PLANADVISER - July/August 2017 - 16

trendspotting
OLDER AMERICANS TOO CAUTIOUS?
Many hold back from realizing their retirement dreams
INNOVATIONS in medicine and technology
have extended human life by
more than 30 years since 1900, which
has helped to double the time the
average adult now spends in retirement
compared with several decades
ago, notes Matt Fellowes, CEO of
United Income, in a report.
Despite the retirement industry
counsel that Americans draw down
reduced income in retirement, Fellowes'
paper suggests older Americans are
spending too little toward realizing
their retirement dreams. " Longer lives
and retirements have ushered in an
extraordinary opportunity for older
adults
to live out
life-long dreams,
embark on second careers, or use their
experience and knowledge to give back
to the next generation, " he writes. " Yet,
our confidence about future economic
growth and our own financial wellbeing
wanes as we age and, in some
cases overly so, which may be one
reason why spending decelerates for
aging households as they seek to maintain
wealth. "
According to Fellowes, the " data
signify that special care needs to be
taken to educate age cohorts about
their biases to avoid investment portfolios
and financial plans that are
AMERICANS' OUTLOOK
ON WORK IN RETIREMENT
63%
5%
18%
too conservative and become selffulfilling
prophecies of economic
problems. "
United Income analyzed consumer
sentiment and spending data from
the University of Michigan that was
commissioned by the Social Security
Administration (SSA) and U.S.
Commerce Department, among other
federal agencies, and found adults
grow less optimistic about future
economic growth and financial health
as they age. In 2014, for instance,
adults ages 64-plus were over 40%
more pessimistic about their future
financial health, over 30% more skeptical
about future economic growth,
and 40% less convinced they would
see future stock market increases,
compared with adults under 35.
In addition, the analysis shows, the
average older adult believed the stock
market had less than a 50% chance of
increasing every year between 2002
and 2014-even though most major
stock market indexes increased in all
but two of those years. By contrast,
every other age group believed the
market had more than a 50% chance of
increasing in most of those same years.
" Perhaps as a reaction to declining
Plan to work
part time
Believe they will
need the income from
a full-time job
Source: Gallup Economy and Personal Finance Survey
FUNDING RETIREMENT
Retirement investments such as 401(k)s and
individual retirement accounts, along with home
equity, account for nearly half of all assets American
families depend on for retirement outside of Social
Security benefits, says new research from the
Employee Benefit Research Institute.
16 | planadviser.com july-august 2017
Believe they will
need the income from
a part-time job
financial optimism, the average
adult 60 years or older will trim [his]
spending by about 2.5% every year, or
by about 20% over a 10-year period. We
also find that spending drops faster for
people in their 80s compared [with]
those in their 60s and 70s, falling by
about 30%, on average, over a 10-year
time period. In addition, spending
volatility grows as we age-increasing
from an average of 6% variance for
adults in their 60s to 9% for people in
their 70s or older, " the paper says.
The analysis also found that wealth
and investments generally grow in
value as people age. The average
retired adult who dies in his 60s leaves
behind $296,000 in net wealth; that
climbs to $313,000 if he dies in his 70s.
-Rebecca Moore
http://www.planadviser.com
PLANADVISER - July/August 2017

Table of Contents for the Digital Edition of PLANADVISER - July/August 2017
