goals, and it's impossible to completely eliminate risk from a portfolio, but by choosing an appropriate mix of investments people of all ages can better control the types and levels of risk in their portfolios," said Carrie Schwab-Pomerantz, CFP, senior vice president, Charles Schwab & Co., Inc. "In a continued choppy market environment it's not surprising that investors are concentrating on managing risk and protecting their nest egg. It's also clear that the sharp downturn in 2008 remains fresh in their minds."
The recession has affected younger investors who said in the survey they were most likely to sit on the sidelines in the next six months and move assets into more stable investments such as money markets and savings accounts. Twenty-nine percent of the 18 to 34-year-old crowd plan to pull money out of the market, while only 11 percent of older Americans said they would do the same.
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"Younger Americans have seen their parents' retirement savings and their own retirement savings take some hits with the recent market volatility," said Schwab-Pomerantz. "Younger Americans are seeming to be more risk averse than ever before. While their time horizon for retirement should be conducive to staying invested and maintaining a more moderate or even aggressive risk level, we are seeing the younger generation sway to be more conservative given what they have witnessed in the market in recent years."
The survey, which was taken May 3-7 by Koski Research over the telephone, also found that 26 percent of Americans surveyed plan to seek professional advice on managing their retirement accounts in the next six months given the recent economic environment and uncertainty about the future. Forty-two percent are concerned about future legislation that could affect retirement accounts. Other major concerns included protecting retirement savings during a period of market volatility, generating enough income to live on if interest rates remain low, striking the right balance between portfolio growth and asset protection and growing retirement savings to outpace inflation.
Only 6 percent of those surveyed said they planned to take even more risk in their retirement accounts.
The survey found a disconnect between what people were saying and what they were doing. One-third of respondents said they felt that protecting their assets was the most important, but 37 percent were not investing in products to manage risk, like fixed income instruments and annuities.
The Charles Schwab Corporation is a provider of financial services, with more than 300 offices and 8.7 million active brokerage accounts, 1.5 million corporate retirement plan participants, 808,000 banking accounts, and $1.83 trillion in client assets as of April 30, 2012.
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