Data & Research April 13, 2010

More Retirement Plan Participants Want Investment Advice

Even as retirement savings accounts are back on a growth curve, retirement plan participants are more interested in receiving advice about investing their retirement funds, a new report suggests.
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In fact, the number of retirement plan participants seeking advice about how to invest their retirement funds has more than doubled since 2008, according to a Spectrem Group report. More than half (58%) of retirement plan participants would like more advice and assistance with investment decisions, up from 26% the prior year.

The report also found that Americans’ retirement savings accounts are recovering from their lows during the economic downturn. Total U.S. retirement assets, which include both defined contribution (DC) and defined benefit plans, rose 18% to $9.3 trillion in 2009, up from $7.9 trillion in 2008.

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Assets held in DC plans rose 19% to $4.5 trillion, up from $3.8 trillion the year before.  As a percentage of all retirement assets, DC plans held steady at 49%. By themselves, 401(k)s, which account for 71% of all DC assets, rose 20% to $2.3 trillion in 2009, up from $1.9 trillion in 2008.

“The retirement market bounced back in 2009, recovering nearly all of the recession-driven losses of the previous year,” said Gerald O’Connor, a director at Spectrem Group, in a news release.

The Spectrem report, “Retirement Market Insights 2010,” is based on data derived from both public and private sources as well as Spectrem surveys. 

Information about purchasing the report is available at www.spectrem.com.

Data & Research April 13, 2010

Most Americans Say They Could Use Financial Advice

Americans reported that they are more knowledgeable about personal finance but would also benefit from professional advice, according to a survey by the National Foundation for Credit Counseling.
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NFCC’s fourth annual Consumer Financial Literacy Survey found that more Americans than last year gave themselves high grades on their knowledge of personal finance. In 2009, 41% graded themselves as C, D, or F, but only 34% did so in 2010.  However, even with this improvement, nearly four in five adults (78%) agreed that they would benefit from advice and answers to everyday financial questions from a professional, and nearly one-third (31%) strongly agree, according to a release of the results.

The survey found some Americans have responded to the financial crisis by making positive behavioral changes in their financial lives, but there is still room for improvement. The proportion of adults who have non-retirement savings has increased from 63 % in 2007 to 67% in 2010.  Nonetheless, three in 10, or more than 68 million people, report that they have no savings, and only 24% are now saving more than they did a year ago because of the current economic climate, NFCC said.   

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Nearly two in five (39%) Gen Y adults—more than any other age group—report having no savings. Of those with no savings, one in four say that, if faced with an emergency, they would charge the expense to a credit card (25% ) or take out a loan (29%).  

Showing improvement since 2007 (39%), more than two in five adults (43%) now keep close track of their spending. However, more than half (56%) still do not have a budget, and more than 11 million adults (5%) do not monitor their overall spending and don’t know how much they spend on food, housing, and entertainment. 

The 2010 Financial Literacy survey was conducted by telephone within the United States by Harris Interactive March 4 and 8, among 2,028 adults ages 18 and older.  Full results are available at www.NFCC.org.

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