BlackRock’s annual Global Investor Pulse Survey got a nice consumer “awareness” boost with a segment featuring president Rob Kapito talking in-studio with CBS This Morning co-host Bianna Golodryga and the show’s 3.86 million viewers about planning for retirement.
The nearly four-minute segment highlighted findings from the latest BlackRock survey, one of the world’s largest studies of investment behavior.
This year’s study spanned 27,000 people worldwide, including more than 4,000 in the United States. At a time when economic anxiety is increasing, some two-thirds of Americans (69 percent) identified financial health as having a significant impact on their well-being—on par with relationships (68 percent), and mental (70 percent) and physical health (71 percent).
Money is the biggest source of stress among Americans — more than their concerns about work, family or health. However, people who proactively plan for retirement tend to be more content with their lives and have a greater sense of personal well-being today.
Americans with a retirement savings plan are more likely (78 percent) to have a higher level of overall well-being than those without one (52 percent), the survey found.
Americans lack retirement preparedness
Retirement readiness remains a significant issue in the U.S. Just 56 percent of all respondents said they have started to save for retirement, and only 45 percent of them feel confident that they’ll achieve their “ideal retirement.”
Among the reasons: Respondents say they are too worried about their financial situation today to think about tomorrow, citing high cost of living (56 percent), healthcare costs (49 percent) and rising prices (34 percent) as the greatest threats to their current financial health.
Equally concerning is that fewer than half (44 percent) of U.S. respondents said that they have any market-based investment holdings at all, inhibiting their progress toward long-term financial goals.
Kapito told the CBS audience that people are not saving or investing enough for the last 10-14 years of their life, pointing out that a lot of parents would rather spend on their kids today than save for their retirement.
“We need to create awareness that you cannot invest for the future in the future, and this is going to be a growing problem in this country,” Kapito said on the show. “We try to do surveys, create technology, create tools so that people can get educated. But the first part is creating awareness that you have to start saving today.”
Encouragingly, there is a high correlation–a virtuous circle–between planning for the future and a sense of overall contentment. Those with a higher sense of well-being are also four times more likely to feel confident about their retirement income (66 percent vs. 17 percent).
“For too many people, investing and retirement planning are all about an intangible future,” Kapito said in a statement about the latest survey. “Thus, the incentive to start saving today just hasn’t been strong enough. But what we found is that there are immediate benefits for those who start early. Much as physical exercise has both short- and long-term benefits, focusing on retirement planning helps alleviate stress and improves your overall well-being today. Saving for your future retirement pays immediate emotional benefits.”
Women who save more worry less
Women, in particular, are missing out on the financial and emotional benefits of investing.
While those who have a retirement plan report a higher well-being (76 percent) vs. those who do not (53 percent), only half (52 percent) of U.S. women have started to save for retirement at all. For 64 percent of this group, just the thought of investing is a source of stress, compared to 50 percent of U.S. men.
The Global Investor Pulse found that only 38 percent of U.S. women invest in the financial markets and more than half (55 percent) say investing is not for “people like me.” U.S. women who do invest take a more cautious approach, with 38 percent willing to increase their investment risk to achieve higher returns, compared to 56 percent of men.
Millennials’ money angst
While money was ranked as the No. 1 source of stress among respondents overall, millennials, who represent a third of the U.S. workforce, reported worrying about their finances more than any other age group.
More than half (58 percent) of them said that they are too worried about their current financial situation to think about their future. Seventy-seven percent of millennials feel that there are too many investment options to choose from and six in 10 (59 percent) said they don’t know where to go for retirement planning advice. Encouragingly, the vast majority of adults age 25 to 37 (84 percent) believe their financial outlook would improve if they started investing.
“Millennials, more than any other generation, have embraced technology in nearly all aspects of their lives,” Kapito said. “The industry should work to meet millennials where they are – and build better and more intuitive systems that help prepare them for retirement as early as possible.”
Make it easy
Given the challenges of many Americans to actively engage with their retirement planning, it’s clear that easy-to-use investment solutions could help alleviate both financial and emotional barriers.
Among those who have started investing, seven in 10 U.S. respondents said new technology solutions would help them be more involved in their investments. In addition, the study found that 83 percent of respondents who work with a financial advisor reported a high sense of well-being, compared with 61 percent of those who don’t.
Kapito took the opportunity on CBS This Morning to introduce a new website, www.blackrock.com/investorpulse, intended to “create awareness for people of what they need to do and why they need to do it.”
Kapito also noted BlackRock’s efforts to create tools for financial advisors to help them educate clients. “We have one called ‘iRetire’ – very simple, you get on, you put in the money you have, what you think you’re going to need; it creates diversified portfolios for you so that you can understand that you can do this in a very conservative way,” Kapito said. “That information is going to help people to make good long-term investments that they’ll be able to have for their retirement and future.”
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
