Bank of America Survey Finds Despite Tightening Their Wallets, Americans Are Further from Achieving Their Retirement Goals Amidst Weakening Economy
BOSTON, Dec. 4 /PRNewswire/ -- A growing number of Americans are concerned that the current economic crisis is threatening to leave them further behind on their retirement plans, according to a new survey released today by Bank of America.
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The 2008 Bank of America Retirement Savings Survey, which reflects the mindset and behavior of approximately 1,000 people across the country, finds that six in ten (60%) Americans are spending less than they were three months ago as a result of the current economic climate. However, even with this decreased spending, more than half (51%) of the general public and 40 percent of affluent Americans are also saving less than they were three months ago - with approximately one in five citing that they're saving "much less."
The survey, conducted by Braun Research, sampled the general public and "affluent Americans," identified as individuals with investable assets between $100,000 and $3 million. Initial findings underscore how deeply troubled Americans are about their retirement savings and financial well-being, with close to one quarter (23%) of respondents indicating that the 'impact of economic turbulence on their retirement savings' is the financial issue that concerns them most.
"Today's economic conditions are clearly having a significant impact on Americans' near-term financial behavior, causing many to be or to believe they are in a less secure position to work toward their long-term retirement goals," said Craig Averill, personal retirement solutions executive for Bank of America. "Based on this survey, it appears that many Americans are not fully able to save what is needed to retire as they had planned, and some are tapping into their nest eggs to meet more immediate financial needs."
Although the majority of respondents with at least one retirement account say that they have not withdrawn assets from their account(s) prematurely (68%), recent economic conditions have caused nearly one in five (18%) to withdraw assets prematurely. The leading reasons for these early withdrawals are near-term financial obligations, such as credit card debt (26%) and mortgage payments (22%), with an additional 22 percent citing recent job loss.
If the economy continues to worsen, these numbers may increase significantly. The possibility of many more Americans dipping into their retirement savings could have profound implications for the country's future economic well-being.
Golden Years Diminish as Careers Extend
In light of recent economic turbulence, many Americans (43%) believe they now face more years in the work force than they expected to one year ago. This will clearly affect Baby Boomers the most, or those approaching retirement who may not have time to recover the financial losses incurred during recent months. For this reason, it is not surprising that more than one third (36%) of affluent respondents said current economic conditions have pushed back their expected retirement age.
According to responses to a Bank of America Retirement survey conducted earlier this year (March 2008), 53 percent of the general public and 36 percent of affluent Americans were either behind schedule or had not started their retirement planning efforts. Comparatively, according to findings from this latest survey, conducted in November 2008, 62 percent of the general public and closer to half (44%) of affluent Americans are either behind schedule or have not started their retirement planning efforts - indicating that Americans are getting increasingly off-track when it comes to planning for their financial futures.
Need for Proper Retirement Planning and Guidance Persists
Despite recent market turmoil, more than two-thirds (68%) of respondents have not changed the way they save, invest or manage their retirement assets in the last three months.
"Lack of change in the way people are saving and investing for retirement may indicate that they're 'staying the course,' with confidence in their long- term financial plans and investments," adds Averill. "However, this lack of change could also be a sign of Americans not knowing exactly what to do besides reduce spending and continue to watch as their retirement assets diminish."
This survey further confirms that Americans need better guidance and education regarding how best to plan for retirement and manage their retirement assets. In fact, 59 percent of the general public and more than half (52%) of affluent Americans don't know or don't have a good idea of how much they'll need to save in order to maintain their current standard of living in retirement, according to this survey.
According to these findings, nearly half (47%) of retired Americans currently do not believe or are unsure if their retirement assets will cover their financial needs throughout their lifetime. Despite these findings, more than four in ten (42%) Americans do not work with a financial professional, indicating that many individuals may not be receiving the financial guidance necessary to fully realize the opportunities that retirement presents.
Take Inventory of Retirement Assets
Funding an employer-sponsored savings plan, such as a 401(k) or 403(b) plan, is a first step for retirement planning. When individuals move from company to company they often face the decision of whether to leave their money in a retirement plan sponsored by their previous employer, to roll over assets into a plan sponsored by their new employer, or to roll them over into an Individual Retirement Account (IRA).
According to this survey, one quarter (25%) of the general public and one- third (33%) of affluent Americans still have at least one 401(k) or 403(b) plan with a former employer. Of those who have a plan with a former employer, close to half (48% general public, 46% affluent) intend to keep their assets in the existing plan.
"There can be a number of advantages to rolling retirement accounts, such as a 401(k) or 403(b), into an IRA," said Averill. "For instance, with a Rollover IRA, individuals can consolidate plans from former employers for easier management of retirement assets over time. Rollover IRAs also allow individuals to maintain their retirement accounts' tax-deferred status, often expand investment choices, and offer more flexible and often penalty-free withdrawal options at various life stages - particularly those near or in retirement."
Retirement Options Amidst Unstable Economic Times
Through its subsidiaries, Bank of America offers a variety of banking products and investment services to help customers understand and reach their retirement goals. For example, through Bank of America, N.A., customers have access to IRAs insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. Bank of America also offers rollover assistance to make it easier for customers to roll over past 401(k)s into an IRA.
"Bank of America has helped millions of people save for their futures through good times and bad," said Averill. "Offering products such as Money Market Savings IRAs and High Yield CD IRAs, which give customers the security of FDIC insurance, Bank of America, N.A. provides customers with the peace of mind that their retirement assets are secure."
For additional information about retirement solutions visit www.bankofamerica.com/ira or call the Retirement Help Desk at 800.774.4724. The Web site provides easy-to-understand explanations of how IRAs work and the differences among IRAs. Here individuals can also use a personal retirement number calculator to see how much they will need to maintain their pre- retirement lifestyle throughout retirement and what steps they can take to help achieve their retirement goals.
Furthermore, individuals can enter one of more than 6,100 Bank of America, N.A. banking centers across the country or call a Banc of America Investment Services, Inc. Financial Advisor to start or enhance their retirement planning today.
Survey Methodology
The survey was conducted by Braun Research via telephone using a random digit dial methodology between the dates of November 5-12, 2008. Braun surveyed 750 nationally representative Americans, with a margin of error of +/- 3.6%, plus 250 individuals with investable assets between $100,000 and $3 million with a margin of error of +/- 6.2%. The survey sample totaled 1,000 Americans.
About Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, more than 18,000 ATMs and award-winning online banking with more than 25 million active users. Bank of America offers industry leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
Bank of America Corporation ("Bank of America") is a financial holding company that, through its subsidiaries and affiliated companies, provides banking and non-banking financial services.
Brokerage IRAs (non-FDIC insured) are available through Banc of America Investment Services, Inc. Bank IRAs (FDIC insured) are available through Bank of America, N.A., Member FDIC.
Banking products are provided by Bank of America, N.A., member FDIC. Investment products are provided by Banc of America Investment Services, Inc.(R) and: Are Not FDIC Insured May Lose Value Are Not Bank Guaranteed Banc of America Investment Services, Inc. is a registered broker-dealer, member FINRA and SIPC, and a nonbank subsidiary of Bank of America, N.A.
SOURCE Bank of America
CONTACT: Matt Card, Bank of America, +1-617-434-1388, [email protected]
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