In Practice December 1, 2006

Investors Want to Drive Their Own Retirement Savings Plans

Many Americans may be leaving their retirement savings program on auto pilot, but a majority responding to a recent survey was certain of one thing: they wanted to make basic savings decisions without the government doing it for them.
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That was a key finding of the Eaton Vance Corporation’s eighth annual survey of US investors, which examined attitudes among generations – GenXers, Baby Boomers, and Seniors, according to an Eaton Vance news release. 

According to the announcement, investors overwhelmingly (85%) said that people should be responsible for structuring their own individual retirement savings accounts rather than have the government (7%) or employers (8%) step in. 

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For example, a majority of investors (59%) and even more Boomers (63%) say Congress should repeal mandatory withdrawals from deferred compensation and IRA accounts and allow maintenance of such accounts until they are needed.

“Most investors think individuals should decide for themselves how to invest,” said Duncan Richardson, executive vice president and chief equity investment officer at Eaton Vance. “Clearly the government needs to tread carefully in this area, but investors do need help to optimize the location and allocation of their investments.” 

Generally, the survey tracked today’s retirement savings reality. Over half of investors (55%) indicated that a 401(k) plan account is their primary retirement savings vehicle, while only a quarter indicated that their retirement savings is primarily through a pension plan or self-directed brokerage account. Nearly three-quarters of GenXers (74%) are saving for rtirement primarily through a 401(k) plan. 

While more than half of investors (56%) were unaware of the changes brought with the Pension Protection Act of 2006, awareness of pension reform was greater among Boomers (44%) and GenXers (46%) than senior investors (34%). 

The telephone study covered 1,209 US residents 25 years and older: GenXers 40 and younger, Boomers 45 to 60 and seniors 65 years or older, who have over $50,000 invested in both qualified retirement plans and investments outside of qualified retirement plans. This study was conducted by Penn, Schoen & Berland Associates, Inc. for Eaton Vance Corp.

 

 

 

 

 

 

 

Data & Research December 1, 2006

AARP Finds Older Californians Overwhelmed by Retirement Saving

A survey from AARP Financial has found Californians over age 50 report being overwhelmed with too many choices, turned off by complex prospectus language and not sure who to turn to for advice, and are thus falling behind in their retirement savings.
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The survey of 500 California residents age 50-plus found that 36% of pre-retirees saving for retirement have accumulated less than $100,000. Contributing to the savings crisis could be that 54% of the Californians surveyed think investing is too complex for the average person and many cite product design and industry practices as a source of confusion, AARP Financial said in a news release.

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The survey found poor communication is also an issue for many investors. More than three-quarters of Californian pre-retirees surveyed said a car insurance policy, instructions for a DVD player and prescription drug inserts are easier to understand than a mutual fund prospectus. Only a third of those surveyed said they read “all or most” of a prospectus before buying a fund.

In addition, more than half of investors surveyed said they believe that mutual fund companies put their own interests before those of their investors. Six out of 10 said they wish there was someone they could talk to about investing who “isn’t trying to sell me something.”

Also of concern, many investors said they do not check or do not know how to check mutual fund fees. Two out of five Californian pre-retirees surveyed are “unaware” or “not sure” of the fees they pay for their mutual funds.

Participants of the survey had to be at least 50 years old, have money saved for retirement and own mutual funds in their retirement portfolio.

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