Retirement in America

AXA Equitable’s Latest Survey of Consumers Also Polls Economists

A new survey recently released by AXA Equitable polled both consumers and economists on a wide range of financial topics, including predictions for the economy and how recent market volatility has affected retirement planning.

Results show conflicting views toward the prospect of economic recovery.  Asked if they believe the economy will continue to be volatile with no clear pattern of improvement:

• 24% of consumers agreed, while
• Only 12% of surveyed economists hold that view

Recession Fears

Even more unsettling were the number who believe that despite signs of recovery, we are likely headed back into a recession – 16% of economists and 11% of consumers.

The survey also revealed consumers’ reluctance to engage in the stock market

• 60% believe equities are necessary to achieve retirement goals, yet
• Only 19% are confident in their ability to invest in stocks

Equity Investing

In the view of economists:

• 69% think investing in equities is important to retirement planning, but
• A staggering 80% believe Americans are uncertain in their ability to purchase equities

“It’s no mystery that the recent market downturn has shattered consumer confidence in investing in equities,” said Christopher M. “Kip” Condron, chairman and chief executive officer of AXA Equitable. “This apprehension, combined with a movement to more conservative investments, could place significant pressure on Americans’ retirement plans in the near future.”

Responses to recent market volatility further highlight differences between consumers’ actions and economists’ estimations:

• 85% of consumers believe financial products that protect principal of investments and provide income that increases with inflation are important, as opposed to 67% of economists believing that they are important;
• Economists estimate that 25% of consumers are supporting relatives due to the market downturn while 16% of consumers have begun to do so;
• And while 24 percent of economists believe consumers have switched advisors, in fact, only 11 percent of consumers stopped using or switched financial professionals.

Consumers More Pessimistic Than Economists

Overall, consumers are much more pessimistic than economists on specific economic indicators over the next year:

• 83% believe health care costs will rise, compared to 52% of economists
• 73% believe taxes will rise, compared to 55% of economists
• 34% believe the unemployment rate will rise, while only 6% of economists agree

“The fact that historically middle-of-the-pack concerns, such as fear of inflation and investments losing value, are now top of mind for consumers suggests that they are increasingly aware about their retirement planning,” said Mr. Condron. “And the large gaps between Americans and economists on specific financial indicators shows there is a disconnect between how the spending public feels and those that study the behavior of the economy.”

Additional Findings

New Top Financial Concerns

• Having inadequate sources of guaranteed income remains the top concern, with 85% of consumers surveyed saying they are worried about it

• Inflation and protecting principal join guaranteed income as top financial concerns;

• 84% of those polled worry about investments losing principal and inflation.

Golden Years Just Got A Little Shorter For Americans

Recent market volatility has forced many to adjust retirement plans and expectations:

• More than four in 10 polled (42%) plan to delay retirement, on average, by six years. Their planned retirement age is now 68, ballooning from a previously planned age of 62;
• Almost three in 10 Americans (27%) plan to go back to work after retiring;
• Approximately two in 10 retirees (17%) have already gone back to work, up from 9 percent of those polled in February 2009.

Advised Are More Confident And Did Better During Market Volatility That Non-Advised

Those working with a financial professional are more likely than those without to:

• Feel investing in equities is important in order to achieve retirement goals
• Be more confident in their ability to invest in equities
• Have recouped more of their investment losses

“Consumers are not abandoning their advisor relationships,” said Andrew McMahon, senior executive vice president for AXA Equitable and president of its financial protection and wealth management business.  “In fact, advisory relationships are even more important to help bolster consumer confidence in being able to invest in equities wisely.”

Click here to view a presentation of select results from the survey (PDF)

About the Study

The study, Retirement in America: A Survey of Concerns and Expectations, is part of AXA Equitable’s ongoing commitment to understanding the financial concerns of consumers and how market volatility has impacted their retirement planning. New to the survey this year are questions gauging the public’s response to recent economic events and how that compares to predictions from macroeconomists.  

The study polled 1,000 Americans between the ages of 25 and 70. It was conducted in December 2009, and respondents included financial decision-makers with household income of at least $75,000 or investable assets between $250,000 and $999,999.

Margin of error for the research is +/- 3 percent, at a 95 percent confidence level. Where necessary, results are weighted to represent overall characteristics of the mass affluent American public. In some cases, comparisons are made to similar studies conducted in February 2009, October 2008 and April 2008.

Additionally, 101 working economists that focus on macro economics, and who feel comfortable making economic forecasts, were polled by a third-party independent research firm in December 2009 and January 2010.

Margin of error for the research is +/-10 percentage points at a 95 percent confidence level.

AXA Equitable Life Insurance Company (NY, NY)