Most are without a financial plan: Natixis

By BenefitsPro

By Paula Aven Gladych

Fewer than half of investors have a financial plan, while even those who do may be seriously underestimating the amount of money they need to save for retirement, according to Natixis Global Asset Management’s Global Investor Insights Survey.

Despite those troubling findings, most American investors who responded to the survey also said they are optimistic their finances will improve in the next year and the majority is confident their current investment approach has them on track to meeting their retirement goals.

Natixis, which is one of the world’s largest asset managers, surveyed 750 investors in the U.S. as part of its global investor survey. It found that 54 percent of those it surveyed don’t have a financial plan.

Its survey also found that three-quarters of Americans are interested in products unrelated to the performance of the broader markets and most investors, 61 percent, do not believe the traditional equities/bond approach to portfolio allocation is the best way to pursue returns and manage investments.

Seventy-two percent of investors said they would consider alternative investments if their advisor recommended them, while 74 percent said advisors are increasingly discussing alternatives with them. That is a huge increase from 2012 and 2011, when 35 percent and 19 percent of investors, respectively, said they discussed alternatives with their advisors.

Those who said they do have financial plans estimate they will need 62 percent of their pre-retirement income to live in retirement, which is significantly less than the 70 to 80 percent figure commonly used in financial planning.

While investors may not be saving enough, they are thinking ahead about potential costs in retirement, including long-term healthcare. Americans expect they will need five years of long-term care and are confident they will be prepared to meet these costs. Nevertheless, 40 percent of U.S. investors consider long-term care costs not covered by insurance to be the biggest threat to their financial security in retirement.

According to those surveyed, long-term care costs not covered by insurance is the top financial threat to their retirement, followed by a reduction in retirement savings due to market conditions, insufficient proceeds from retirement plans and unemployment.

If their retirement funds fall short and they can’t support themselves, 40 percent of investors say they will rely on family members to fill the gap and 38 percent said they will look to government programs. Nineteen percent said they would get a job post-retirement.

Investors are growing increasingly concerned about the political and macroeconomic landscape and how it affects their investments. Nearly all of investors say they are anxious about the federal government’s financial situation, with 57 percent saying they are very concerned.

Ninety-two percent are concerned about the level of unemployment and 91 percent are concerned about U.S. political issues.

In addition, the majority of investors are anxious about the possibility of a natural disaster. Most investors are also concerned about the possibility of terrorism and war.

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