Schroders Releases US Retirement Survey Results

Global asset manager Schroders today announced the results of its proprietary study on US retirement trends. The company surveyed 1,004 respondents with the goal of better understanding the needs of pre-retirees and retirees, the general sentiment around retirement, and an individual’s understanding of retirement planning, investing and social security benefits.

Survey Respondent Demographics:

• Respondents are split 50/50 between men and women and are categorized into three age cohorts: 45-59 (336 respondents), 60-69 (335 respondents) and 70+ (333 respondents)
• Among those surveyed, 50 percent are married, 20 percent are divorced, two thirds own their own homes and 51 percent are currently living with two 18+ year-old people in their household
• Respondent ethnicities include 754 Caucasians, 120 Hispanics, 110 African Americans and 20 Asians

Joel Schiffman, Head of Intermediary Distribution, North America, Schroders, commented:

“As we continue to refine and innovate the retirement solutions we offer clients, we wanted to have a clear understanding how the transition from pension plans to individual retirement plans has affected decision-making around retirement savings, investing and social security benefits.”

Key Findings:

Outliving Assets

• There is significant concern of outliving one’s assets, with 42 percent of people classifying themselves as being concerned or very concerned about outliving their assets and 35 percent of those retired being concerned or very concerned about outliving their money

Social Security

• The majority (67 percent) of all respondents do not believe that the monthly amount they receive in social security will be enough to live on
• 39 percent of those who reported being retired, began taking social security benefits at age 62, forgoing greater monthly benefits by deferring benefits to a later age
• There is an overwhelming lack of understanding surrounding social security benefit payouts amounts among the youngest cohort, with 52 percent of people ages 45-59 being unsure of how much social security benefits they expect to have in retirement

“We find it concerning that not only are the vast majority of respondents concerned about not being able to live on what they receive from social security, but such a high number of retirees are beginning to take social security at the age of 62 when pay-out benefits are the least,” said Schiffman. “This either reflects a lack of education on how social security benefits grow as the time-to-activate is delayed, or a strong desire to retire earlier in life, with less money. In either case, we see a great opportunity to help educate people on these trade-offs.”

Asset Allocation

• 55 percent of respondents don’t know how their assets are allocated
• 43 percent of respondents state they won’t change their asset allocation in retirement
• There is a lack of confidence in the stock market and real estate, with 30 percent of all assets for all respondents reported being held in cash, compared with 18 percent in real estate and 12 percent for stocks
• African American people were found to hold nearly half of their assets in cash (47 percent), versus an average of 37 percent amongst all other races

“401k programs have taken the guesswork out of pre-retirement savings, with availability of auto-enrollment and target-date asset-allocation tools,” said Schiffman. “This data speaks to the need for a retirement program that provides a similar, professionally managed, diversified-investment solution, but one that meets the changing needs of retirees,” said Schiffman.

Ability to Retire and Retirement Age

• 74 percent of those ages 45-59 and 40 percent of those 60-69, plan to work in some capacity during retirement, while nearly half of those 70 years and older do not plan to retire
• Women lag men in their confidence as to when they will be able to retire, with 41 percent of women being unsure of when they will retire, compared with 25 percent of men who are unsure of when they will retire
• Of the 511 participants questioned who have not yet retired, 48 percent of individuals plan to retire at some point and at a mean age of 65.7 years old. Of those who were retired (493 participants), the average age for retirement was 61.1 years

“As the industry has transitioned from employer-directed pension plans to self-directed retirement programs as a means for funding retirement, it appears that we have left a post-retirement education and planning gap for the vast majority of our population” said Schiffman. “Historically, we have focused all of our attention and education on the ‘asset accumulation’ phase but have provided little guidance for those in the ‘asset decumulation’ phase. The lack of information and access to so few options to replace income in retirement has made the dream of retirement less certain for many.”

Primary Investment Objective in Retirement

• The majority (60 percent) of respondents claim that their primary investment objective in retirement is “steady income generation”

“With ‘steady income generation’ being the primary investment goal in retirement for the majority of respondents, we see a meaningful opportunity to create enhanced retirement tools that help meet this goal, while providing the necessary investment returns to ensure individuals do not outlive their assets,” said Schiffman.

How to Invest

• More than half of respondents (54 percent) lack an understanding of how to invest in retirement, and even more concerning is that 64 percent of women claimed they don’t know how to invest their money, compared with 44 percent of men
• The majority (58 percent) of the youngest age cohort surveyed ages 45-59, claim they do not know how to invest their own money when planning for, or during, retirement

“As a practitioner in the retirement market for over 30 years, we have worked hard to improve the investment acumen of individuals, but it seems we must do more to provide investors with the necessary tools to make informed investment decisions,” said Schiffman. “We intend to change this for the future.”

Healthcare Emergency

• 54 percent of participants do not believe that they have enough money saved for a healthcare emergency, compared with 60 percent of female participants who do not believe they have saved enough for a medical emergency, and 48 percent of men

Where to go for Investment Advice

• When asked where respondents receive or plan to receive investment advice, 48 percent of all participants stated that they do not or do not plan to seek investment help from anyone, believing they can manage their assets without professional guidance
  • 21 percent do or plan to seek investment advice from an investment advisor, 10 percent from a family member, 10 percent from the Internet, 6 percent from an employer-sponsored pension plan resource and 5 percent from friends
• 27 percent of African Americans stated that they get their investment advice from the Internet, compared with 16 percent for Hispanics and 9 percent for Caucasians

“With nearly 50 percent of all respondents choosing to invest without assistance, we believe this further validates the need for greater investment-education programs,” said Schiffman.

Note to Editors

Past performance is not a guide to future performance. The value of investments and the income from them can go down as well as up and investors may not get back the amount originally invested. Exchange rate changes may cause the value of overseas investments to rise or fall.

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Schroders plc

As a global investment manager, we help institutions, intermediaries and individuals meet their goals, fulfil their ambitions, and prepare for the future. But as the world changes, so do our clients’ needs. That’s why we have a long history of adapting to suit the times and keeping our focus on what matters most to our clients.

Doing this takes experience and expertise. We bring together people and data to spot the trends that will shape the future. This provides a unique perspective which allows us to always invest with conviction. We are responsible for $565.5 billion (€496.6 billion/£444.4 billion)* of assets for our clients who trust us to deliver sustainable returns. We remain determined to build future prosperity for them, and for all of society. Today, we have 5,000 people across six continents who focus on doing just this.

We are a global business that’s managed locally. This allows us to always keep our clients’ needs at the heart of everything we do. For over 200 years and more than seven generations we’ve grown and developed our expertise in tandem with our clients’ needs and interests.

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Schroder Investment Management North America Inc. (“SIMNA”) is an indirect wholly owned subsidiary of Schroders plc, a UK public company with shares listed on the London Stock Exchange, and is an SEC registered investment adviser providing asset management products and services to clients in the US and Canada. Schroder Fund Advisors LLC (“SFA”) is a wholly owned subsidiary of SIMNA Inc. and is registered as a limited purpose broker-dealer with FINRA and markets certain investment vehicles for which SIMNA Inc. is an investment adviser. The Schroder mutual funds (the “Funds”) are distributed by SEI Investments Distribution Co (“SIDCO”), a member of FINRA. SFA previously served as the distributor of the Funds. Although SFA has been replaced by SIDCO as the distributor of the Funds, SFA continues to be involved in the distribution of shares of the Funds through an agreement with SIDCO, and SFA, SIMNA and their affiliates continue to provide shareholder services to the Funds. SIDCO is not an affiliate of Schroders plc.

*as of June 30, 2019

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