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Jim Lentini: Americans and a secure retirement?

Posted: November 9, 2009 10:47 p.m.
Updated: November 10, 2009 4:55 a.m.
Most Americans acknowledge that the market crisis has hurt their prospects for a secure retirement. Sixty percent of Americans express significant concern about their retirement savings and investments. Many are making immediate sacrifices to deal with the financial and emotional challenges, such as cutting back on spending (54 percent) and postponing retirement (41 percent).

Eighty percent reveal a need to start rebuilding their savings, and many show signs of re-evaluating their approach to saving money and preparing for retirement. More than four in five respondents of a independent survey by a leading pension provider stated they wish they had been better protected, and most are more cautious now than ever before.

Recovering will be a challenge
On average, respondents think they lost 30 percent of their assets as a result of the market turmoil. In reaction to the crisis, 29 percent pulled some or all of their money out of equities in order to avoid further losses. Only 19 percent took the opportunity to invest more. Most, however, have made no sudden portfolio changes (52 percent). While 38 percent think they won't be able to grow back the money that they have lost in their workplace retirement plan, the majority are optimistic, saying they will "probably" (47 percent) or "definitely" (15 percent) recoup their losses.

Investors becoming more conservative
Data revealed that a year ago, on average, retirees and pre-retirees had roughly 61 percent of their investable assets in equities versus today's average of 50 percent. Moreover, seven in 10 (70 percent) say that being too aggressive with your investments is riskier than being too conservative. This is in stark contrast to just two years ago when respondents were split evenly (50/50) on this matter.

Guaranteeing retirement assets
When presented with ideas for guaranteed investment products, 75 percent said a product with guarantees for lifetime income, protection of principal and opportunities to lock in market gains would be important or nice to have as part of their portfolio. Two-thirds of Americans would be likely to pursue a solution that offered guaranteed income as part of an annuity, and this number includes those who have access to guaranteed income through other sources (e.g., Social Security or pensions). If protected by such guarantees, 70 percent said they would be likely to put money back into the stock market.

Accountability and advisors
Americans are paying more attention and want more control of their portfolios. For some, this means using "me" as the No. 1 source for guidance (48 percent today versus 37 percent before the market decline). Yet, two-thirds would still trust a financial professional for information and guidance on how to best manage their retirement savings and investments. And, for more complicated products, especially annuities with guarantees, consumers still need and want to talk to advisors. In fact, 66 percent said their preference for learning more about guaranteed income products would be by talking to a financial professional.

Jim Lentini, CLU, ChFC, IAR is president of Lentini Insurance & Investments, Inc. His column reflects his own views and not necessarily those of The Signal.


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