42 INVESTMENT ADVISOR APRIL 2020 | ThinkAdvisor.com
according to MagnifyMoney (which
conducted the poll in the fall of 2019).
A third of investors in the survey said
they could tolerate up to a 10% market
decline before they would take their
money and run. Only 22% of investors
said they would leave their retirement
funds in the stock market no matter how
large a decline.
“Volatile markets can make us feel
uncertain or scared about the future, and
our survey shows that many Americans’
first instinct is to flee with their money,
locking in a loss which may leave them
out of potential market rebounds and
meaningful gains,” said Josh Rowe-Heupler, general manager of investing
for Lending Tree/MagnifyMoney.
“Anxiety around the stock market
is normal, but that doesn’t mean
investors should automatically act on
Rowe-Heupler said sticking to one’s
financial plan or asking a professional
for help was a good way to combat fear
amid uncertainty. “A financial advisor
can be an excellent resource to help
keep consumers from making decisions
that they may later regret.”
The survey results showed that baby
boomers had a stronger stomach for
a stock market decline than younger
investors. Thirty-eight percent of boom-
ers said no market decline would prompt
them to give up on stocks in their retire-
ment plan, compared with just 18% of
Gen Xers and 16% of millennials.
Here’s how the different generations
responded with regarded to increasing
• Up to 5%: boomers – 18%;
Gen Xers – 19%; millennials – 18%
• Up to 10%: boomers – 23%;
Gen Xers – 38%; millennials – 36%
• Up to 20%: boomers – 17%;
Gen Xers – 16%; millennials – 19%
• Up to 30%: boomers – 3%;
Gen Xers – 10%; millennials – 11%
Survey respondents who identified as
Republicans exhibited a higher tolerance
for stock market declines than those
who identified as Democrats. Twenty-
five percent of Republicans but only 19%
of Democrats said they would stay in the
market whatever the size of a decline.
The results showed that just 13% of
parents with children under 18 would
keep their retirement funds in stocks no
matter how large the decline, compared
with about 30% of parents with adult
children or no children.
MILLENNIAL, GEN Z OBSTACLES
Members of Gen Z and millennials
understand the value of building a retirement fund, but face conflicting financial concerns that prevent them from
adequately preparing for retirement,
according to a recent report released by
Betterment for Business, a 401(k) service provider. By 2020, younger workers
will comprise half the global workforce.
With workers increasingly responsible
for funding their own retirement, confusing financial advice and subpar plans have
left many unprepared and unaware of
how much they need to be saving. Market
Cube, a research panel company, conducted the online poll in late 2019 and received
over 1,000 responses. Of these, 695 were
millennials and 306 were Gen Zers.
The survey asked participants how they
were doing with their finances. Seventy-seven percent of respondents said
thinking about finances caused them
stress. This is not surprising given that
both generations are weighed down by
unprecedented debt: Three in four said
they owed credit card debt, with one
in three owing more than $5,000; and
nearly half had student loan debt.
Betterment said those with high levels
of debt may need to significantly reduce
their current spending rates, or face substantial lifestyle changes in the future.
Still, 82% of millennials and 71% of Gen
Zers in the survey said they did not feel
too young to start saving for retirement.
About nine in 10 respondents overall
reported that they actively saved some
money every month, but a fifth said they
saved less than $100 monthly in total,
including in their retirement accounts.
“It’s clear that millennials and Gen Z
want to save for retirement, but this goal
can be deprioritized when they’re faced
with student debt, medical bills, or other
expenses that arise,” Edward Gottfried,
director of product at Betterment for
Business, said in the statement.
Employers are proactively trying to
help, and employees are making the most
of it, according to the survey. Millennials
and Gen Zers said they expected their
employers to play a role. Indeed, 40%
of respondents asserted that they would
not work at a company that does not
offer retirement benefits or accounts.
Seventy-two percent of survey participants said their employer offered a
retirement savings plan, and 80% said
their company matched contributions
to their plan. Almost half of respondents
reported that they contributed 5% or
more monthly, and 75% maximized their
Outside of retirement plans, 48% of
younger workers said their employers
offered other financial wellness benefits, such as access to a financial advisor, financial planning tools or student
Forty-four percent of respondents
said they were planning to save less
than $1 million for retirement. Thirty-eight percent of respondents said they
had tapped their retirement savings to
pay for an unexpected expense, such as a
medical emergency, or to pay off student
and credit card debt. And 23% reported
that they had taken out money for travel
and leisure activities, jeopardizing their
ability to retire and losing out on compounding investment growth.
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